Solid earnings to buoy Novell, Red Hat stocks?

The two software makers have been battered on Wall Street, and solid earnings are unlikely to change that, given recent irrational market moves.

Novell will announce its earnings tomorrow at 5 p.m. EST. Red Hat's will come later. From interaction with the two companies over the past few months, I expect both to have good earnings to report.

Will it matter?

Right now Wall Street doesn't seem to be rationally correlating stock price with company performance. It has been too punitive, pummeling stocks that either should have been rising or should have received only a mild "scolding."

Analysts are almost universally giving Novell's stock a price target in the $8 range, yet the company's stock currently trades for roughly half that. The same is true for Red Hat, which trades around $9 per share, yet has most analysts targeting double (or more) than that.

With this in mind, will it really matter if Novell and Red Hat report strong earnings? Probably not, at least in the short term. No good deed goes unpunished...

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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