Novell Completes Options Probe; Is A Big Buyback Ahead?

Novell (NOVL) Wednesday announced that it has completed its stock-options backdating probe, and will be up-to-date on its SEC filings by the end of the month. The company will take a $19 million charge to cover errors with the accounting for previous grants.

For Novell, bringing the company’s filings up to date will free it to use some of its substantial cash to buy back shares, asserts Terry Tillman, an analyst with SunTrust Robinson Humphrey. Tillman pointed out in a research note Thursday morning that the company has over $1.2 billion in net cash.

The company has $1.82 billion in cash, offset by $600 million in debt. Market cap is just $2.6 billion; a $1 billion buyback would take out nearly 40% of the outstanding shares.

NOVL 1-yr chart: