Slashdot Mirror
SCO - What have WE Forgotten?
"Over the last eight months I have read countless posts on Slashdot regarding SCO and most if not all of the posts view the scene with rose-tinted spectacles. Promises are made that SCO will be buried and that McBride will find himself in prison, yet they are still there and McBride is still in charge. The men and women who play the stock market on a regular basis are no fools and something unknown to Slashdot readers made the SCO stock price rise by 2.4%, on December 26th, over half a days trading. If someone buys a stock they expect the price to rise, so what have WE forgotten that could be good news for SCO investors? The principle of 'many eyes' has been used by the Open Source movement before. Thousands of people examine source code, submit patches, and ensure that we give the best software we can to the community at large. Bugs are announced and fixed within hours and all of us know that this methodology provides a better solution than that offered by closed source products. We now need to apply the same methodology to the SCO problem, all of us need to consider what we know about this sorry affair and how we can legally contribute to the downfall of the SCO Group.
SCO have been ordered to produce their evidence against IBM by midnight on January 11th, 2004. This gives us [five days] to make sure that when the IBM lawyer marches into court he has a spring in his step, knowing that he has every Linux user on the planet behind him. THEN we can talk about SCO being buried, but not before.
Thank you for your time and a Happy New Year."
Trouble is, you can also find 100 investments that looked just like the great bargain-basement opportunities, but went from low-valued to zero-valued during the same year. Nobody knows for sure which ones are which until after the fact. Some people are better at guessing than others; those people go on to be successful mutual fund managers, but even the successful ones get it wrong a lot of the time. They keep making money because they have their funds spread out over a lot of stocks, not because they have crystal balls in their closets.
Here's an interesting fact: Very few stock funds, even the successful ones, outperform market indexes over the long term. Lots of high-profile funds do really well for a year or five but then have a lousy year or two and lose all their gains relative to the market as a whole.
If you want to build wealth trading stock in public companies, history says the most successful strategy is to buy a wide, diverse portfolio. Keep buying into it over time, whether the market is up or down ("dollar cost averaging.") Then ignore the people who happen to get lucky on a particular stock pick -- because you know if you try to do that, you're much more likely to end up broke than rich.
I personally find it hard to believe that there are NO skeletons in the Linux kernel closet. That is perhaps one of the advantages of closed source. Deeper closets...
that this whole SCO thing is a lot like the .com fiasco. The craze may still be pumping those stocks, but we all know it's eventually going to burst. This is no different.
Buying a Dell computer is equivalent to dropping the soap in a prison shower.
yup...groklaw
You're assuming that stock prices reflect the "value" of a company - they don't. Investors aren't often all that smart and a bit of media buzz is often enough to make them invest. Media buzz != sound financial investment.
The fact that SCO is listing higher is an indictment on the mentality of investors not a reflection of the soundness of their legal case.
It doesn't mean anybody has 'missed' anything, just that the people that invest in SCO are not doing so based on the technical or legal merits of its lawsuit.
When we remember we are all mad, the mysteries disappear and life stands explained.
Mark Twain
If any organization got as much press as the SCO, regardless of whether they did anything or not, they're stock would rise in value.
Too true! Look what it did for Enron...
Oops
Come now, the stock market is legalized gambling these days. It's a nice easy way to invest in a company. Investments are risks. The stock buyers are taking the risk that SCO is successful. I mean, what if they were? Certainly their stock would be worth probably what? 1000x current with actual Linux licensing fees?
Hell, do you know anyone who wouldn't take 1000 to 1 odds when the American legal system is involved?
In many cases (especially with tech stocks), stock price has *nothing* to do with how well or badly a company is doing. In fact, if a company gets a lot of press, which SCO has, it often causes a lot of people to buy the stock, which in turn causes the stock price to go up. Was there really any good reason to be investing in the company? Probably not. Another example of an over-inflated tech stock, that will probably crash like so many other have.
We have forgotten to be humble.
We have forgotten not to act like those who we dislike.
We have forgotten to take the high road.
And this includes letters and statement from leaders in the community, as much as ACs on Slashdot.
"If you want to improve, be content to be thought foolish and stupid." - Epictetus
1) Legal wrangling always has some uncertainty involved. If SCO has a 10% chance of winning the case, they get $1 billion. A 2 Billion billion dollar settlment times .1 is 200 Million, which is around
their market cap.
