Utah County is home to the company with the top-performing stock in the country, according to U.S. News and World Report.
The special-issue investment guide by the national magazine ranked 200 of the best stocks and mutual funds. Novell Inc. came up No. 1.Novell is a computer company with headquarters in Provo. Its greatest success is NetWare, software that links computers together in a network.
"This isn't supposed to happen in Utah County," said Provo stockbroker Jack Larkin. "It's supposed to happen to Silicon Valley. But it did happen here with Novell and WordPerfect. I think it's neat."
Larkin is manager of the Provo office of Piper, Jaffray & Hopwood Inc., a regional investment firm with 65 branches. "Novell's been a success story. I've followed it for quite a spell," he said.
U.S. News and William O'Neil & Co., a Los Angeles-based brokerage, ranked the 100 stocks "that have generated consistent and superior earnings over the long term."
"With a 60 percent share, Novell dominated the market for software used to link office computers together. Company sales of PC software have increased 15 times since 1985 and should hit $1 billion by 1995," said the article in U.S. News and World Report.
Peter Troop, Novell director of investor relations, said the real value to Novell of the stock performance ranking is that it gives the company prominence. "It is part of a growing recognition of what our business is."
Troop is one of about 700 Novell employees based in California. He works in San Jose. He said Novell has about 900 employees in Utah, 200 in Austin, Texas, and about 500 in 24 regional offices in the United States and abroad.
Large institutional investors own the bulk of Novell's stock, "upwards of 60 percent," Troop said. Also, a large number of employees own stock.
"One of the things Novell wants to do is help expand the number of retail accounts," Troop said. The stock's No. 1 ranking should help Novell attract the individual investor.
Larkin said Novell is not as well-known to the average person as WordPerfect. A secretary in an office knows she is using WordPerfect for word processing but she may not know she is on a link provided by Novell's NetWare.
"Novell appeals to people who know a lot about the computer industry," said Larkin. But, he cautioned, the nature of high-tech is that it could stumble and fall.
While Novell has performed very well in the past, there is no guarantee the stock will continue to do well, Larkin said. In high-tech industries, a company could be doing very well but an outside breakthrough could "blow the company out of the water."
"I followed Novell when it was 50 cents a share, and it's split several times," Larkin said of Novell stock that now sells for about $32.50 a share. A split doubles the amount of stock held. For example, if you hold 100 shares and it splits, you then own 200 shares.
"Will it continue?" asked Larkin. "We sure hope so but we can't know. For everyone that works out like this (Novell's success), you've got a hundred that never go anywhere."
Troop said Novell started out making hardware and software but "the real value we bring to customers resides in our software." A few years ago, hardware was still half the business but its relative importance continues to decline. Hardware made up only about 10 percent of Novell's earnings last year.
"The software engineers really make it go," Troop said, adding that an informal but very important relationship with Brigham Young University feeds Novell talented software engineers.
While Novell still sets up local area networks for PC users and departmental networks, Troop said the big growth for 1990 was in NetWare 386.
A local area network will link six to eight personal computers, allowing workers to share a printer and files. A departmental network is larger, with several computers sharing printers and files.
NetWare 386 can link different computers on a business-wide basis. If a firm in Cleveland using all Apple computers acquires a Tucson firm where workers will not part with their IBMs, NetWare can link them.
"Novell is unique in the industry," said Troop. "We are the only company our size that networks. We've begun to be understood at last."