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SCO gets $50 Million Investment
sjbe writes "It was announced today that SCO received $50 million in private equity funding. The lead investor is BayStar Capital which has invested in Roxio among other companies. This gives SCO a pretty big war chest to fight IBM. Before this investment SCO only had a few million in cash remaining. If you thought SCO was annoying before, this won't help."
In the corporate world, isn't this generally regarded as "not a whole lot of money?"
What the hell were they thinking?
"I use a Mac because I'm just better than you are."
Other factors that may affect such forward looking statements include ... and claims of infringement of third-party intellectual property rights.
This is one of the few cases where "third-party" is just too singular-sounding for the thousands of parties it applies to. But at least they are stating the obvious.
~ Whence do you come, slayer of men, or where are you going, conqueror of space?
How can we finally kill this thing? I'm getting so sick of all this!
SCO's claims are bogus and BayStar just wasted their money. If you are an analyst working for BayStar, I have a bridge that I want to sell you.
So the strategy is to give away money to a dying comapny so that it can pursue its dream of vain lawsuits and dishonor?
Esoteric reference.
Comment removed based on user account deletion
just when you think you've got things figured out and under control, bang, a new changlange, each one harder than the last, until ultimate boss(M$).
-Tim Louden
This isn't enough money to pull them out of their revenue doldrums. It's just enough money to make them a huge pain in the ass. If it were $500 million we'd probably have *less* to worry about, because they might be able to actually pursue product-based revenue streams.
WARNING: there is a trojan on your
now IBM will have something to collect when it wins on those patent infringement suits they've filed against SCO. $50 million or not, it's game over come April 2005 for these guys.
Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
hehe Great. That means they'll now still have money left when IBM/SGI/RedHat come seeking damages.
So THIS is why they stopped sending out those invoices.
$cat
"LINDON, Utah, Oct. 16 /PRNewswire-FirstCall/ -- The SCO(R) Group (SCO) (Nasdaq: SCOX - News), the owner of the UNIX operating system, today announced it has received a $50 million private investment led by BayStar Capital, an investment fund that is a leader in providing negotiated private equity placements in publicly traded companies."
Was SCO ever legally determined to own Unix? I can't keep track of the things that SCO claims to legally own anymore.
On the bright side, they now have enough money to be worth suing! Now all the kernel developers (whose copyrights SCO continues to violate!) can get a piece of the pie. :)
I'm sure Baystar would appreciate some public reaction to this decision.
How about we fire off a few emails to their contact address.
info@baystarcapital.com
-You may license this sig for only $6.99.
I agree that in the scheme of things that $50M is not a lot of cash. They will burn through a significant amount of that defending themselves from IBM and Red Hat. I'd love to know what they will actually spend improving their products. My guess is not much at all.
Think how many starving children you could feed for $50 million... or how much cancer research you could fund. I mean seriously, they couldn't think of anything better to do with their money than give it to SCO?
Rank Presidents by th
How much of the $50 million do we think came from Micro$oft?
No wonder about this.. SCO Group was label as a "buy" by Deutsche Bank analyst on October 15th.
just fucking die. Your burial makes the world a better, safer place.
But it won't matter in the end. They are doomed and any idiot who invests in them or carries a long position in their stock is going to get screwed. Unfortunatly there is still a unhealthy supply of idiots handing out other people's cash trying to get the '90s levels of payback again.
Democrat delenda est
You have to remember who exactly BayStar Capital is.
They're the folks who are known for balancing several chairs on the nose of their chief executive. In fact, it's well known that the nose in question is big and powerful.
Therefore, it was only natural that they'd stick their nose up SCO's butt in hopes to find a prize.
Don't believe me? Check out their website.
In any case, I love their IT guy! Here's a quote from their website:
Steven Griffin is the Chief Technology Officer of BayStar Capital. Mr. Griffin brings ten years of information technology experience encompassing both the public and private sectors. Before joining BayStar Mr. Griffin was the Lead Systems Analyst at the San Bernardino County Fire Department.
From 1995 to 2000, he oversaw the San Bernardino County Fire Department's deployment of their wide area network and the maintenance management ERP project. From 1992 to 1995, Mr. Griffin worked as an independent contractor deploying local area networks for law offices and Realtors.
Mr. Griffin is currently pursuing his MS in Computer Science. He received his Bachelor of Science degree in Computer Science from California State University San Bernardino in 1998.
Wow! If he is their IT guy, I should be the Pope. Or even better.
I could have sworn that investors dumping money into companys with failed buisness models was something that ended years ago.
Anail Nathrock Uthvass Bethudd Dochiel Dienve
anything i touch becomes unlucky. to leverage the powers-of-the-ill-fated (tm), i guess i'll have to buy sco stock now. see how you handle _that_, sco.
----
http://www.hellection.com
to David Boies. SCO will be taking caring of the next few generation of Boies' family....
smd4985
Who controls BayStar?
Answer that question, and it will probably become obvious why they would be willing to "waste" $50 million.
SCO is just a foot soldier in a war that is being fought by Microsoft and associated proprietary software firms against the adoption of Linux as the dominant Operating System for the next century.
They are buying time, for one thing. Every day this FUD campaign drags on, slows the rate at which corporations switch their infrastructure to Linux. For all that those in the know realize what a crock of steaming shit this is, the courts are unpredictable at best, and PHB's are a conservative lot. Many won't bet their future on an OS which is the subject of litigation because they cannot be certain of the outcome.
SCO will die. But that's what foot soldiers do. Meantime, those pushing them forward are happy to lend them all the resources they need to prolong the fight.
Peace and love, y'all
I'm glad I don't deal with them but the funds that I used to invest in had massive problems with stupid investments which is a common problem with mutual funds. They have $X amount of money they must invest every week. Then on the 1st and 15th they have $Y they also must invest. I'm sure its easy the 1st few weeks to find something good to invest in but after a while all the good stuff is gone and the law says it must be invested. Where is Fidelity going to put a billion dollers next week?
I just found out that the Aussie superannuation funds are now buying houses and empty lots. No wonder people can't afford homes anymore, clueless investment firms have billions of dollars they have to put somewhere and they only thing left is homes which they seem happy to pay double for. The super funds in Oz now have $130 million a week they have to invest which is 9% of the countries income.
Sounds like they are going for broke. I wonder what the hell SCO is thinking, if they lose this and they will. Their new investors will be on them like a pack of ravenous wolves. McBride is obviously gambling the company on this. Just my.02
"Beer is proof that God loves us and wants us to be happy - Benjamin Franklin"
What the hell was this company thinking? When the hell will SCO just lie down and die? Is 99% of the community wrong or is it just companies like this? Assholes... lie down with dogs, get up with fleas. Geminus
I have the forumla for working cold fusion. for 100 million dollars, I will hand over all details, patents pending, and copylefted material.
Please send a check or money order to...
oh wait... damn, never mind.
"Computer games don't affect kids; I mean if Pac-Man affected us as kids, we'd all be running around in darkened rooms,
P.T. Barnum...your Magnum Opus has been proved again....
Step 1) Give $50 million to a dying company
Step 2) ???
Step 3) Profit!
topreacher@signature.slashdot.org 1% rm -rf sig
What they want is some legal precedent that the GPL is somehow (and this I find hard to get a mental handle upon) unenforceable. If the GPL can't be enforced, what would give legitimacy to other types of license agreements? Magic? Wormholes from another dimension? Nothing says that an agreement between two or more parties has to fit some arbitrary business "standard" that happens to suit the likes of Forbe's suits. If you make an agreement, you should abide by it, and take the consequences if you don't.
What these clowns really want is for the GPL to appear to be invalid. If they can achieve that, then it won't matter much if the GPL is legitimate because no-one will release anything under it.
The higher the technology, the sharper that two-edged sword.
Since SCO's market capatilization is only on the order of $250M this is a VERY sizeable addition to their coffers. On the bright side, this might lead them to a false sense of confidence about their position. In essence the perfect setup for humiliating public exposure of the falsity of thir claims
Apparently they are not just smoking crack.
They are trafficing.