2) Let say that investors fall into 2 categories, people of the opinion that SCO will win, and people who are of the opinion that SCO will lose.
The first set buy SCO stock, thinking their investment will pay of 10x. If they're wrong, they'll lose the investment. The second class of investors have to short sell the stock, especially since options don't seem to be available.
The second class of investors have a much worse situation. They can double their money, but if SCO wins, they could lose a great deal of money, in theory there's no limit. What's worse is that if there's a legal victory, the stock is likely to spike, making the possibility of cutting your losses before they get too bad difficult. The current trend is also discouraging. The stock has been slowly gaining value over the months. This would mean a short seller will have to keep pumping money into their initial investment, waiting for the moment when SCO's stock crashes.
If you fall into the second camp, I think the risk is just to vast and the payout too far away for people to jump on.
OTOH, buying puts looks like a much better deal, but they don't seem to be availible.
Look at how fast SCO execs (the people with the real knowledge of how good their case is) were DUMPING their stocks.
Lots of people buying stocks are fools. Look at how many of them lost money during the "dot com boom".
The main problem in the next year is the environment that the SCO/IBM case will play out in. If you're rooting for SCO, vote for Bush.
You are being MICROattacked, from various angles, in a SOFT manner.
You can still make money off of SCO's stock price climb if you take a big risk.
Short their stock.
The truth has a way of shaking out, and when the current SCO hype is undone and the price plumets to a fair value, you will cover your short and buy a speedboat or two (I like Donzi).
I do not often short stocks, prefering to avoid the risk, but in this case...
Invest at your own risk.
~8^]
Remember BRE-X?
9 7. htm
http://geology.about.com/cs/mineralogy/a/aa0420
You could have made a mint on it if you bought in at the right time. The stock went into the $200 plus range, then became worthless over a period of a week.
History repeats itself.
My rights don't need management.
You know, after reading this post I was shocked. I don't track SCO at all, and I don't follow the case, but I assumed from all the derisive posts I'd read here that SCO's stock was in the dumper. I wonder if that's revealing.
/. Just because we want something to be true does not make it so.
The parent invokes the "many eyes" image as if that will necessarily mean SCO's downfall. But the parent implicitly acknowledges is that there are ALSO "many eyes" - in the market - actually, make that "many many eyes" that are scrutinizing the case and that seem to be voting that they believe there IS merit to the case.
There's several possibilities here, one is that the smart money's just playing up the price until every-day-joe jumps in and buys, at which point the smart money will dump it. Given the length and depth of SCO's rally, I think this seems unlikely (but I've been wrong many times before).
Another possibility is that maybe - just maybe - the market knows more than Slashdot zealots know - or will let themselves admit. Maybe a lot more companies than we know are paying SCO's licensing fees. IANAL, but maybe their case has much more merit than you would guess from reading
A third possibility is that SCO's price rise is just an unhappy coincidence completely unrelated to the legal action. Who knows, maybe the case will fall flat on its face and SCO will go in the crapper as so often predicted here. The market has been wrong many times before.
But one thing is clear, you can't get a good sense of what is going on by reading the opinions of chauvinists - like, say, here or on any of the forums populated by people who've gotten rich or hope to get rich holding SCO.
This is not strictly speaking a pump and dump. I call what SCO is doing "pump and squeeze". SCO is very thinly traded. That means most shares of SCOX are held by insiders and institutional funds. Only a small amount of stock is being sold on the open market. Small buys and sells of the stock move its price wildly. This means SCO can't just dump their shares on the market and make a killing. The price would drop too rapidly for them to move it all at a good price. What insiders can do is register planned sales of stock with the SEC and time their press releases to shortly proceed those sales. This allows them move chunks of stock at the high rate. Anytime the price dips too low for public consumption or a planned sale, they can make another outrageous announcement and pump it back up. The longer they have to unload their stock, the better this works. This is why they do everything humanly possible to delay the IBM and RedHat suits. Either one of those coming to a quick finish would destroy the pump before it finishes extracting money from the market.
They can also use the paper value of the stock as collateral to buy things. This seemed to work best by their buying Vultus (another Canopy Group company). In this way, they can allow the Canopy Group to show real profits with real money even though its really the Canopy Group shuffling things around. It would be risky for them to acquire outside companies this way since it would expose their scheme to more parties who either want their cut or sue them as well.
