Messman’s 21-year career @ Novell coming to a close
Perhaps only one person has had a greater imprint on Novell than Ray Noorda.
That person? Jack Messman.
Nevertheless, Novell announced yesterday (6/22/06) that current Novell President, Ron Hovsepian, has been given the additional title of chief executive officer, with board member Thomas Plaskett elected as non-executive chairman of the board. According to the release, Messman has relinquished his roles as CEO and chairman of the board, but he will remain on the board until Halloween Day (10/31) 2006.
NOTE: CFO Joseph Tibbets also stepped down at the same time. In fact, a closer read of the release (specifically, the fact that the release was distributed at 7 a.m. on 6/22 and that it said [speaking of Messman and Tibbets], “will leave Novell’s employment, effective June 21″) suggests to me that they were given the boot in a board meeting the prior evening . . . but that’s pure speculation on my part.
Anyway . . . a Novell director since 1985, Messman became the company’s president and CEO in July 2001 when Novell acquired Cambridge Technology Partners, an acquisition valued at $266 million when it was first disclosed in March 2001. Messman was then named Novell’s chairman of the board in November 2001.
On the day that the Cambridge acquisition was completed and Messman became president and CEO (July 10, 2001), Novell’s stock closed at $4.87 per share. Today’s closing price? $6.55 per share, up $0.55 on today’s news.
Along the way, Novell’s shares have closed as low as $3.11 per share on 6/30/03 and as high as $14.06 on 2/3/04.
It was under Messman’s leadership that the company moved its headquarters to Boston. Messman was also at the helm when the company decided to move strongly into the open source and Linux marketplace, including its move to acquire SuSe. And these moves appeared to be working.
However, Wall Street was surprised earlier this year on 3/2/06 when the company annouced Q1 2006 results that were not as expected. The result, a nearly 37 million shares traded hands the next day with the stock dropping $1.63 per share (approximately 17 percent) to close at $7.90, down from $9.53.
With approximately 339 million shares outstanding, it amounted to a $550 million drop in Novell’s market capitalization in one day.
The 5/31/06 announcement of the Q2 2006 results (ended 4/30/06) saw a similar drop-off, with Novell’s closing share price dropping $1.13 per share to $6.60 from $7.73, a 14.6 percent one-day selloff or an additional loss of $383 million in market cap.
Except the price kept heading downward. During the following two weeks the per share price continued to erode, closing at $5.84 on both June 15 and 20, or a two-week loss of $1.89 per share or a total market valuation loss of $640 million.
And . . . if you take the delta between the 3/2/06 closing share price of $9.53 and the 6/15/06 and 6/20/06 closing prices of $5.84, now we’re talking about a drop of more than 38 percent in less than four months. A market cap erosion of $1.25 billion.
My guess is that at that point, the board said, “It’s time for a change.”
I’m sure that there was a lot more that was going on behind this decision. I’m also not suggesting that the recent market surprises were the only reasons for Messman’s departure.
But with more than 21 years as a Novell board member under his belt, Messman has had probably more influence on Novell’s direction, success and failures than any other person, save perhaps Ray Noorda.
And soon Messman will be permanently out of the Novell spotlight too.
So what’s next for Novell minus Messman? That remains to be seen.