134340: I am not a number. I am a free planet!
even better, this quote will get a big *no shit sherlock* and a big *SUCKERS!!!*
"These statements involve risks and uncertainties. The Company wishes to advise readers that a number of important factors could cause actual results to differ materially from those anticipated in such forward-looking statements. The Company has a history of unprofitability and has only realized revenue from its SCOsource licensing initiative during the last two quarters and the intellectual property rights that it is asserting in seeking to enter into licensing agreements are subject to pending litigation, making it difficult to predict the extent of future revenues from this source. Other factors that may affect such forward looking statements include the ability of the Company to successfully roll out its new services and solutions to service providers in its existing channels; the acceptance of such offerings by existing service providers and customers; the ability of the Company to grow its core UNIX business and the continued acceptance in the marketplace of the Company's core products; the Company's ability to compete effectively with other solutions providers; new and changing technologies and customer acceptance of those technologies; and claims of infringement of third-party intellectual property rights. These and other factors that could cause actual results to differ materially from those anticipated, are discussed in more detail in the Company's filings with the Securities and Exchange Commission."
"Computer games don't affect kids; I mean if Pac-Man affected us as kids, we'd all be running around in darkened rooms,
In the PR, they say the cash is for development, but then stowell opens his mouth and...
The new cash sends a message. "For anyone out there that was doubting we had the necessary funds to fund that litigation, they should rest easy now," Stowell said.
Yeah, we knew that's what it was really for.
Linux: The world's best text-adventure game.
as the chances are that they stipulated what the 50 mil is to be used for.. and they might think that their linux case is a waste of time.. they MAY have stipulated that they don't use the 50 mil for that case...
"Consider how lucky you are that life has been good to you so far. Alternatively, if life hasn't been good to you so far
you can't imagine the stream of obscenities that i just shouted
DB apparently thinks the odds are between 1 in 3 or 1 in 4 that they'll win. They see a $180 per share upside if SCO wins, but a zero value if they lose. So, if you look at it as P(win) * $180 + (1-P(win) * 0) = their target of $45. So, P(win) is 1/4.
Alternately, you can look at it as either $30 upside (from ~$15 (easy math, here folks, it's late)) vs. $15 downside. In which case, P(win) is 1/3.
If Baystar buys into those odds, then this is a good bet for them. Most venture capital funds are satisfied with one home run and two break-evens out of ten tries. This would be a home run for them if SCO wins. And $50M really isn't that much money.
All that said: Man, I want SCO to just go away!
Sigh.
Self Serving Sig: Hosting Comparison
They consummate the deal (or even before they do it), they hedge hedge hedge - i.e. short (close to) as many shares of SCO as they are getting in this deal. They will likely have a negative carry cost, meaning that they make money while holding a fully hedged position, because of the high dividend SCO is probably paying them.
And as someone else pointed out, these securities often have a "death spiral" feature - which means that if SCO stock goes down, BayStar gets more stock, and potentially makes more money.
No conspiracy theories needed - this is probably a great money maker for BayStar. And can you blame SCO for selling stock at these prices to raise cash???
Mike
why am I not suprised to see them used in the same sentence? :)
Religion is a gateway psychosis. -- Dave Foley
No, what some companies really want is for the GPL to appear more restrictive than it is, so that companies are inhibited from using GPLed software.
now i hate something more then M$... "SCO" I wish they would find something useful to do like develop something people need instead of attacking people for what it perceives as a threat to its "IP"
Die First, Then Quit
"private equity funding"?? Does anybody else think this deal smells? These guys are just a front for some private investors, i.e. they supposedly solicited the the investment from some third parties after putting together the package for an equity purchase in SCO. I wonder who those third parties are? Well you'll never know because it's a private placement. This is just a device for concealing who is really behind the funding. If your ever able to dig down through the byzantine structure of corporate, partnership and limited partnership entities that are the private investors, I think you know who you'll find at the bottom of the heap; those who have an interest in seeing this litigation continue regardless of its outcome.
... true story ...
I can't fathom the concept of investing in this company
9 02 0654,39115337,00.htm
--------------------
http://news.zdnet.co.uk/business/management/0,3
"We have an authorised capital of 45,000,000 shares of Common Stock, par value $0.001 per share... Our board of directors has authority, without action or vote of the shareholders, to issue all or part of the authorised but unissued shares," the statement said. "Any such issuance will dilute the percentage ownership of shareholders and may dilute the book value of our common stock".
Considering the company has only 13.5 million shares floating around, it is conceivable that the issuance of 45 million shares at a tenth of a cent each may dilute the list price somewhat.
-----
The current share price is over $15 yet the share value could be diluted by 3:1 (45:13.5) at $.001. What an equity suck that would be. Instant Kaa-Ching for any one the board wants to pay off. The source of the funds: stock value. No one should be coming within 3 brokers distance of this one.
If you take a look at their web site, you'll notice they have a picture of the Golden Gate Bridge. In light of their recent "investment" in SCO, I think the Brooklyn Bridge would be more appropriate.
Rank Presidents by th
Slashdot announces that they intend to file suit against IBM for $5 billion dollars.
Commander Taco was reported as saying, "There's no basis for this suit, but that didn't stop SCO. Our case is just as strong."
In unrelated news: BayStar Capital is looking to invest $80 Million in Slashdot
gay
Well, considering that SCO actually ARE a software company and can't seem to figure out what they own and whether code in linux infringes or not, I'd be fairly willing to bet Baystar's $50 million that Baystar's "experts" have even less clue than SCO... or you, for that matter.
:-)
Easy bet, too. It's not my money
Put another way - I'd trust SGI's assertions that SCO ain't got shit for a case more than I trust some VC firm's experts. Exhibit A: thousands of failed dot-com IPO's. Exhibit B: SGI's actual experience writing and selling IRIX.
I kinda suspect that SGI know the Unix codebase better than SCO right now.
Ce n'est pas un vrai mouvement de robot!
Hmmm, let's see:
* - First, it becomes public that many of the top SCO execs are cashing in big stock options as they get pumped in the media as the thorn in Linux side. Several collect tens of millions of dollars from stock not worth a nickle prior to the IBM "lawsuit".
* - Next, we never actually see any of the "evidence" that is to be used in the case, just small portions of what is promised to be "major violations of IP" that they may -- or may not -- actually own. This issue gets set aside and taken as a given that they just own it all...even the stuff that's long been known to be in public domain.
* - Now, after a speculative report on possible billions of dollars in licensing that might be collected (assuming they have any claims of substance and they win the lawsuit) and sweet talk from a large investment bank, suddenly some dipshit VC gives them a lousy $50 million...and they now have $61 million in the bank. This being very odd since their last SEC filing mentioned that all of this was very speculative and, if it doesn't pan out, they may be tits up.
* - Finally, throughout the whole thing, every promise to keep on point and it's "just a licensing spat" continue to be proven false and the threats expand to encompass just about anything ever touched by Linux.
Now I'm not a lawyer nor a stock broker, but it sure seems to me like this is just a slow-motion Bait-n-Switch with a Pyramid Scam/Stock Swindle twist. In the '90's we used to call this a "Pump-n-Dump" (build up the buzz, sell off the stock, run to the Bahamas). Apparently the boys in the boardroom figure if they just make their money on the front end, fine; but, if it turns out they might actually have something like $3 billion coming to them on the back end, so much the better.
Wonder if anyone has contacted the SEC and DoJ to see if this is all on the up-and-up...?
From the article:
"BayStar Capital looks to invest in growth-oriented firms with strong management, substantial market opportunity and solid, comprehensive business plans, and we believe that all of those fundamentals are in place for SCO to succeed," said Lawrence Goldfarb, General Partner, BayStar Capital. "SCO owns the most predominant UNIX software assets in the I.T. industry, has a 20 year history of providing trusted software solutions to end users around the globe, and an aggressive and seasoned management team focused on generating profitable growth."
Are you fscking kidding me? How does SCO continually manage to BS rich investment firms into believing it is more than just a frivolously-litigating, artificial-stock-inflating joke? Are investment firms really that dumb? Can I sue IBM and just get $50 million by pretending to be a player in industry?
