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SCO Investor Changing the Deal
Kurt Wall writes "According to this story, recent SCO investor Royal Bank of Canada appears to be changing its tune. RBC, along with BayStar Capital, invested $50 million in SCO, but now has changed the deal to give it veto power over the payment of the 20% contingency fees SCO's IP lawyers will get. As to the wisdom of the investment itself, an RBC spokesman would only say that the 'investment in SCO is passive, made to hedge an economic exposure resulting from client transactions.' Such as the SCO case collapsing, perhaps?"
SCO has admitted that its action is designed to shore up sagging sales by wringing revenue out of its rights to Unix, an older operating system from which [something is missing here] Linux was derived.
Shouldn't the blank be filled in by the words "SCO contends"? As in, "Unix, an older operating system from which SCO contends Linux was derived."
I thought the whole point of the defense against SCO is that Linux is Unix-like, but *not* "derived" from Unix. Unless I'm wrong (a frequent situation), the newspaper article has swallowed a little too much FUD today.
Stressed? Me? Of course not. Stress is what a rubber band feels before it breaks, silly.
Hmmm...what do they need $50MM for? If IBM (and the rest of the planet) are about to fold and have to pay huge bux to SCO, why do they need the invesment? Even if the IBM claim goes to trial, it will go to trial within a year or two so I would only imagine that SCO needs a couple of years worth of burnrate. It just seems to me weird that a company that only is losing a few hundred thou a year needs such a big investment.
IBM scored a surprise legal victory in that court case when a judge ruled on Friday in favour of IBM in SCO's trade-secret violation lawsuit against the computing giant.
Huh? Even SCO wasn't surprised by what happened last friday in court.
-MDL
Happy meals fund terrorism
They call the investment "passive", but they have control over SCO's biggest asset, the litigation division. They're watching this like a hawk, just as we are.
sigs, as if you care.
From earlier discussions on Slashdot, I gathered that there isn't much SCO stock available on the terms that let you short-sell it; and what is available was already grabbed by other short-sellers.
But there is one big problem with short-selling SCO stock:
Short-selling doesn't work unless you can predict when the stock will go down. Given that no rational and well-informed person would buy SCO stock, I'm stumped to guess why it's as high as it is, and twice as stumped to say exactly when it will go down.
You might be all set to short-sell SCO stock, and then Darl McBride might announce that SCO actually owns UNIX, BSD, Windows, MacOS, and CP/M; SCO stock doubles overnight and your short-sale, instead of making you money, loses you a lot of money.
steveha
lf(1): it's like ls(1) but sorts filenames by extension, tersely
Unfortunately as a result, they're helping prop up the stock price of an really awful company.
Vote Quimby.
The story notes, "IBM scored a surprise legal victory in that court case when a judge ruled on Friday in favour of IBM in SCO's trade-secret violation lawsuit against the computing giant..."
I'm certainly no legal expert, but was this really that much of a surprise? From most legal info I've read about the case, it seem fairly accepted that SCO is really just fishing.
This is truly a remarkable troll. You sir, are an inspiration to us all.
Based on upvotes, Ageism is the only "-ism" Slashdotters care about and think isn't SJW
Given that no rational and well-informed person would buy SCO stock, I'm stumped to guess why it's as high as it is, and twice as stumped to say exactly when it will go down.
/. would have you think, no one is 'well-informed' about this case. It is a huge tangle of intellectual property law, contract law, and source code. No single person really knows what SCO can prove, what IBM can prove, where the code came from, where it is now or who owns what. There's plenty of speculation, and I personally wouldn't buy into SCO, but investors like to gamble -- and given the fact that SCO (David) is taking taking on IBM (Goliath) I guess the conclusion is they must have some kind of case. Darl's putting up a BIG front, and that's what investors look for.
The fact is, despite what
Maybe partying will help...
1."...Unix, an older operating system from which Linux was derived."
This is extremely poorly worded. Isn't this precisely a contention of SCO that is hardly widely accepted?
2."SCO had been pressuring the courts to force IBM to reveal its Unix and Linux source code..."
The author apparently does not know that IBM has already "revealed" its Linux source code, since the code is freely available under the GPL.
When you go long, your potential loss is limited, your potential profit is unlimited.
When you go short, your potential profit is limited, your potential loss is unlimited.
The thing about things we don't know is we often don't know we don't know them.
Pull money from an index fund to avoid owning 0.000001 SCOX shares? Do you know what an index fund is?
Liberty you never use is liberty you lose.
While this particular arrangement is uncommon, your objections to it would apply in any case of a stock issuance. Whether SCO's lawyers are paid in cash or in stock makes no difference to the shareholders.
Yes, of course the CEO can do this. If it is obviously not in the best interest of the shareholders they can sue him, but it could easily be in the best interest of the shareholders.
This deal was disclosed in exactly the fashion that it should have been as far as I can tell. And it was a judgment call on the part of the CEO. Exactly the type of thing he's paid for.
There are no trails. There are no trees out here.
I don't think it would be Microsoft. They have lots of money marching in the front door. Why would they need to sneak money in the back? They could be trying to add legitimacy to investment in SCO, by using a seeming unbiased party. After all, if most of the recent investments in SCO all had a whiff of microcash, it wouldn't be the best for legitimacy.
True genius is grasping a situation like a peice of fruit, and peircing it just right so that it drains dry.
This investment isn't as speculative as it might first appear. RBS have $30M worth of preferred convertible shares. They can happily short against these to reduce their risk, lock in some cash profits, then as long as SCO doesn't go bust they collect 30% interest over 4 years. This deal has been set up so that BayStar and RBC will at least get their money back, even if SCO rapidly goes bust, and they do very very well if SCO hangs on for 3 years.
This is the only way junk like SCOX can get cash funding.
Shorting out a shock means you SELL borrowed stocks and at a later date, returned the stock by buying it back from the market. If SCO is to collapse or go backrupt, you won't need to return the stock you borrowed since there will be no stocks to be returned.
In US, you can easily buy enough major firearms to wipe out your neighbourhood but a few little fireworks are banned.