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This is pure speculation driven by a recent article in Red Herring:

Big Fish: Eric Schmidt, the future is calling

By Paul Kapustka,, July 19, 2000,

A few of the interesting points in the article include:

Mr. Schmidt's personal stock is a perennial blue chip. His resume is impressive, including stints at Xerox PARC and Bell Labs, which preceded his well-received 14-year run at Sun, where his most-recognized accomplishment was pushing Java to a winning position. Now, however, he's like the NBA star who finds himself playing for the Los Angeles Clippers: His individual skills are respected, but everyone in the league knows he's not going to win a championship there anytime soon. ..........

Since taking over as Novell's CEO in April 1997, Mr. Schmidt has been trying to change the way Novell thinks, making it more Internet-centric and less a Microsoft (Nasdaq: MSFT) competitor. But even Mr. Schmidt lapsed into the familiar competitive pigeonhole Novell has been in since the early '90s, when he first blamed (and later retracted) part of Novell's recent fiscal woes on competition from Windows 2000. .....

Mr. Schmidt may not like the comparison, but we'll take the poetic leap and compare Novell to a dusty town that once was booming but has now been bypassed by the railroads. And we'd hate to see Mr. Schmidt left behind as the Internet train goes running down the track.

IMO - XRX will also fit into this train story.

Some other interesting articles on ES:


The Red Herring - Time is running out - October 1997

Xerox's Proving Ground


If we examin the pluses of XRX company most people will identify (there are others):

1.) Excellent Brand
2.) Excellent Marketing Organization
3.) Excellent R&D

While there are a lot of problems - three big ones come to mind are:

1.) Core Product lines are impacted by rapidly changing technologies and competitors.

2.) And the lack of Visionary Leadership.

3.) Disruption caused by reorganization efforts.


IMO - NOVL + XRX with ES at the helm will make for a very exciting company. ES has the right set of skills to get this big XRX ship moving again. He has experience dealing with failed reorganizations efforts (at NOVL in 1997). He understands the industry and the technologies. And finally, he is visionary.

There are benefits to a merger that transend ES. With an injection of XRX Marketing expertise NOVL will start moving again as well. I also think that NOVL's dealer network may be the type of allies XRX needs to break into the SOHO market. Furthermore NOVL becomes an outlet for many of the newer technologies being developed at PARC. And lastly, NOVL stock is now in the dumps so the deal shouldn't command a big premium.

Today, regardless of what they say, NOVL still thinks of themselves as a LAN company and XRX as a Copier company. NOVL thinks software, and XRX thinks hardware. IMO - If it's done right a combination of NOVL/XRX would have the merged company thinking like a Document Company which sells Solutions.

What do other Fools think?

Bruno the Meateater - (Disclosure - Long on NOVL & XRX)
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