-jag
http://starboard.flowtheory.net/
BayStar is just paying SCO's licensing fee for linux. At the new low cost of just $50 million, until next month when it doubles again.
From the 'Stategy' section of their website it says:
"BayStar Capital invests in a broad range of small and medium capitalization growth companies including, but not limited to: technology, telecommunications and life sciences. Capital needs of $5 to $50 million are targeted towards acquisitions, product development, marketing or sales expansion, or as a bridge to a public offering."
So from this bit we can see they are putting every penny they can into SCO. Also they now own 17.5% non-voting shares of SCO. Maybe these guys know something we don't...or are blowing their money into a bottomless pit. However, I smell a conspiracy theory. Would the UNIX market want to be dominated by Linux? A free operating system, that protects the rights and makes everyone even from the basement programmer to huge corporations.
Last time I checked, "industry" hated equality when it comes to money.
Court case begins.
A euro analyst recomended Sco yesterday and the stock went up a couple of dollars.
But what he also mentioned is that if the court case fails the stock would be 'worthless'.
He said it was very speculative.
Source - Businesswire.com
Seriously, do we have to threaten some representatives with being thrown out to get the laws changed to stop this kind of BS? Is there any way people other than IBM can get the courts involved in getting them to show what they've got?
Why yes I am paranoid! Thanks for asking!
but maybe not. If we assume that SCO wins their suit id guess its worth about 2 billion dollars over a several years, maybe more. 18% of a 2 billion dollars revenue (less virtually nil in expenses) is 260 million, or basically a 5 to one profit in cash dividends. in a few years and more in the future. SO right away if they figure the odds of winning are 1 in five, its a good bet.
of course, SCO already has a book value and owns a number of properties that are worth money, so this lessens the risk too.
finally there is alos the high likely hood of greenmail here. They cash infuse SCO, wait a few beats, the stock goes up as suckers invest, or the next SCO bombshell is parsed by the news media, then you dump some of your stock at a premium over what you paid. And finally you could sell some shorts on this to lower your risk so that you cant lose the full 50 million.
So it really does sound like a good investment if you believe sco will win or be bought out for a mulitple of its market cap.
Some drink at the fountain of knowledge. Others just gargle.
Now that SCO actually has some money to throw around, this is the ideal time for all of us who support Linux for a living to file our class action suit against them for the damages their false claims have had on our ability to make a living.
After all, in this impromptu, roadside interview, Darl @ SCO basically states that they have to protect their income (6:42 into the conversation) and their employees' livelihoods. Those of us who depend on Linux for a living should protect ours too.
As an independent IT pro, I can honestly say that my company's bottom line can definitely use an injection. SCO's unchecked, continuing spreading of FUD has seriously impacted the number of companies implementing Linux (thus lowering the number of potential customers).
Let's face it, SCO's practically using the court system as its marketing department. That "courtroom marketing" just got the company a nice, fat $50M check. I don't see how they can get away with this right under the SEC's (apparently not-so-watchful) eye. It's so ridiculously obvious that they pumped up their stock with false claims and dumped it successfully for a huge profit, and now they're getting ready for a second round of pumping. I wonder how much the SCO execs will rake in this time around. (watch SCOX tomorrow)
SCO: Give me a copy of your source code, the Linux source code, and the BSD source code and I'll tell you whether or not your claims hold merit. My bet is that after I publish my results, your precious UNIX products will have nice, big GPL and/or BSD licenses on them. Either that, or your UNIX products will fit on a 1.44MB floppy after I remove all of the code you stole from the BSD project(s).
It's great to see that your Bayside stakehorse just dumped another bankroll of chips in front of you. I'll see your UnixWare and raise you one Linux kernel. Now call, fold, or get the hell out of the game. Whatever you do, make it quick before everyone notices you're dealing from the bottom of the deck.
-- Stu
/. ID under 2,000. I feel old now.
SCO has been around for how many years now? What the heck have they accomplished? Not a whole heckuva lot; essentially a worn out implementation of UNIX.
After all, thier main competitor on the PC platform was MS was it not? With DOS and Windows operating systems being the main competition? Now it seems that they are fighting a battle on the side of their old competitor.
I'm really sick of the whole thing. It bores me.
Next issue please!
Codifex Maximus ~ In search of... a shorter sig.
Buy Steampunk Clothing Online!
Someone Set Up Us the Bomb!
Maybe we need a new slashdot subdomain to shunt all these stories off onto so that we don't have to see them: sco.slashdot.org. Oh, wait, can't do that. SCO would sue OSDN for using their name in the URL.
Convert RSS to HTML - integrate webfeeds into your website
This buys us tons more SCO stories! Keep it coming, fellas! MS-bashing is *so* last century.
Computers are useless. They can only give you answers.
-- Pablo Picasso
From the PR:
The investment in SCO was structured as a private placement of non-voting Series A Convertible Preferred Shares, convertible into common equity at a fixed conversion price of $16.93 per share, which was the average closing bid price for the Company's common stock for the five previous trading days prior to the date of closing.
As someone else pointed out (but didn't get modded up since this is a site for tech geeks, not financial geeks), SCO has more than likely received what is generally known as "Death Spiral Financing." If BayStar believed in SCO, and SCO thought it had a future, the conversion price would have certainly been higher than the "average closing bid of the last trading days..."
Here's how BayStar makes money:
For those who aren't familar with shorting, this means borrowing stock you don't own to sell to someone else. You get the money, but you will have to give the stock back in the future, since it is borrowed. What you are anticipating is that the share price will go down, so you can buy the shares back for less than you got for them. Profit!!! The danger is the that stock will go up, which you means you will have to pay more than you originally got, causing a loss to you. So why is BayStar doing this? Easy, SCO just gave them enough shares to "cover their" short position. If the stock goes up, BayStar is covered. If it goes down, Profit!!! This is a big SHORT bet by BayStar. If SCO wasn't desperate, they could have told BayStar the conversion price is $20/share for example, something higher than the current average price when the deal was signed.
This most likely signals the beginning of the end of SCO.
Imagine how much harder physics would be if electrons had feelings! -Feynman, maybe
They evidently didn't learn a thing from the dot-com bust, which came from investors throwing gobs of money at tech companies with no hope of success. These guys are throwing gobs of money at SCO (probably because they owe the Canopy group a favor), so SCO will stay around a little longer, but still fail miserably. In the end, these people will have absolutely nothing to show for their $50 million. It'll be a good lesson to them. Natural selection in the business world.
steve
Oh, you're not stuck, you're just unable to let go of the onion rings.
I wonder if MS had anything to do with this?
True genius is grasping a situation like a peice of fruit, and peircing it just right so that it drains dry.
it appears microsoft has invested 500 million in baystar..
every day http://en.wikipedia.org/wiki/Special:Random
Yes, it's true.
Speaks volumes for their business acumen, doesn't it? I think these people are trying to make a quick buck and don't know what they have gotten themselves into.
I wouldn't be hasty in making some kind of conspiracy theory out of this.
HBI's Law: Frequency of calling others Nazis is directly correlated with the likelihood of the accuser being Communist.
but what if this company was allowed to view SCO's evidence, they showed it to their lawyers, and then decided to make the investment. However, I think it more likely that these companies are buying into the idea that SCO will be able to get a return on their ownership of the UNIX source code, even if not from the IBM case.
This is a better explanation than any I've seen.
Peace and love, y'all
Instead of using this money for the "load of crap" lawsuit why don't they produce a Unix disto that it worth buying. With that amount of money they can do some serious changes to their software and get something that not only benefits them but the OpenSource and *NIX community on a whole.
That would be a lot more productive use for the money instead of fighting it out with IBM in court. All I see there is a waste with lawyers being the only winners.
(\(\
(^.^)
(")")
*This is the cute bunny virus, please copy this into your sig so it can spread
No, wait, this must be a Microsoft conspiracy!
--
the strongest word is still the word "free"
Who do they think they have kidnapped Richard Stallman!!!
