Novell, promoter of SUSE Linux, is listening to potential takeover bids. Mandriva, promoter of a Linux distribution that has 3 million users, is in discussions with potential investors. As a result, some pundits think Mandriva Linux and Novell SUSE Linux face similar business challenges. The VAR Guy begs to differ. Here's why.

First, some background:
  • Novell is seeking bidders for its business; the deadline for initial bids apparently was last week, according to The Wall Street Journal. Novell is set to announce quarterly results on May 27, so The VAR Guy wonders if the company will provide an update on a potential sale process at that time.
  • Mandriva, meanwhile, confirms that it's in takeover talks with various investors.

A Tale of Two Linux Distributions -- And More

Some pundits say the Mandriva and Novell situations are similar. The VAR Guy says that's not the case.

For starters, Novell generated $862 million in revenue during 2009. Also, Novell is publicly held and had roughly $991 million in cash and short-term investments as of January 31, 2010 -- up from $983 million the previ0us quarter.

Sure, revenue from Novell's legacy businesses (i.e., NetWare) continues to plummet. And some critics wonder if Novell's various products really fit together under one company roof. But Novell's latest technologies -- SUSE Linux, identity and security management, etc. -- are generally well-respected by big partners like Dell, Deloitte & Touche, Hewlett-Packard, IBM and Verizon.

Bottom line: Novell may get sold, but the company is not in crisis mode. Novell has a critical mass of enterprise customers and partners.

Mandriva's Story

Meanwhile, Mandriva's story is a bit different. Over the past years, Mandriva bought Edge-IT, Conectiva and Linbox FAS, notes CEO Arnaud Laprévote in a May 12 blog entry.

Laprévote's blog entry added:
Today, Mandriva is in takeover talks with various investors. These discussions concerning new investments in Mandriva are not new, they have happened all throughout the life of the company, and there are still going on today. We want to stress out the fact that Mandriva has not been bought by anybody.
But here's perhaps the most important line of all. Laprévote concedes: "Like many other companies, Mandriva has been impacted by the economic slow-down..."

Translation: Mandriva has some momentum in Europe, South America and Asia. But The VAR Guy believes Mandriva hasn't reached critical mass within businesses, promoting the company to seek outside funding -- which may involve the outright acquisition of Mandriva.

In stark contrast, the economy hasn't forced Novell to seek outside investment money. In fact, Novell is sitting on nearly $1 billion in cash. The bigger question facing Novell is whether the company's various product lines really complement each other. That's why Novell is listening to potential buyout offers.

Yes, Mandriva and Novell compete in the Linux market. And both companies are listening to potential bidders. But don't confuse their business needs and goals. They're quite different.

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