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SCO's Other Investor: Sun Microsystems

Posted by michael on from the investing-in-FUD dept.

Vicegrip writes "Apparently Sun not only bought extra licenses from SCO, but also obtained the option to buy a nice stake in the company: 'The pact, signed earlier this year, expanded the rights Sun acquired in 1994 to use Unix in its Solaris operating system. But there's more to the relationship: SCO also granted Sun a warrant to buy as many as 210,000 shares of SCO stock at $1.83 per share as part of the licensing deal, according to a regulatory document filed Tuesday.'" A reader points out Ransom Love's 2000 Linuxworld keynote speech.

10 of 414 comments (clear)

  1. Shares by deman1985 · · Score: 4, Insightful

    Granting Sun a warrant to buy shares, eh? Sounds pretty overconfident to me. I'll hop right on that bandwagon and buy into the sinking ship!

    --
    KappaStone :: Constant Innovation
    1. Re:Shares by haystor · · Score: 5, Insightful

      You have to be careful with options. You could exercise them and realize a taxable gain of $2million but still be under contract not to sell the stock for quite a while. During that time the price could go down significantly until you actually owe more in taxes than the stock is worth. Its less of a no brainer than it may seem at first glance.

      I'm sure some people on this board can comment on how they may have learned this lesson.

      Most employee stock options allow you to sell the stock immediately upon exercising the option. I would recommend selling at least enough stock to cover the tax burden immediately just to eliminate the tax risk from your portfolio.

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      t
  2. Win-win position for Sun by Anonymous Coward · · Score: 5, Insightful

    If SCO wins, and their shares skyrocket, Sun can still buy at $1.83. If they don't win? Well, no sweat off Sun's back - the deal was done in the past and is a sunk cost. I'd love to be in that spot.

  3. Quick cash for Sun by TopShelf · · Score: 4, Insightful

    Since the stock deal represents roughly 1.5% of SCO's outstanding shares, Sun would probably be better off taking the cash and running. Since SCO is currently trading around $11 a share, Sun could buy at $1.83, sell immediately and pocket about $2 million profit. Given the recent runup in the SCO stock price, perhaps Sun is waiting to see how much more they could make...

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    Stop by my site where I write about ERP systems & more
  4. Migration... by pubjames · · Score: 4, Insightful


    What are Sun thinking? They want everyone to migrate off Sun boxes like people have been doing to SCO?

    Stuff like this annoys techies and techies have quite a lot of influence over IT purchasing decisions in many businesses. Do Sun think that supporting SCO is going to win them more business than it will lose them? My understanding of business is that it is a very bad move to do stuff that your customers dislike...

    1. Re:Migration... by Laur · · Score: 5, Insightful

      I'm guessing this is why Sun hasn't been advertising the fact that they are supporting SCO. They licensed the code back in February and we just learned about it from SCO regulatory filings. Remember, February was before SCO started making all of the crazy accusations against Linux (all your code belong to...). Sun doesn't want to be associated with SCO but wants to profit from the FUD. Of course, it was bound to come out sooner or later. The backlash will be interesting to watch.

      --
      When you lose something irreplaceable, you don't mourn for the thing you lost, you mourn for yourself. - Harpo Marx
  5. Reading the article it was more a purchase of code by will_die · · Score: 5, Insightful

    Reading the article it seemed that this was primarily a purchase of code.
    Sun purchased drivers and other stuff to use in its i86 version of Solaris, along with the rights to show that code to others.
    As for the stock options; SCO probably needed the cash, Solaris had the cash so the directors of Sun decided to gamble. Solaris gets options for a price, and if SCO does good they stand to make a really nice profit. SCO gets some additional cash and has a little protection from Solaris since any action by Sun has to include potential profits from using the stock options.

  6. Nope by Walles · · Score: 4, Insightful
    Most of the Linux hardware drivers are GPL. To use them SUN would need to change the license of their kernel to something GPL friendly.

    SUN probably wouldn't call that "without any costs what so ever".

    --
    Installed the Bubblemon yet?
  7. Re:SCO who? by Laur · · Score: 5, Insightful
    you should also note that the only reason for the expansion of the license was to allow sun to do intel hardware drivers under Solaris..soemthing they could have adpoted from Linux without any costs what so ever.

    I'm sure this was far from the only reason. They could have just adapted drivers from BSD with little licensing restrictions. Also, Sun had Solaris working on Intel long before this deal. My guess is that one of the primary motivations from Sun is the FUD factor. "Switch to Sun , the ONLY 100% in the clear, IP legit UNIX vendor."

    --
    When you lose something irreplaceable, you don't mourn for the thing you lost, you mourn for yourself. - Harpo Marx
  8. Before you get too pissed at sun by OldAndSlow · · Score: 5, Insightful

    Consider that Sun bought a 300K$ license in Feb, a month or more before SCO publicly went after IBM. Sun may be entirely innocent of anti-Linux actions. Or even intent.

    300K$ is chump change in corporate circles. That's less than the cost of 2 programmers for a year.

    If they got options that are now worth 2 million in the process, I'd say they are good businessfolk.