It would seem illogical for anyone to invest in SCO based on the extremely high potential to come out of this high and dry. Not to mention that any profits earned are going to fatten the pockets of an attorney anyway. So the questions come to down to these two:
Who does this benefit?
Hint/Quote:
(Seems like SCO is not benefitting)
Based on who would benefit from this, who also would have the cash flow to take this kind of investment risk? (not to mention the state of the economy)
Some food for thought..
[sig]darkfus[/sig]
[sig]darkfus[/sig]
Notice when the announcement was made: at 5:18PM. Watch SCOX take another jump upward on Friday morning.
-russ
Don't piss off The Angry Economist
"Headquartered in Lindon, Utah, SCO has a worldwide network of more than 11,000 resellers and 4,000 developers."
4000 developers? That seems hard to believe. That would be a payroll of something like $400 million a year (allowing for some overheads). They must be counting all the Linux contributors :-)
"Death spiral financing" or "toxics" are being chased after by the SEC. Rhino got dinged for hit.
The loan scheme involves a a floating convertibility price of the debt to stock, not fixed.
If SCOX was priced at $20, and the debt could be converted at a sliding scale (usually a discount is given below market value too), the there is an incentive for the price to go lower. At $20 a share, with a $50 mill debt, it can only be converted into 2.5 million shares. When the price drops to $10, not the debt can be converted to 5 million shares.
Shares are then sold short to drive the price down, and then the debt is converted to stock and handed back.
If the converting price was fixed, then there would be no incentive to drive the price down since that debt is also fixed in number of shares. Driving the price down would actually lose money.
Shorting stock that you hold is just a way to hedge against a drop in price, not make money.
AC comments get piped to
That's $50 million more for them to lose in countersuits. And eventually, after lawyer fees, $5-$10 million back to the open source community.
Its easy to see why they would invest in SCO, just look at the stock price.
To draw some paralell to the dotcom era; lots of companies getting over inflated IPO's and getting lots of cash through that avenue...These people and companies getting rich don't care whether or not SCO will be around for the long haul as long as they get back more than they invested. So, if you invested 50 million and through the stock market you get back 75 million then all the better. Of course they are really aiming for some sort of victory in court, or some buyout by IBM, in which case they get back quite a bit more than that 50 million. Naturally they do their bit to spread FUD, "look at these Unix assests".
Is this really about destroying Linux? Yes and no...Yes in that they would love to have SCO Unix flourish in place of Linux and no because its much more about the money. Linux is in far too many places around the world now to be simply destroyed by anything SCO or Microsoft can ever do, at least in a world wide perspective (maybe in the US, but the US is starting to fall behind technologically, its not been the first in everything tech related for quite sometime and ever present badly formed laws have been stifling innovation for quite sometime along with a Monopoly who only got told off for trampling its smaller opponents into dust).
Will this ever reach court? I doubted the licensing scheme would work, and it didn't. I also very much doubt SCO will ever take IBM to court, I expect them to keep spreading the FUD to get as much money out of this as possible, then they will say something about the code having been removed and all is now well..
"Bugs and buffer overflows may hurt me, but Microsoft and SCO never will"
Private equity firms only invest after they have established a well-defined exit strategy. By this I mean how the firm gets its money back (hopefully with some return attached) after the investment has matured.
In a typical early stage private equity deal, the private equity firm gets a sizable stake in a company that has not yet gone public. When the company finally does go public (or gets acquired by another company) the private equity firm makes a bundle. If the company goes under, the private equity firm gets nothing.
This case is a little different because this is a PIPEs investment (Private Investment in Public Equity). That is, the private equity firm is attaining a stake in the company without simply buying its publicly traded shares. This helps SCO because SCO gets a cash infusion without trying to sell new shares (not an easy task for them right now). The private equity firm gets a lot more say through this investment since it's a structured deal.
The point of all of this is that unless the conspiracy theories (MS being behind this, etc.) are true, the SCO management has pitched these private equity guys some kind of story about how they will eventually get their money back, and with a juicy return attached. The obvious answer is the old "Let's get IBM to buy us" idea. But perhaps something else is afoot. I'd be curious as to who else would want to acquire SCO, for one reason or another. Anyone have any ideas?Read this Story about another dotbomb and BayStar investments:= articles%2farchi ve%2finvestor%2f2000%2f0420%2finv-worldonline04200 0.xml
Text from Redherring.com
www.redherring.com/Article.aspx?f
World Online stock shock rocks Europe
As youthful European dot-com companies go public, they better stick to the rules and offer transparency, or their valuation -- and their investors -- will suffer.
For someone who liked to brag that she had made her first $30 million before she was 30 years old, Nina Brink's justification for selling off a large chunk of her stake -- at the bargain basement price of 6 euros a share -- just before her company went public in the Netherlands last month rang hollow.
Her reason, that she "was securing the financial future of her family," didn't seem sufficiently sound, especially to the thousands of investors who have collectively lost some 4 billion guilders (about 1.71 billion dollars) when World Online 's (NL: WRDOL) shares plummeted as the news of the move was made public.
This wasn't supposed to happen to World Online, much less to Europe's nascent Internet economy. The incident, however, has sent both the company and the sector into a tailspin. Investment banks are wary of the increased scrutiny that company-share prospectuses will now receive, and Europe's new retail investor class worry that dot-com companies might only be hype after all.
The incident throws a spotlight on the degree to which investors are protected by strict transparency rules as Europe's stock markets compete to woo dot-com firms to list on their exchanges. Also, it marks a mighty blow to Ms. Brink herself, who previously was hailed as a role model for women seeking a place at the top of Europe's dot-com corporate echelon.
WOE TO THE WORLD
World Online, widely regarded as one of Europe's success stories, is the paragon of all that must be avoided as the Net boom moves to Europe -- and the lessons from the fallout are many.
The Dutch Internet service provider (ISP) seemed to have decent management, an ever-growing brand, and the ability to scale quickly across Europe, as evidenced by its pan-European buying spree of ISPs over the past 12 months. Along with Lastminute.com -- a recently public company whose stock is similarly trading below its offer price -- World Online was often cited by investment bankers and Internet entrepreneurs as the poster child of European startups that would show the U.S. that the continent didn't need to rely on dot-com imports.
Yet trouble began just days after the company went public on March 17, when news surfaced that Ms. Brink had sold 6.35 percent of her 9.48 percent in the company to three investment funds, at a share price of just over 6 euros each. One of these funds was Baystar Capital, a private U.S. investment fund, which dumped 1.2 million of its shares, or 9 percent of its stake, on the day of the IPO. Baystar, it turns out, hadn't agreed to a lock-up, and a closer reading of the prospectus revealed that Ms. Brink was to share in the profits of any of Baystar's sales. To investors, it looked as if Ms. Brink was trying to get around the lock-up. More importantly, it looked as if she lacked confidence in her own company.
Investors fled the stock, sending it into freefall. Today, it trades at just under 15 euros, a 65 percent drop from its offer price of 43 euros. Ms. Brink resigned from the company on April 3 after being pushed out by large institutional investors following what the Dutch media dubbed a stock market scandal. The company, however, has retained a role for her on its advisory board.
SCO execs are seeking to get rid of all their stock cheap and legal.
I am the unwilling control for my Origin.
if N. Korea gave pre-war-Iraq (before the americans went in) alot of Nuclear parts, no one would stand for it. period. in such a situation, N. Korea and Iraq would have more than just the americans and british to worry about.
bad people do bad things for bad reasons
You are confusing me with someone who cares.
SCO will hold a teleconference to address this investment on Friday, October 17 at 12:00 p.m. Eastern time. Participants should dial in 10 minutes prior to the start of the call and dial toll-free 1-800-811-8824 and use the confirmation code 690025. International callers should use the toll number +1-913-981-4903.
First of all, it was a joke. Second of all, ...if this is the ten billionth time, hmm, I guess I haven't been reading every comment carefully enough. I did look for a "SCO" story topic. Forgot to look for "Caldera".
Convert RSS to HTML - integrate webfeeds into your website
http://siliconvalley.internet.com/news/article.php /751031
here's an excerpt, make of it what you wish...