I think the core of the question is not stock value, but is there something about the overall situation that we are missing. Is there something that we are overlooking that might lead to a "gotcha" by McBride and crew that we can prevent now.
That is a question well worth pondering.
The simple truth is that interstellar distances will not fit into the human imagination
- Douglas Adams
This article wasn't about stock tips and I have no idea why you chose to talk about it. The author was just using SCOs stock as an indicator that the company is not going to lose the court case like everyone else assumes will happen. And that the linux community should be worried, and help out.
Anonymous Cowards - Oh God, How I hate you
...don't take investment advice from slashdotters. They think that everyone is migrating to Linux and Open Source.
Ah- so your whole argument is based on unproven allegations of what McBride could be doing?
In that case, I think Howard Dean should be arrested because he could be shoplifting gay pr0n. That would explain a lot of his crazy behavior.
SCO has had a lot of press releases that apparently have nothing to do with the case. They sued IBM for breach of contract and copyright infringement. "Lots of Unix code has gone into Linux." That is the file system JFS, NUMA and RCU, and some SMP stuff.
JFS was originally written for AIX, then rewritten from scratch for OS/2, and then ported to both AIX and Linux. So it's the OS/2 version we have in Linux now. I can't see how SCO is going to pull this, and I don't think they know themselves. If the court decides SCO owns the rights to JFS, it would be like IBM worked for SCO under a slave contract (do slaves have contracts?). Everything that touches Unix would be the property of SCO. They would never sell another license if that happened -- if the GPL is viral, SCO's license would be alienesque (like Ridley Scott's Alien, that is).
So SCO is threatening everyone else too. They want $3.50. I mean $699. If anything that has touched Unix in some way is their code, the fact that IBM has dumped some such code into Linux would make Linux their code too. So the case is absurd. Or it seems to be. It looks like Nigerian scam-spam: It's far too good to be true (for SCO's investors: if they win, they own the world), and it probably isn't. But with the media coverage SCO gets, at least some people will be stupid enough to buy stock.
In the meantime, maybe SCO actually has a few extra cards up their asses^H^H^H^H^Hsleaves, and maybe they actually have a case. But it's not the same case they play through the media.
Orrin Hatch makes me embarressed to live in Utah :/
SCO is a catch phrase outside of tech circles. I literally had to tackle my mother to prevent her from investing. She argued about them being in the press and once the lawsuit was settled the advice she was getting was they'd triple in value. After shedding some light on the grounds of the lawsuit and how I felt about the facts of the case she understood why I freaked out. But then again, just because thats how I feel doesn't mean the judge/jury won't find in their behalf.
I'm not claiming to have any more information then any other casual observer to all this, but to answer the question of why is the stock price rising?, in my mother's case, its because some dumbass calling himself a stock trader said there was a buzz and is forcasting the stock going through the roof after they win some lawsuit they're part of.
Let's take a different approach and assume that if SCO wins its case, everybody will stop using Linux. At that point, SCO will be worth its cash on hand. Ignoring whatever it needs to shell out to lawyers and Satan, $3B in cash would give a $3B book value and a $3B market cap since they would have no revenue. In that case, their current market cap is 1/12 of that, so the market is giving them a 1/12 chance of winning. That's a lot better than the 0.005 probability, but I still feel much better being on the 11/12 side.
Disclaimer: this are back-of-the envelope calculations. Please do your own math before drawing any conclusions and please share the results here.
Clearly investors are not blind to SCO's situation. They are a sinking ship and are trying to rescue themselves anyway they can. Indeed, I believe from the beginning, their strategy was to try and convince IBM that buying SCO was the cheapest solution. I say this because these type of investors are not interested in a long drawn out court battle. It will take ten years to sort all this out, which is far to long for the typical large investor.
Furthermore, evidence to the buy me so I do not hurt you tactic can be found in overtures that have made towards Goggle. Simply put, Goggle is looking at $10+ billion dollar IPO which could be severely harmed by a lingering intellectual property lawsuit from SCO. So what does SCO hope Google will do? Why buy them with some pre-IPO shares and end all the legal problems. Guess who makes out incredibly well the day of the IPO by selling their shares?
