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DOJ Could Scotch Novell Patent Sale: NY Post

The Post implies that the patents could give Microsoft a stronger position over Linux

The New York Post claimed Wednesday to have a disinterested source "close to the situation" telling it that the Justice Department could scotch the $450 million sale of Novell's patents to the Microsoft-led consortium that includes Apple, Oracle and EMC, a sale that's integral to Novell's $2.2 billion acquisition by Attachmate.

Of course it's hard to imagine anybody "close to the situation" who doesn't have a dog in the race - and the paper is still saying it's 882 patents when Novell has already corrected that initial number downward to 861 in an SEC filing - but let's give the devil his due. Anytime the DOJ asks for seconds on information, it can spell trouble.

The Post implies that the patents could give Microsoft a stronger position over Linux although nobody - including the DOJ apparently - has reviewed them.

The paper says the DOJ doesn't have the manpower to check them out. It also says that Novell hasn't answered the DOJ's second summons for information yet - but will soon, giving the regulators the usual 30 days after that to decide whether to approve the transaction or not.

The Post expresses a concern that if the so-called CPTN consortium, especially Microsoft, gets its hands on the patents Red Hat could be hurt. Ah-ha, well, there's already a visible direct line between Novell-rival Red Hat and the complaint to the Justice Department by the Open Source Initiative (OSI) whose president works for Red Hat.

The paper suggests that the DOJ could require Microsoft to use the patents only for defensive purposes, a bug that one might assume has been put in the DOJ's ear.

Anyway, after Forbes read the Post piece and told Wall Street about it, Novell's stock dropped to $5.80, 30 cents below the $6.10 Attachmate is supposed to pay.

It dropped a bit more after-hours Thursday when Novell reported the results of its January quarter and came up short on the revenue side, down 5.8% to $190.7 million versus a consensus estimate of $199 million. It complained of foreign exchange rates.

Earnings of seven cents a share were in line with projections, but because it repatriated cash from overseas it actually lost $17.9 million, or five cents a share.

It's got $1.1 billion in the bank and total deferred revenue of $593 million, down from $646 million year-over-year.

Its risk statement imagines such horrors as the merger agreement getting terminated and Novell having to pay Attachmate a $60 million termination fee; the sale of the patents to CPTN adversely impacting its business relationships; and the possibility that one or more governmental entities may not approve the sale or hedge it in with restrictions.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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