"An FBI affidavit said he subsequently sold the stock for more than $5 million, which he allegedly used to fund a second, scheme. The form said Gordon supposedly used the $5 million to induce a Cisco business partner, an interactive voice response start-up called Spanlink, to eventually deliver $10 million into a phony venture capital firm he established.
Spanlink had been seeking a cash infusion from Cisco last year; Gordon agreed to provide the $5 million through the venture firm named Bay Star Capital. Spanlink was unaware that Gordon was acting on his own, even though Bay Star listed his home address. The deal called for Bay Star to eventually get $10 million in equity in exchange for the original investment. "
Steve's Computer Service, Hobbs, NM
They are not counting on a direct return on investment from this action. They are attempting to kill Linux and the Free Software movement because it threatens the software vending business model, the media distributioon business model, thier basic understanding of how the economy works, and thier shared control of media outlets.
There is no possibility that these investors could be looking at SCO as legitimately being the holder of IP rights over Linux, or that a court decision based on precident in contract or copyright law could be in favor of SCO in thier suit against IBM, but they are planning on the judge ignoring legal precident, finding in favor of SCO, and invalidating the GPL.
They are not backing SCO because they think that SCO has a good product, or that SCO is a good investment with a future as a software vendor. They are backing SCO because they see this fight as a fight against the "liberal" (meaning anything that does not benefit them directly) forces that threaten to change the business environment.
Read, L
It does, however provide the prospect of an interesting side benefit for the open source community: If people start suing them for (gnu) copyright infringement, they're now plump and juicy with cash for payouts. I think that this might be a good time for some class-action lawsuits.
Free Software: Like love, it grows best when given away.
In this case, they are giving the money to a charity. The only difference is that in this case, the charity is not a licensed nonprofit, and the beneficiary is not a bunch of starving children. The beneficiary of this charity is Microsoft.
If you give $50 million to a small cancer research lab, maybe they will find a cure for cancer. If they do achieve this, the payback will be absolutely massive, since, hey, you've got a cure for cancer. The chances this will happen are almost nonexistent. However, the chances are still indescribably greater than the chances there will be a large payback in the SCO case. Even taking seriously the idea there would be a sizeable payback in the SCO case displays an almost willful ignorance of the law and situation.
_____
The "big payoff" I assume everyone keeps referring to is that the courts will accept SCO's definition of "derivative work", in which case SCO owns fully literally every popular commercial operating system made since 1980 except for QNX and versions of the Mac OS earlier than 10.0. Besides this being logically absurd-- there is no way that if the UNIX intellectual properties were worth *that* much, that Caldera would have been able to buy them from Novell in the first place (both becuase Novell would not have sold it for an amount of money Caldera would have been able to buy, and because Caldera would not have had any money at all since Linux, where Caldera got that money from, would not have been possible)-- it is completely at odds with the way copyright as regards computer programs has been interpreted in every other instance ever. The alternate "big payoff" would come from some kind of "time bomb" propeitary code that someone at some point slipped into Linux unnoticed, which might at one point have gotten a small sum for SCO, but given that 1) the infringement on all parts except the initial person who inserted that code into linux was unintentional and 2) SCO has made no effort whatsoever to mitigate the damage done to them by this, SCO has destroyed any hope they might have had of getting significant money by this method.
The only possibilities are that SCO will recieve some small number of damages from the entry of code they own into the linux codebase-- code which will be, upon its disclosure, promptly removed-- or they will find some kind of minor "gotcha!" loophole in a contract with IBM by which IBM owes them money. This will not be a significant amount of money. Moreover, by their irresponsible and damaging public actions and statements while hyping this trial, SCO has opened themselves up to various countersuits-- for libel, for deceptive trade practices, for making various sorts of threats-- from many parties not at all involved in their initial IBM suit. Any money SCO gets from the paltry possibilities they have left will be dwarfed by the likely legal costs, as well as the money they may wind up owing from these suits. Moreover, once that money comes in, they will promptly cease to have any revenue strategy and their projected revenue will drop to zero.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
SCO is nothing more then a litigation firm. Also, they have tainted their name brand recognition throughout the IT and software industry. Even if they did make a solid product, I will never trust them. I mean, it could have spyware embedded into the stuff for all I know. No, FUCK EM...crush em..
Life is not for the lazy.
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
The problem is in the legal system.
I'm not calling for an anarchist revolution, I'm just putting the blame where it belongs so people can focus on fixing what is broken and not breaking what works.
If you'd invested 50 mil in this bunch of no account losers, guys who can't back a threat and keep extending the deadline for letting the hammer fall, you'd put your guys on the board for sure.
The board will make SCO vanish the moment that there is wind of a settlement.
To dismantle SCO will cost IBM 50 mil.
And SCO won't get a friggin' dime of it which will piss off "what'z hiz puss", the SCO CEO, no end.
Don't get into be with vulture capitalists unless you don't mind waking up looking like Prometheus.
Look at Cisco for an example of how ruthless they can be.
MSBPodcast.com The opinions expressed here are my own. If you don't like 'em... Think up your own stuff.
I found this wording found in the last paragraph interesting:
"UNIX is used pursuant to an exclusive license with The Open Group and is a registered trademark of The Open Group in the United States and other countries."
Am I misreading this or is SCO now claiming that they, and only they, have the right to use the UNIX mark? I guess if their story is that they already own all UNIXes everywhere (and their derivatives) then this attitude makes sense to them.
This sounds lousy at first, and in terms of giving SCO more working money, it probably is. However, if IBM or another large company were to buy SCO, then they could win big. Let's keep an eye on these guys.
I am so glad I just switched all my Linux boxes to Windows 2003 Server boxes!
The glass is half full....the glass is half empty.
Some many see it as SCO having money to sue IBM, I see it as SCO having money TO BE sued.
Now, we can ALL sue SCO for a piece of that $50 million pie.
That document says Microsoft is one of the top ten entities doing PIPE transactions, not that they are doing them through BayStar. If the title of the graphic isn't clear enough, notice the attribution at the bottom.
Democrat delenda est
> Are investment firms really that dumb? Can I sue IBM and just get $50
> million by pretending to be a player in industry?
Yup, it is just that easy. IF you can talk the talk, wear the Guici suit and have the right friends in the right places. The money people who make the decisions haven't a clue what most of the companies they invest in actually DO, but they know the guy wearing the suit went to the right schools, mingles in the right circles and says the right things. So they ASSume he is one of 'them' and if he says he is going to be getting to step 3 (profit!) real soon now, they all line up to throw money his way, hoping to get a piece of the action.
Democrat delenda est
SCO will burn through that $50 million like a birch tree next to a Kuwaiti oil-fire.
!@#$% whole-grain cereal. When I want fiber, I eat some wicker furniture. - G. Carlin
I don't think that makes much of a difference to the open software community.
The people making free software know what they are doing. The people using free software know what they are doing (most of the time, anyway). If other people don't get it or are afraid of it, the only consequence is that THEY won't use it. They can't stop people from developing software under the GPL. They can just look for alternatives.
As time goes on, more and more companies will realize the benefits of free software. Or maybe not. I find it very hard to believe that people and companies who have already accepted the GPL and enjoy the benefits of free software will suddenly stop using it, especially if they've invested time and money developing their own GPL software.
blog
Other than that, publishing the investment without publishing the possible eventual short sale would encourage newcomer readers to invest in a probable loss, lemming-bandwagon style.
Correct Horse Battery Staple: 72 bits of entropy. Enter "Correct H" into google. When it generates the phrase, that's
Ok, if this is good for us, and good for BayStar, we just buy some stock of BayStar.
1) We buy BayStar stock
2) SCO goes under
3) BayStar profets from shorting
4) ???
5) profit
No?
See the forbiden post Here
I can believe a VC company doing this. All those braindead VC people from the dotcom days were plaowing much more money than this into similar hairbrained schemes, so there doesn't seem to be a lack of stupidity in VC companies.
What it does highlight is the way the VC suits think, and what they actually know of technology. It shows that VC suits like companies with management that makes big bold and agressive statements. It shows that VC companies will spend money on words alone, because SCO's verbal tactics open them to charges of slander and libel, and even if they actually win part of the case (although I severly doubt it, IBM is going to kill them in court I think) there's still the RedHat and IBM countersuits to consider.
