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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."
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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
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
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
Apparently they are not just smoking crack.
They are trafficing.
134340: I am not a number. I am a free planet!
it is still very possible that the lawsuit with IBM may have merit
:)
Yes, for arbitrary generous definitions of possible and values of merit less than epsilon.
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- - You can't take something off the Internet! That's like trying to take pee out of a swimming pool.
It was a typo.
They misspelled bye
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134340: I am not a number. I am a free planet!
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
sorry
try this
if that doesn't work, go to google, type in "baystar capital microsoft" it is the PDF link that is for me third down the page.. once the PDF opens, search for microsoft. since october 2002, it looks like they've put 500 million into baystar deals.
every day http://en.wikipedia.org/wiki/Special:Random
Not Just that, their no. 1 investor is Vulcan Capital which is Paul Allen's investment vehicle. Allen was co-founder of Microsoft.
See my journal, I write things there
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