Other than picking a fight with IBM, they have done nothing but post press release and send letters to create FUD in the market. So what to do? Get back to work, ignore SCO. Do what go us here in the first place -- write code, solve problems, use Linux, and plan world domination
HPC for Primates. Read Cluster Monkey
SCO is claiming that the SystemV contract specifies that they retain control over everything developed for SysV Unix
But if you follow what's going on (I read GROKLAW regularly) you see that SCO is just plain in flail mode. IBM's version of the SysV contract has an appendix that says "but anything IBM invents, IBM still owns." Whoops, there goes SCO's whole claim to JFS and just about everything else.
Meanwhile, SCO has tried to admit very vague claims, and the judge didn't permit it. So SCO has to produce specific claims. SCO also tried to demand a huge pile of stuff from IBM, and the judge didn't go for that, so SCO can't go fishing, looking for something of which to accuse IBM.
This is IBM. They are careful with contract stuff and IP stuff. SCO might manage to find some little point that IBM didn't handle 100% perfectly, but IBM will absolutely destroy SCO's main claims, and IBM's counter-suit against SCO will be enough to destroy SCO itself.
SCO has done a bad enough job in the court so far that it may not take 5 to 10 years before this gets decided in IBM's favor. The biggest issues might get thrown out completely before the case even goes to court! If that happens, the SCO stock price will plummet.
steveha
lf(1): it's like ls(1) but sorts filenames by extension, tersely
Enron is actually an excellent example.
They eventually collapsed, but they were walking dead long before that. Because rich friends have other rich friends in powerful places. All of the executives who pump-and-dumped the company, they should be flat out tortured to death. One might well be able to link their manipulation of energy prices in california to at least one death. But honestly, the economic toll was much greater than any life.
Where the rubber hits the road, the economy runs on trust, trust between people than things are reliable as they are said to be, trust that they will perform as expected. When people betray that trust, a betrayal which hurts everyone everywhere. It does diminish us as a species. It makes us all weaker. Those betrayals should be answered with punishments that are cruel, unusual, and inhumane. The sins of the fathers should be visited upon his sons and daughters. Is it their fault, no, of course not. But no success, no joy, nothing to love should remain as proof of the life of a person who so wronged everyone.
But in that same vein, we value things like integrity, in words only. We don't punish rich people. Including Martha, she's not going to be swinging a 20 lb sledge making the most darling gravel the prison system has ever seen. McBride isn't going to jail. He'll just be an executive consultant for other companies. It's no seat on the board. But like OJ's in ability to get the best tee times, it is in its own way a prison without bars.
Didn't SCO need an investment to keep their attack-lawyers paid enough to tide them through. Would it be enough to pay for 5-10 years? Some of their "lenders" can even pull their funding if they don't like the way things go.
The BS from SCO could certainly last a long time, but how long can they afford the lawyers required to face IBM-et-al before they end up with moths in their pockets?
These are the same dimbulbs who gave us the tulip mania a century ago ($3000.00 for one bulb?!?)
Most investors ARE stupid. They follow the herd. They get less than the average return, because, when those margin calls come in, they HAVE to sell, unlike the large institutional investor who can ride out the dips. On average, the little guy loses, and the big guy gains. So, what else is new?
As to the original question - What have we missed? NOTHING. We're talking about a company where their legal counsel doesn't seem to be able to distinguish between patent law and copyright (should make him feel at home here on /. :-), and doesn't know that your statutory right to make a backup copy of ANY software is a minimal right that doesn't include greater rights (a la the GPL and multiple copies). The only thing we're missing is a poop-and-scoop to clean up after their shit.
The question was stupid. Okay, I'm done ranting.
Right, and he could also be laundering money for colombian drug lords.... or the russian mob, or running a prostitution ring out of Salt Lake City....
But unless you have some way to actually back up what you are saying.. it's all just absolute fantasy.
If he were doing that, especially in something this public, he would be risking personal financial ruin and prison time... despite what you all may think, do you think Darl is a stupid retard who doesn't know how things work?
The answer is something I've known for a long time: the stock market has ABSOLUTELY NOTHING to do with reality! It's a terrible indicator of the health of a company or the real strength of our economy. When I'm President, the first thing I'll do is shut down Wall Street. All corporations will become public non-profits, and investments will be treated as loans to be paid back with interest, not perpetual debts that can never be paid off.
