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Software industry

WordPerfect and Novell Merge to Take on the Software World

Strategic Insights

— 1 min read

WordPerfect Corp. is gearing up for a massive expansion into new markets, including communications and innovative approaches to understanding languages, following its merger with Novell Inc. The merger, which is set to be completed this month, has been described as a strategic move by WordPerfect's president, Adrian Rietveld, to counter Microsoft Corp.'s growing dominance in the software industry. Despite a 24% slide in Novell stock since the merger was announced, Rietveld remains optimistic about the future, citing the companies' complementary technologies and the potential for significant revenue growth.

Key Takeaways:

  • The merger between WordPerfect and Novell is set to create one of the world's biggest software vendors, with annual revenue exceeding $2 billion, about half the size of Microsoft and 20% the size of International Business Machines Corp's software business.
  • WordPerfect will move into new areas such as communications and innovative approaches to understanding languages, leveraging its expertise in desktop applications, particularly word processing and electronic mail.
  • The two companies will pool their technologies, with WordPerfect bringing its prowess in desktop applications and Novell providing its command of the network software market.
  • The merger will harmonise the new technologies required for "network services," including sharing documents, electronic mail, and other data over wide networks.
  • WordPerfect will change its name to "WordPerfect, Novell Applications Group" once the merger is completed and its familiar logo will change to include Novell's logo.
  • The enlarged Novell will benefit from an alliance with AT&T Corp, which currently owns a 3% equity stake.
  • WordPerfect already has more than 2.2 million users of its electronic mail and scheduling software, which hasn't gotten the same recognition as Lotus Notes.
  • The company plans to hone its understanding of linguistics and the mechanics of 29 different languages to complete work on a kind of universal electronic "codex" that will understand oral commands to PCs and telephones and act on them intelligently.

Statistics:

  • 24% slide in Novell stock since the merger was announced
  • Original takeover value: $1.4 billion
  • Current takeover value: about $1.04 billion
  • Novell's market share: 70% of the global networking software industry
  • Number of WordPerfect users: over 2.2 million
  • Estimated revenue growth: exceeding $2 billion annual revenue
  • Number of languages WordPerfect will understand: 29

Sources:

  • Bloomberg Forum
  • WordPerfect Corp
  • Novell Inc
  • AT&T Corp
  • IBM Personal Computer Co
  • Compaq
  • Apple

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