What this makes me think is that it's time to start skinning VC companies for money again. All you need is some arsewipe businessplan and some agressive statements and someone who's been in the business for a while and the VC loonies will throw $50 milloin at you.
Can we at least put a link to the SCO website for every artical posted? Maybe that'll slow them down.
I have over 70 freaks, do you?
Original An explanation?
Okay, I did a search on "Death Spiral financing", and found out that this refers to a criminal financial operation. Therefore, any financial magazine that said "this could be..." would be liable for libel.
Which is rather interesting, because that means that our laws are actually making securities fraud easier, not harder. That, in turn, might imply that there is something fundamentally wrong with either the laws, or the structure of the markets, or maybe just that if your country has a significant population of evilly minded people, you're not going to have a good life.
Anyhow, I suspect that no financial magazine can use the words "death spiral financing" in conjunction with an investment, no matter how much it looks like it will be exactly that.
Correct Horse Battery Staple: 72 bits of entropy. Enter "Correct H" into google. When it generates the phrase, that's
It sounds like both BayStar Capital and Canopy Group should surrender all of their assets to the Linux Community world wide or some designated organization for the defense of the freedom to run Linux and for Linux development. A class action suit involving Linux would involve millions of injured parties world wide.
BayStar and Canopy owe every single Linux user for this threat to our freedom and the emotional stress suffered when contemplating having to return to the torture of a Microsoft universe.
All data is speech. All speech is Free.
Who controls BayStar? Answer that question, and it will probably become obvious why they would be willing to "waste" $50 million.
The first intelligent comment on this board. There is NO FRIGGEN WAY that anyone would believe they could profit from a 20 million dollar investment in this company without a business model.
However, as a weapon of war, $50 million is an easy play for wealthy companies that have something to gain from the SCO FUD Machine / Reality transconfiguration field. If you were Bill Gates, for instance, you would probably believe that a $50 million gamble was well worth it, if there was even a small chance that it could result in the paralysis of your enemies (who are in the process of scaling the walls of your castle).
These are not conspiracy theories... We are not seeing the death spiral of SCO. On the contrary, we are seeing the death spiral of Microsoft . And when a superpower dies, it dies spectacularly .
It is your personal duty to fight for what is right on a daily basis. Ignoring injustice is identical to approving
The google search " baystar investments pipe microsoft " tells the tale. It is Microsoft. They have invested appx 600 million since 2001 in baystar pipes. The cat is out of the bag MS is really trying to aquire the rights to UNIX. Plain and simple. Even though the US competition watchdogs have tried to slow MS down, the fact is they are just going to try to control all software world wide. They have struck a deal with Pheonix. The interesting thing is there is very little noise coming out of Redmond. The occasional grunt from Balmer but apart from that they are mum about SCO. The last thing MS wants is more anti-trust inquiries.
OH THE SHAME I fell off the wagon and use sigs again!
Can someone explain how preferred shares can be issued on a publicly traded company?
I thought that publicly traded companies had to conform to regulations that wouldn't allow them to issue preferred shares due to the nature of Preferred shares that gives them preferrential treatment in a manner that adversely affects public stockholders (e.g. acquisition, bankruptcy, etc..). If you owned SCOX before these shares were issued, you have just now been (A) Diluted without being afforded normal conentions of protection and (B) Had your stockholder rights pre-empted without being able to exert your normal rights to vote your stock.
Someone please help clarify this. Is it even legal?
It is your personal duty to fight for what is right on a daily basis. Ignoring injustice is identical to approving
Sco might have $50 mil but IBM has a couple of billion. I think I can see who is going to last longer in a drawn out court battle
Rus
Cheap UK and US VPS
So, would this lead one to believe that shorting SCO themselves could be profitable?
Manipulate the moderator system! Mod someone as "overrated" today.
Awesome. Come RedHat, come IBM, come classaction filers... The chests are full, the violations widespread... SCO welcomes their new lawsuit overlords...
How fun... Now that they have money, it is time to sue the pants off of them and have the aside satisfaction of knowing that we will be taking Microsoft's money...
It is your personal duty to fight for what is right on a daily basis. Ignoring injustice is identical to approving
What proof do you have that Microsoft is behind the SCO situation?
:-)
Actually, Microsoft isn't behind the SCO situation. The primary player in the SCO situation is Linus.
As many have pointed out over the years, Linus is a very smart guy. He also has a ton of influence over the psyche of the Linux movement. So, about a year ago, Linus had a conversation with McBride that looked something like this:
Torvalds: Hey, McBride. I've got a great proposition for you.
McBride: I'm interested.
Torvalds: How about you claim that you've got a death grip on Linux, and start firing off nonsensical lawsuits? This will depress the stock prices of the various Linux businesses. Then, I buy back into some of them, we drop the whole business, and I ride the wave back up. If anyone just ignores you, I'll be sure to act really worried about the lawsuit. It'll be great PR!
McBride: Hmmm..ingenius. I like it. But what's in it for me?
Torvalds: That's the beauty of it. While you're shooting off all these lawsuits, SCO's stock price will be shooting up. You buy stock beforehand, and cash out while the thing is elevated, before it comes crashing down again.
McBride: Fantastic. I'm in, Linus!
You can be damned sure that Linus's dark hand is indeed in part of this if you see Linus purchasing *any* sort of portion of *any* Linux-related company over the next year.
May we never see th
Looks like this might be a key to the whole thing.
Jesus, how blind are these investors? How long do you think it will take SCO to make back $50 million in profits, assuming they succeed in their suit? I mean, it's not like the license is an exponentially growing market. In the ideal SCO-wins scenario (i'm talking from their point obviously), they'll sell a finite amount of licenses and view VERY little growth. It's not like they release a product every two years which requires their entire userbase to buy a new license (*cough*MS*cougH*). So how could SCO be seen as a company with huge growth potential?
1) First they ignore you.
2) Then they laugh at you.
3) Then they fight you.
4) Then you win.
I have no problem with your religion until you decide it's reason to deprive others of the truth.
... it's actually the lesser of two most predominant Unix'.
-pyrrho
I was having withdrawals.
Mix the failings of Usenet with the shortcomings of the World Wide Web and the result is slashdot.
Well, there are obviously some people out there with a WAD of cash that think a dot.com is the way to dispose of it.
This article http://www.theregister.co.uk/content/7/33444.html mentions news on the SGI front.
Well now.. there's an Idea I havnt heard proposed yet..
IBM has the money, why not offer SCO a buyout?
SCO would go either one of three ways..
1. they'd accept
2. they'd (hah) politely decline
3. they'd decline, then tell the media that IBM has no faith in their case due to the attempted buyout, and just whore up more media time
I hate to dis such a great idea, but SCO is pre-destined to choose 3.
Welcome to the End
My boycott list grows larger every hour, it seems. I'm sure my opinion doesn't matter in the end as far as corporate America is concerned, but it would piss me off if a single one of my dollars went to weakening the GPL and Linux. Let us just hope that money can't buy a favorable judgement for SCO. Oh, wait....
====
Crudely Drawn Games
This goes hand in hand with that SCO buy recommend the other day from DuestchBank, the premise of which is that if SCO wins their lawsuit against IBM and is awarded $3B its worth $185/share. Of course if SCO loses, its stock isn't worth using as toilet paper. The buy recommendation came as a high risk, all or nothing investment play. But its predicated on several bad assumptions, first that SCO has a 50/50 or better chance of winning, and second that if they win they will be awarded the full $3B. This is the sort of logic that lead to the dot.com bubble. You might as well take $50M to Las Vegas and put it on number 16 on the roulette wheel.
The way this works, as I understand it:
e s% 2farchive%2fmag%2fissue95%2f1310018931.xml
1) BayStar loans Scox $50 million.
2) In return, scox owes baystar $50 million worth scox stock. NOTE: the 2.9 million shares is just an estimate based on scox's share price over the last 5 days. If scox share price falls to $8.50/share; then scox will owe baystar almost 6 million shares. Scox has about 13 million shares outstanding now - that means *huge* dilution.