Vote Krumwiede in 2012!
You should read a WW II history book. Specifically, look up Russia.
What a lot of nonsense. Intellectual property is, on the whole, a great boon to society, although it's undeniable that the privelege can be abused. I wonder if those people who are so critical of IP rights have just never produced any of value.
I think what at least some of the investors know, and we do not, is The Bigger Idiot Theory. In real estate, you sometimes buy a property and then find out it's either overpriced, or a dog. That's when you start buffing up the property and looking for a bigger idiot than yourself.
It's entirely possible that many of these traders don't know or care if the SCO arguments are valid. They could well be banking on finding the bigger idiot before the day of reckoning.
Envy my 5 digit Slashdot User ID!
What WE forgot was that just because something has no technical merits doesn't mean it can't have some short-term financial merits. The same thing was true of the dot com bubble. Ultimately most of the businesses being developped were nothing stable, and couldn't survive long or turn a profit. That is irrelevant, however, when it comes to 'herd mentality' - because when you get enough people together they are governed by their lowest common faculties - which normally means desire and fear. Even investors who knew that the dot com thing was an artificial bubble would jump on the bandwagon, because if you could get out soon enough, you could really clean up nicely. Likewise, you don't have to believe that SCO has any chance in hell of winning, you just have to gamble on the greed of many other people and hope that it might cause enough noise to get you rich before it bursts.
There are a thousand forms of subversion, but few can equal the convenience and immediacy of a cream pie -Noel Godin
Not so. Most people who play the lottery are stupid, too. But no amount of smarts is going to help you make a "killing" playing the lottery.
The stock market is similar to the lottery, except that the expected payback is usually somewhat above 1.0, instead of the 0.5 or so payback that most state lotteries yield. (I assume everyone here realizes that the an almost fraudulently advertised $100M jackpot figure does not represent acutal present value.)
Sure, some people do much better than average in the stock market, just as some people get lucky and win the lottery. However, much of that is dumb luck, and most of the rest is due to having inside connections and privileged information you can't access as a member of the general public.
Members of the public don't have enough information to reliably pick stocks, just as they can't predict which pingpong balls will pop out of the lotto machine. Thus, your best bet as an indivdual is to treat the stock market the way the state treats its lottery: diversify enough so that the individual gambles are irrelevant and depend on the overal odds to bring you revenue.
What press? Slashdot stories don't count. Just did a Google news search on SCO... not one major media outlet on the first two pages. CNET was the biggest, and that's still directed towards techies. I work in a trading firm, and nobody I work with (granted, I'm not in the tech analysts area) have even HEARD of SCO, let alone the ongoing lawsuits and notices.
Trading volume on SCOX is THIN. about 1/20th of what IBM trades, not even 1% of Nortel's daily volume... hell, VA Linux (or whatever it's called now) trades more than 4x as much stock.
So no, there's is almost no mainstream press about SCO, we sit here with CNBC on all day and I don't think I've seen SCO mentioned once since this whole thing started. I've tried to point it out to traders around me, and they don't really care about the company one way or the other. Heck, the Reuters newsfeed on SCO barely has anything other than reports of large individual trades or press releases. But from Slashdot, you'd think that they've got major front-page headlines on 5 major newspapers, and an expose running on CNN 3 times a week.
So what you're getting is a small number of small-cap technology traders who have seen that this stock has skyrocketed in the past year, and they keep trading it in relatively small amounts. Speculative investors are seeing this as a company that's going up in value, and they want to get in while they can. When will the bubble collapse? When they lose in court, which could take years still, through stalling, appeals, etc.. Throw on top of that the very real possibility that they could actually WIN something if they get the right judge and convincing enough "experts" on their side. Even if they DO lose, since so few people outside of the tech circle care, the price could remain inflated for some time with the right amount of spin on the part of SCO, and investors trying to salvage their investment.
Just remember that just because everyone on Slashdot knows about it and knows it's bullshit doesn't mean that the rest of the world has a clue.
- In hell, treason is the work of angels.
More to the point, market caps are misleading.
This only tells you what people are willing to pay for a stock. Enron, the day before their collapse seemed invincible. (I know, the collapse was somewhat gradual, but non-the-less.)
