iPhone 14 Pro vs. Galaxy S22 Ultra HP Pavilion Plus Planet Crossword Pixel Watch Apple Watch Ultra AirPods Pro 2 iPhone 14 Pro Camera Best Android Phones
Want CNET to notify you of price drops and the latest stories?
No, thank you

Novell up on rumored IBM buyout

Shares surge more than 10 percent on rumors that IBM will make a major move to dominate the corporate intranet market.

Novell (NOVL) shares rose more than 10 percent in trading today on rumors of a buyout by IBM (IBM).

Novell shares jumped as high as 16.6 percent to 10-1/2 in heavy volume before giving up some gains and ending the day at 9-31/32, up 31/32 from yesterday's close. In excess of 31.6 million shares traded hands--more than six times the stock's daily volume, based on a ten-day average.

Fred McNeese, an IBM spokesman, declined to comment on speculation of a Novell buyout.

In recent years, IBM has acquired Lotus Development and Tivoli Systems and has taken an equity stake in NetObjects, McNeese said. These moves may be viewed as a serious effort to gain dominance over corporate intranet servers.

Despite the speculation that Novell's low stock price would make it a cheap buy, some analysts remain skeptical such a move is in the works.

"This situation is possible, though unlikely," said Michael Geran, an analyst with Pershing's DLJ division. "I don't see how this would provide a strategic fit or advantage for IBM."

He added that in its previous acquisitions, IBM has purchased companies not only at a "good buy" but also for a strategic purpose.

Novell's stock, which hit its 52-week low in late June at 6-71/256, has been volatile this month, taking a few wide swings between the 7-1/2 to 9-1/4 range.

Novell, a networking company, has been hemorrhaging of late, with declining sales and a larger-than-expected third quarter loss of $122 million. In an effort to pare down excess inventory, the company halted further shipments into its channel last quarter.