Novell down as buyout denied

Novell (NOVL) shares fell more than 10 percent this morning after chairman and chief executive Eric Schmidt said the company "is not for sale."

Schmidt refused further comment on rumors of a possible merger with IBM (IBM).

Novell's stock, one of the most actively traded on the Nasdaq, had soared 19 percent since Friday's close on rumors that Big Blue would buy the network software maker. Shares of Novell dropped as low as 8-15/16 in heavy trading this morning from its close of 9-31/32 yesterday.

"First of all, the company is not for sale," Schmidt said, adding, "I am not allowed to comment on any of these kinds of rumors."

Schmidt made the remarks at the Java Internet Business Expo in New York.

In recent years, IBM has taken a stake in NetObjects, and has acquired Lotus Development and Tivoli Systems, seeking to boost its efforts in the corporate intranet server business.

Rumors were fueled in part by Novell's low stock price and speculation that Novell would be a bargain.

But one analyst remained skeptical of such a buyout.

"This situation is possible, though unlikely," said Michael Geran, an analyst with Pershing's DLJ division, in an earlier interview. "I don't see how this would provide a strategic fit or advantage for IBM."

He added that in its previous acquisitions, IBM has purchased companies not only as a "good buy" but also for a strategic purpose.

(Reuters contributed to this report)