This was touched on by people higher in the story, but in many cases, stock prices rise, not because the company has and brings value, but simply because someone else is willing to buy the stock for more. This is how ponzi schemes work. They "work" great as long as things are going up. When the weight of the fraud crashes, though, it's murder.
IMHO, IBM has much more intrinsic value and brings said value to the shareholders and company. MS, on the other hand, has loads of people who are willing to pay inflated prices for the stock.
In short, Market Caps may be an easy metric to use, but not very valueable.
Cheers,
Greg
I don't think it's what they know; Rather, it's what they don't: IMHO not many people who deal stock for a living actually read /., or other "grass-root" publications. They read "serious" magazines or web sites, and the kind of press SCO has been getting there is very encouraging...
SCOX is rising on a wave of disinformation, carried forth by people who don't have a clue not because they're stupid, but because SCO runs an extremely well-managed PR campaign.
First of all, SCO's case is not necessarily far-fetched. SCO is running two cases, that by popular perception are merged into one. First, it has a contract dispute with IBM. Second, it has a copyright dispute with the Linux community and kernel team. The second dispute has been pretty well debunked by the community, by Groklaw, and similar. We don't need to worry about it directly.
However, it is quite possible that SCO does have a valid claim in the first dispute against IBM. As a community, we do not know the details of the contracts, and it is quite possible one of the contracts has an appropriate loophole. Legally, this claim should not effect anyone outside of SCO and IBM.
However, in reality, there is a painful problem. Since the two issues have been linked closely in the minds of the world, if SCO wins the IBM lawsuit, they will openly state "we were right," and demand royalties. Most people won't understand the difference between the two disputes, and will pay up. The GNU/Linux community will lose a lot of face, and SCO will generate a lot of licensing revenue.
It's certainly a gamble for SCO, but depending on the details of the IBM contract, the odds in the gamble might not be that bad.
At the same time, investors operate on the law of large numbers. If SCO has a 1% chance of being worth 3 billion, it will have a market value of about 30 million. Institutional investors keep large, diverse portfolios, so while each investment like this is a gamble, overall, you lose 99, win 1, and come out ahead. But if you have 500 investments, you're pretty much guaranteed to win a few.
Ok, I am assuming that you are trying to indicate whay institutional bankers are still investing in SCO, just as Bank of America, et al. were doing with Parmalat up until very recently. But this viewpoint overlooks a large number of issues that I don't see an institutional banker with ANY legal screening missing (you do legal screening of these claims, right?). OK, even without legal screening, some analysts have been saying some interesting things about SCO. IANAL, however, though I read court cases as a hobby.
The first is that the GPL being tested in court doesn't do a darn thing for SCO. Either they lose (and probably go out of business), or they win and face massive lawsuits by Linux kernel developers over copyright infringement. Yes, without the permission from the GPL, it is SCO who is infringing on copyrights not only by IBM and Red Hat, but also Linus Torvalds and THOUSANDS of other contributors.
Secondly, analyists HAVE been saying that these lawsuits undermine SCO's former core competency as a software manufacturer.
Laura DiDio aside, I think analyst reaction to SCOG has NOT been as positive as you make it out to be. And Laura DiDio has claimed that the lack of indemnification is what holds Linux up in the enterprise while failing to mention that no other enterprise OS offers such indemnification. Interestingly Linux as offered by HP now does which should by that measure give them a strong advantage in the marketplace.
Third, SCO did not fare well in the last round of hearings. I have generally used pretrial hearings as a general test of how the judge views issues at hand, and the judge has not reacted well to what IBM has argued are sets of delaying tactics and discovery requests without specific allegations of wrongdoing (i.e. fishing for evidence). SCO will have had 7 months to prepare their response to the discovery request in January, and it will be interesting to see what they do or don't put forth.
Finally, the fact that SCOG was an active contributor and distributor (even after the lawsuit was filed!), they cannot argue that they inadvertantly distributed their trade secrets under the GPL. No one believes that.
SCO IS A BUBBLE. And the SEC is now investigating three banks in conjunction with their handling of Parmalat (including Deutchebank and Bank of America). SCO may be next.
LedgerSMB: Open source Accounting/ERP
It's very simple, really: A lot of people think IBM will ultimately capitulate and buy SCOX out, win or lose. If that happens, then they get paid (i.e., their stock is bought out.) This kind of thing happens on Wall Street all the friggin time.