Novell feeling the pinch from Nasdaq

In the advertising business, there's an old saw that goes something like "any publicity is good publicity, as long as they spell your name right." Let's hope Novell feels that way because last week's headlines featuring our favorite networking vendor didn't appear to be good news:

* Novell faces delisting from Nasdaq (NetworkWorld.com)

* Filing delay lands Novell with $600m debt default notice (The Register)

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In the advertising business, there's an old saw that goes something like "any publicity is good publicity, as long as they spell your name right." Let's hope Novell feels that way because last week's headlines featuring our favorite networking vendor didn't appear to be good news:

* Novell faces delisting from Nasdaq (NetworkWorld.com)

* Filing delay lands Novell with $600m debt default notice (The Register)

* Novell faces delist, default notices on 10-Q delay (Reuters)

* Novell gets Nasdaq delisting notice due to delayed 10Q (MarketWatch)

* Novell Gets Delisting Notice (TheStreet.com)

* Novell faces Nasdaq delisting over accounts (ComputerWeekly.com)

After the dot-com bubble burst we often saw stories about one company or another getting a delisting notice from a stock exchange. Typically, this was because the company's stock had dropped below the $1 trading level. In other words, no one was interested in buying a piece of the company.

Novell's stock price isn't flying high (it was a bit over $6 late last week), but it is well above the $2-plus-change mark it was running just a few years ago. No, it's not the stock price that has Novell in what appears to be a troubling position - it's due-diligence.

There's another old adage which holds that "no good deed goes unpunished," and while it's usually uttered flippantly it might well be true in this case.

You may remember that, in talking about Novell's third quarter financials last month, I mentioned that Novell referred to the financials as a preliminary release. That's because Novell, like most companies in the high-tech sector, is re-examining its behavior in the granting of stock options over the past years to see if there's a need for restatements. Unfortunately, this desire to see that the right thing is done triggered an automatic reaction from Nasdaq, which requires corporations listed with it to file quarterly and annual forms with the Securities and Exchange Commission (SEC) on time.

Novell has filed an appeal to the delisting announcement, which should hold it in abeyance until the company finishes reviewing its stock option practices and restates (if necessary) its financials.

But it does seem that the company is stuck between a rock and a hard place. It could simply file the correct forms based on the information that's already been reported - and possibly face investigation by the SEC for its stock options practices. Or it could thoroughly investigate and make right any misstatements that were made in earlier filings, making things right with the stockholders and the SEC but endangering its listing with Nasdaq. Sometimes, in the words of another old cliché, you can't win for losing.

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