The Financial Times has come up with a novel assessment of the stock options scandal. It may open the door to takeover bids at as many as 42 companies. The primary leverage is that investors can ask the courts to call an annual meeting in many states when the company has not held one for over 13 months. Companies involved in the options scandal cannot send out proxies for these meetings because they do not have the required financial statements to go along.
Some fairly large companies, including McAfee (MFE) and Novell (NOVL) are in the pool of firms with annual meeting problems.
But, being able to do something and wanting to do it may be different things.
Novell, for example, has been in trouble for some time. It recently signed a deal with Microsoft (MSFT) to bundle the company’s Linux products with Windows in a joint selling effort to enterprises. But, the license authority that controls open-source Linux has been fighting to keep Microsoft out of the hen house. In the meantime, Novell’s revenue is flat at about $250 million a quarter, and, in the last quarter, it lost money.
McAfee’s numbers were up in the last quarter, but the stock is rich, trading near its 52-week high of $34. And, the anit-virus business that makes up most of McAfee’s business may have a rough future. As Jeffries & Co recently told The Associated Press: "We remain reluctant to recommend the stock given the persistence of weakening long-term fundamentals, particularly in consumer anti-virus,"
Buying companies that have been hit by the options scandal my be getting easier, but, does anyone want them?
Douglas A. McIntyre
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