There is no doubt that the stock market can drive you crazy. Murphy's Law runs rampant day in and day out - whatever can go wrong will go wrong. It's bad enough that after much research and due diligence, as soon as you buy a stock it goes down. Worse yet, as soon as you sell a stock it goes up. Now, it happened to me with this column! On Monday I held off telling you about the second stock I own that I think offers interesting possibilities, because of column length constraints. Naturally, the stock went up yesterday and today.

The stock is Novell (NOVL). This may be a turnaround situation that is very close to moving up. As you may know, they were the premier networking software stock. Then a previous C.E.O. tried to take on Microsoft by buying companies to complement the business, but unfortunately they turned out to be losers. They lost focus on their core business, and this permitted Microsoft to make big inroads on the networking business.

Now, they have fired two C.E.O.'s, sold their money losing acquisitions, and hired Eric Schmidt, former Chief Technology Officer of Sun Microsystems, as their Chairman and C.E.O. as of March or April, 1997. At that time he asked for 1 year to get the company on the right track. I have a lot of confidence in him as he seems to be doing all the right things. He cut expenses by reducing head count, got rid of all non-core networking businesses, and drastically reduced the pipeline of unsold and aging product. Now he has the company going full-speed creating leading-edge products, which will culminate this summer with the release of NetWare 5. This is the biggie.

Their profits have been very slim, although above Value Line's estimates. They have 40 million customers world-wide, and seem on the verge of an upside breakout. It could happen now, or by year-end. You know how crazy the market has been about technology stocks, and this one hasn't done a thing in years. In May, 1995 it traded between 18 and 23; in May, 1996 between 13 and 15; and in May, 1997 between 7 and 8. In the past 12 months through last Monday, it traded between 6 and 11. In the past 30 days through Monday, it was in a tight trading range between 9 1/16 and 10 5/8, with an average daily volume of around 2.5 million shares.

On Monday, Novell closed at 9 15/16 down 1/16, on 1.4 million shares..That's low for them - the stock was really snoozing. But I liked the timing on Monday as the stock was relatively cheap, and they are due to report their earnings within about two weeks. It seemed like low downside risk, with the possibility of a positive earnings surprise. On Tuesday, the stock was up 5/8 to 10 9/16 on 4.3 million shares! Today it was up 7/16 on 12.7 million shares!!! It turns out that a major brokerage house put out a buy recommendation with a target of 15, where it is expected to encounter resistance. I hate to pay someone else's profit, but if this stock takes a breather within the next week or so, you might consider getting in. This stock has burned a lot of people including yours truly, but they say every dog has its day. You know, I think I hear barking in the distance. Stay tuned.

The Market Pro - May 13, 1998