Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Novell Rally Stalls [TheStreet.com]
Summary: Three weeks ago when Novell, Inc. announced a groundbreaking deal to partner with Microsoft to work on interop solutions between its Linux operating system and Microsoft's, shares jumped 16%. Since then, they have given up more than half of their gains, emphasized yesterday by a note downgrading the stock to "underperform" by Credit Suisse analyst Jason Maynard, who wrote, "We do not believe the 10% appreciation in the stock is sustainable." Maynard also believes the deal will hurt Novell's standing in the open-source community; also, Oracle's entry into the Linux market means there won't be enough demand to support market share gains by Novell.
Related links: Media coverage: Reuters . Commentary: In Recognition of New "Mixed" Software Environment, Microsoft To Work With Novell's Linux • Novell: We Didn't Sell Our Soul To Microsoft • Enterprise Software: Credit Suisse Sees Microsoft Upside to $35. Conference call transcripts: Novell F3Q06.
Potentially impacted stocks and ETFs: Novell (NASDAQ:NOVL), Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL) • Competitors: Red Hat (RHAT) • ETFs: Software HOLDRS (NYSE:SWH).
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