3) baystar takes a huge short position in scox.
4) Since scox now has a cash position of $61 million, scox is now worth suing. Scox is already being sued by about six different companies, expect more to pile on.
5) Death spiral.
It's worth taking a quick look at the article.
http://www.redherring.com/Article.aspx?f=articl
Okay,
:)
Why does it feal like I'm watching a guy on the street corner hustling a game of three card monty?
Of course its nice to be sitting here watching others point out the shills
This space for rent. All reasonable inquiries will be entertained at proprietors discretion.
I'm curious about what kind of person would buy 18% of a company with the stipulation that they would have *NO* say in how that company is run.
All's true that is mistrusted
Wasn't Baystar the corporation that helped Nina Brink wheel and deal half of the Netherlands out of their savings? For lying and cheating, go see them. In NL, this scandal started the collapse of the .com boom.
Wouldn't buy a car from her, nor from Baystar. Ugly people.
BayStar is real big on PIPEs .A PIPE is a private investment in public equity. In a nut shell it allows investors to quietly pump money into companies. Who is on the top 10 list of investors in PIPEs since 1995? You guessed it Microsoft.
Go here for more information.
Forgive me if this is already covered, but I don't see it above. A press release of $50 million funding doesn't actually mean a check for $50 million has been delivered. My CTO years were very enlightening this way... here's what it probably really means...
The VC inked a deal with SCO to provide some small amount up-front (e.g. $1 million) at a certain discount off the current share price such as 15%. They probably commit to investing more later, such as monthly, at the same rate PROVIDED certain goals are met by SCO. And the total of the committed amount might be about 25% of the total in the press-release (e.g. $12.5 million.)
They get the rest of the way up by virtual of options usually. The VC gets options after a year to pay 50% more than their initial price-per-share for the same number as they bought discounted. This is zero-risk for the V.C.; they don't HAVE to do it. They'll only do it if the share price has gone up more than that 50%. And they probably get another option for the same number of shares at double the initial price.
I'm not saying the SCO deal is this format specifically, but it's completely normal. SCO would announce the total dollar amount because it sounds more impressive, more like a strong sign of faith. The VC doesn't eat through their available cash because they do it in small amounts spread over time, and 75% or so is discretionary EVEN IF SCO makes all their goals.
Let's all hope that SCO falls to a "toxic convert". I wonder if the street will recognize the move for what it is, as well. If so, that alone should hammer the stock price. And I don't think McBride et al will see it coming.
Wanted: One witty yet thought provoking
"The problem is all inside your head", she said to me
The answer is easy if you take it logically
I'd like to help you in your struggle to be free
There must be fifty ways to leave your lover
She said "it's really not my habit to intrude"
Furthermore I hope my meaning won't be lost or misconstrued
So I repeat myself, at the risk of being crude
There must be fifty (million) ways to leave your lover, fifty (million) ways to leave your lover
Just would you go, SCO, when will you die, Sly
Don't need to quarl, Darl, just listen to me
Run and hide, McBride, don't need to discuss why
Just drop off the source, of course, and get yourself free
She said "it grieves me so to see you in such pain"
I wish there was something I could do to make you smile again
I said, I appreciate that, but would you please explain about the fifty (million) ways
She said, "why don't we both just sleep on it tonight"
And I believe, in the morning you'll begin to see the light
And then she kissed me and I realized she probably was right
There must be fifty (million) ways to leave your lover, fifty ways to leave your lover
Just would you go, SCO, when will you die, Sly
Don't need to quarl, Darl, just listen to me
Run and hide, McBride, don't need to discuss why
Just drop off the source, of course, and get yourself free
In the beginning, a lot of people theorized that this was SCO's plan -- annoy IBM to the point where it's simpler and cheaper for Big Blue to just buy them out. In an early interview Darl McBride said that such a buyout was one possible outcome.
The theory now is that IBM didn't want to set up a precedent of being blackmailed into buying worthless failing companies so they decided to fight.
I agree with you, at this point SCO would probably choose option 3. Certainly a buyout offer at this point would hurt Linux's perception in the minds of CIOs; it would appear to be on shaky IP grounds if even IBM had no choice but to buy out SCO.
>
> SCO would go either one of three ways..
>
> 1. they'd accept 2. they'd (hah) politely decline 3. they'd decline, then tell the media that IBM has no faith in their case due to the attempted buyout, and just whore up more media time
>
>I hate to dis such a great idea, but SCO is pre-destined to choose 3.
Incorrect. SCO would accept the buyout.
This whole thing started when SCO decided they could extort a $200-300M buyout by suing IBM for $1B. "You know that in court, whether we have a leg to stand on doesn't matter, so long as we can confuse a judge. Buy us out now for a relative pittance, or take your chances with the court."
IBM said "You've got to be fucking kidding us. We'll take our chances in court. We don't believe you'll find a judge dumb enough to fall for your scam."
And so, here we are. But I assure you, if IBM were to capitulate and offer SCO the buyout, SCO would take it, because a buyout is what they've wanted all along..
According to the points mentioned in your theroy, the odd's of IBM reverting to the idea of a sco buyout are slim. So in a universe where all things are possible, but not probable, your scenario is moot :)
SCO possibly always wanted a buyout, but at this juncture, it seems unlikley for both competitors to back down and take the easy way out. ie, a simple buyout.
To many people have become involved to make a clean escape from this problem possible.
Then again, neither of us have the luck (or misfortune) of being lawyers/exec's in the case. Possibly the most probable action will be overridden by the randomness of the human mind.
We will see in time, won't we? Care for a friendly wager as to the outcome?
Welcome to the End
One thing is for sure at IBM: there is approximately 1300 lawyers per productive employee. IBM Legal is like the KGB it insinuates itself into every nook and cranny and every aspect of every function in the company.
SCO is cooked, it's a walking dead zombie company that doesn't know it yet. Soon it will have an "I see dead people" moment.
You are wrong about this connection. The white paper is a fluff piece pushing Baystar's prime busines interest: PIPEs. As such, the numbers mostly refer to the whole PIPEs industry to make it look like Baystar has a much bigger interest than they actually have. It's like Charter Communications claiming that they are part of the "XXX billion dollar cable TV industry" when they only have a small percentage of the market.
In one chart, you can see that there have been thousands of PIPEs since 1995, including 612 in the latest year (2002). Of those thousands, Vulcan Ventures and Microsoft Corporation are in the top ten in dollars invested.
However, Baystar claims to have been involved with 90 out of those thousands of deals ($400M total). They do not detail their clients and cusotmers in this document, but they do list their "partners:"
Larry Goldfarb
Steven Lamar
and "strategic partners:"
Thomas Hicks (Hicks, Must, Tate, & Furst)
Steven Hicks (Hicks Capital)
Andrew L Farkas (Insignia Financial)
Louis C. Gerken (Gerken Capital)
Kianfilippo Cuneo (Baystar)
BayStar Capital is pleased to announce the closing of a $50 million investment in The SCO Group, Inc. The investment in SCO, led by BayStar, was structured as a private placement of non-voting Series A Convertible Preferred Shares, convertible into common equity at a fixed conversion price of $16.93 per share, which was the average closing bid price for the Company's common stock for the five trading days prior to and including the date of closing. Upon conversion, the investors will own an aggregate of 2,953,000 shares of SCO common stock representing 17.5% of the company's outstanding shares.
The SCO Group, Inc. is a provider of reliable, cost-effective UNIX operating systems and software products and solutions to small and medium-sized business markets. SCO solutions include UNIX platforms, messaging, authentication, e-business tools, and services that include technical support, education, consulting, and solution provider support programs. The Company's SCOsource division was formed in January 2003 to review and enforce its UNIX intellectual property rights. It is also developing Web-based applications, products, and services to facilitate connections to the Internet for its customers. SCO has a worldwide presence with representation in 82 countries. This infrastructure enables SCO to provide local support and dependable solutions to businesses around the world. Additionally, SCO has a channel of more than 11,000 solution providers, a developer network of nearly 8,000, thousands of direct account customers, and an installed base of more than two million systems. For additional information visit the SCO Group, Inc. Website at www.sco.com.
