Piper Jaffray Maintains 'Neutral' Rating on Novell (NOVL), Reduces Software Estimates to Reflect Softening IT Demand

October 8, 2008 10:20 AM EDT

Piper Jaffray & Co. maintains a 'Neutral' rating on Novell (Nasdaq: NOVL), but lowers earnings estimates and price target to $4.75.

Piper analyst says, "We lower our software, EPS and cash flow forecasts to reflect softening IT demand...We are reducing estimates across our coverage list of 20 Enterprise Software companies (excluding a few companies that very recently updated guidance) to reflect the likelihood of a downward-revision bias to consensus Q4:08 and CY09/CY10 forecasts. The expected downward bias is primarily based upon our belief that the effects of the global credit crunch have intensified in recent weeks, and also the unfavorable currency effect of the strengthening US dollar plus lower interest income on cash balances for our cash-rich companies...Continuation and Extension of our Cautious Stance. For the past 13 months, we have characterized the trajectory of IT demand as a 'slow bleed'."

Novell, Inc. is a global infrastructure software and services company. It develops, implements, and supports mixed source and open source software for use in business solutions by providing its customers with enterprise infrastructure software and a range of training and support services.

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