Will Red Hat Buy Novell? (RHT, NOVL)

Oppenheimer is out with an analyst note this morning that tosses around the idea that a Novell NOVL acquisition by Red Hat RHT may be smart. Analysts cited Red Hat’s CEO Jim Whitehurst, who was speaking with the “The Register” recently and said they he “declined to dismiss the possibility” of acquiring Linux competitor Novell, which is currently entertaining acquisition bids. Opppenheimer believes that, while this would be a challenging deal for Red Hat, it would be possible, and further believe that gaining the SUSE Linux business and other NOVL assets would accelerate RHT's long-term goal of generating $5B in revenue. Operationally, Oppenheimer analysts expect the company to post a strong May quarter in a few weeks, driven by “~20% bookings growth stemming from improving server shipments and higher ASPs coming from expanding JBoss sales activity and Advanced Platform acceptance.” They also added, “with the stock (RED HAT) trading at ~15x our CY11E unlevered FCFPS of $1.65 (after backing out $5/share in domestic cash), it remains quite attractive, in our view.”