BayStar Capital is a private equity crossover fund that makes direct investments in late stage privately held companies and small to medium capitalization publicly traded companies across all sectors.
PDF Format
Heh. The biggest investor in dollars is Vulcan Ventures, owned by Paul G. Allen. Yup, the same one who co-founded Microsoft.
How intersting is that. I wonder how many others (Janus, Rose Glen, Citadel, Putnam and more) are also involved with Microsoft.
This is, in my opinion, incontrovertable proof that Microsoft is gunning for Linux (and IBM) any way it can.
Congratulations boys and girls! We've hit the big time!
Funding SCO may not be too smart.
Firstly : because their business plan looks more like a way to get enough profit so that the CEO can grab a pile of cash and run and less like any kind of real plan for future earnings.
Secondly : their business practices are at best sleazy and at worst illegal. They've make extortionate claims against people who have no connection with their business whatever.
Finally : they've managed to irritate, annoy and generally make seriously cranky a large number of the people that they should be playing nice with if they expect to sell any OS software in the future.
You may end up with a fun question to answer :
How will you explain to your investors the fact that you lost $50 Million on this company?
Or worse yet:
How were the decision makers at your company persuaded to make this investment knowing full well that SCO was an empty shell? And was this decision smart, ethical and legal?
Will someone, PLEASE, make a .gif of Tux f*cking clippy?
Dawn of the Dead
This is a good thing, now we can probably get a class action going against them because a lawyer will see there's some cash to be had from their carcass.
I own some SGI stock and that investment has been undermined by SCO's FUD, I think I'll call a Gucci shark.
This investment may or may not be a death-spiral. Just because the conversion ratio isn't variable (a "distressed investment") doesn't mean it isn't a death spiral. DIs are the true hawks, they will issue you a convertible bond (give you a loan) with VERY questionable terms. Usually on the terms that the lower the stock price goes, the more stock the loan issuer can convert to. Once the price is low enough - you can convert enough stock to own the company and liquidate it. Companies avoid this unless all other methods of credit have been exhausted. If you recieve a distressed investment bond, if you don't pull out of the gutter your assets WILL be liquidated. Period. No fund wants to keep running ownership of your failed company.
Private placements are not usually used the same way, but can be. In this case, they feel that there is enough risk involved in the investment that they are going to "hedge" their investment. Hedging, simply put, is managing the amount of risk (how much money you stand to lose) by creating "synthetic" investment instruments. (Usually a collection of like instruments / positions such that when combined can be viewed as one position/instrument)
It makes perfect sense - you invest X dollars in a company, which is worth Y shares (as a convertible bond). You then short X-Y (delta) shares on the open market. To really make it obvious you should just look at a delta-hedge example graph. The bond has a value curve based on stock price, and the short has a value curve based on stock price.. there's a delta you strive to maintain to keep making cash off it.
Now, the higher the stock price goes, the lower the short is worth to you - but you still make money. The lower the price falls, the less the bond is worth to you, but the more the short is worth - you still make money. You make money on VOLATILITY ALONE, not the absolute values of the bonds or stock prices. As long as the market is moving, you are making money. This is delta-hedging, and the difficult part is find the delta such that when the market moves (in either direction) you make money.
This is a fairly sophisticated investment strategy, and this investment company is most likely a private hedge fund or something much like it. It's all about ALWAYS making _some_ money, instead of striving for some largely intangible and unobtainable long-term position, or shorting the shit out of a dying company to make that quick dollar and 1-time bonus for the investor. Rich people pay funds lots of money in management fees to invest like this because they will ALWAYS be making money, instead of just on booms.
The copper bosses killed you, Joe. 'I never died', said he.
Here is something interesting to check out.
One of Baystars products is Called a PIPE Transaction and guess who is one of its TOP TEN INVESTORS Baystar White Pages
You should read the IBM prospectus and/or analyst reports from Gartner. IBM's primary moneymaker isn't hardware nor is it software. IBM receives the lionshare (I hesitate to quote figures as I do not have them handy) of their profits from their Global Services division. Now that IBM owns PWCC, they are one of the largest global consultancies in existence. The services market is growing quite well despite the economic turn.
To know is to have knowledge....to understand is to be enlightened.
According to baystar's website, BayStar DOES handle $500 Million of Microsoft's money in investments in public companies, and does so in a way that does not require disclosure. http://www.baystarcapital.com/public/pdf/BayStar%2 0White%20Paper%20October%202002.pdf
I would say that this could EASILY be a way for Microsoft to give $50million to BayStar, and then have BayStar invest it in SCO.
No way is this investment for hopes in product sales, but definately an investment in SCO's current business model : litigation & FUD.
We have no way of knowing whether Vulcan or Microsoft were in this particular deal, but it still smells.
...the privaty equity firm that is the controlling shareholder of SCO (I forget its name) managed to persuade another investor of the likelihood of a multimillior dollar settlement from big names.
/. crowd is generally unable to affect stock prices, but if we (a) start a campaign to hurt SCO sales and, even better (b) isolate the leading shareholders of SCO, figure out what other business interests they have, and boycott the whole lot of them, we're likely to have justice prevail.
The name you're looking for is the Canopy Group.
The
Here's a list of the Canopy Group's portfolio companies, including some that should know better and might be encouraged put some pressure on their investors to stop this nonsense. Do you do business with these companies or recommend their products? If suing their partners and customers is just part of "the Canopy Way" should you or your company worry about litigation from them next? If you're an investor or employee and Canopy loses, should you worry about your stocks or your job? Maybe it's time to start the "reverse slashdot effect."
Altiris
Axiom Press
Center7/Inc.
Cerberian
Cogitoinc
Communitect
Data Crystal
Devicelogics
DirectPointe
Fat Pipe
Geolux
helius
homepipeline
iArchives
Industrial Training Zone
LearningOptics
Linux Network
luxul
MaxStream
Mi-Co
mti
MyFamily.com
Perimeter Labs
PlanetEarthTools
Power Innovations
SCO/Caldera
Trolltech
Tuglet
viawest
Wrenchhead
My next sig will be ready soon, but friends can beat the rush!
...hand the fifty extra-large over to a bunch of attorneys and cut out the middlemen?
"How many light bulbs does it take to change a person?" --BMcC-->
PIPE deals (Private Investment in Public Equity) are the very last worst source of funding for a company. The deal generally screws the shareholders out of a lot of the value of their firm. Their back is up against the wall, and the share price REALLY needs to come down from where it is.
And, correct me if I'm wrong, the same place where a father thinks nothing of continuing his son's allowance money when the young man decides on a field trip to Yemen, and points east.
Luke, help me take this mask off
If the stock price rises, the short position and the converted shares cancel each other out. If the stock price falls, the shares are never converted, and investors profit by an amount equal to difference in value between the series A and the common. (Potentially doubling their money if the company is liquidated and there is enough to fully pay the Series A, but no money left over for the common shareholders).
That said, I doubt that the investors in this offering are immediately planing to hedge their position. In fact, they probably signed agreements prohibiting this, and reducing the liquidity of their shares. (This is admitedly difficult to enforce in the case of a private company).
And so, here we are. But I assure you, if IBM were to capitulate and offer SCO the buyout, SCO would take it, because a buyout is what they've wanted all along..
Darl has claimed publicly that a buyout is no longer an option, but then he has claimed a lot of things publicly I hear :)...
.....we are.
Free Mac Mini Yeah, it's
Dominance does not imply monopoly, specially if the dominant product does not impede in any way your freedom to choose another product fit for the same task.
/. , and there area many people dreaming conspiracy theories, but that does not exclude others that are completely misinformed that misunderstand the most basic terms about how the computer industry moves.
This may be
IANAL but write like a drunk one.
Thought folks here might be interested in this story about an angle on that $50 million:
& si d=53813
http://www.itbusiness.ca/index.asp?theaction=61
Wasn't just Microsoft, but the RBC put in a few million too.