The world lines up to deal with Novell Inc.


April 20, 1992|By Lee Gomes | Lee Gomes,Knight-Ridder News Service

SAN JOSE, Calif. -- At a computer industry trade show a few years back, Ray Noorda, president of a then up-and-coming Utah networking company named Novell Inc., strolled into the exhibit of 3Com Corp., which at the time was the industry's big cheese.

Mr. Noorda's intentions were entirely guileless. But that didn't matter to a 3Com executive, who spotted him and immediately demanded that he leave.

Now Mr. Noorda looks like the kindly old town doctor, and he's certainly not the type to pick a fight. So he simply turned around, and amicably, professionally, and with no hard feelings, walked away.

That might have ended the story -- except for a later development.

Over the next few years, Mr. Noorda -- just as amicably, just as professionally, and with the same it's-only-business nonchalance -- all but drove 3Com into the ground.

These days, no one kicks Mr. Noorda out of anything. In fact, the whole world is lining up to do business with him.

Though his very success is now attracting competitors, especially from the fearsome Microsoft Corp., Mr. Noorda has profited by selling software that allows desktop computers to communicate with each other.

That's made Novell one of the industry's fastest-growing and most important companies. With annual sales closing in on $1 billion -- and profit margins downright corpulent -- it dominates the multibillion-dollar personal computer networking market the way International Business Machines dominates mainframes.

And Mr. Noorda has pulled off that feat with a non-combative public posture of working with competitors, not evicting them from booths. Novell has deals and alliances with virtually every firm in computing. Its mantra: Growing the overall industry is more important than making an individual sale, a strategy one wag dubbed "coopetition."

Novell's shares, worth $6 five years ago, closed down 25 cents at $58.25 in Over-the-Counter trading Thursday. The markets were closed for Good Friday.

The company's market valuation -- the number of shares times the value of each -- is about $8 billion, higher than Apple Computer Inc., Digital Equipment Corp. and Sun Microsystems Inc., to name a few. And Mr. Noorda's 11 percent Novell ownership, worth close to $1 billion, makes him one of the nation's wealthiest men.

Novell's overall situation is not likely to change soon, even as it prepares to face the stiffest competition of its life while knowing that a successor has not yet been named for the mastermind of its success.

Mr. Noorda is 67, and while he acknowledges that retirement looms, he is not letting up.

Aware that most large personal computer users are increasingly buying their basic software from one source, Novell is broadening its product line by actively reaching into the even larger field of computer operating systems, challenging Microsoft in the DOS market through its acquisition of Digital Research Inc. in July, as well as preparing a Unix product for release this year.

Microsoft, though, is as anxious to move into networking as Novell is into operating systems, and is designing networking features into its next-generation Windows product.

The resulting battle is expected to be one of computing's liveliest, made even more compelling by the personality clash between Mr. Noorda and Microsoft's Bill Gates, a man with a more testy temperament.

Even beyond operating systems, Novell is eyeing the day when networked desktop computers can run the kind of industrial-strength software that now requires tens of billions of dollars' worth of minicomputers or mainframes.

For example, it has an investment in Cooperative Solutions Inc., a San Jose start-up developing programs that will allow personal computers connected with Novell's software to perform much of the "on-line transaction processing" that, for example, banks do when a customer takes money from an automatic teller machine.

Even with the competition from Microsoft that Novell will soon be facing -- IBM is also preparing yet another push into the field -- and even at the stock's current heights, most Wall Street analysts have the stock on their buy lists, largely because they see networking as one of computing's few remaining boom fields.

"It's the best-positioned company in the entire computer industry," said Richard H. Kimball of Montgomery Securities. Tom Wood of the Business Research Group said, "If they are doing anything wrong, I can't think of what it is."

Therese M. Murphy of Smith Barney added, "For investors, Novell is one of the core holdings of the 1990s."

All in all, that's not a bad collection of jacket blurbs for what 10 years ago was a near-bankrupt Utah hardware company with 14 employees.

While its mainstay then was computers using a soon-to-be obsolete operating system known as CP-M, some Novell programmers had written software that allowed machines to share files with each other.

That's what drew Mr. Noorda to Novell when he saw the company's booth at the Comdex show in 1982.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.