SCO - What have WE Forgotten?

Ed Almos asks: "When trying to examine the SCO affair with a cold analytical eye I can't help but be worried. Over the last twelve months the SCO stock price has climbed from just over a dollar to nearly eighteen dollars and at its peak it was well over twenty dollars. Hindsight is a wonderful thing and if I had invested my life savings in SCO stock last Christmas I would now be a multi-millionaire, examining which speedboat to buy instead of which bills to pay. Even a six month analysis of the stock price shows steady growth from about ten dollars to seventeen, a strange situation for a company which is supposed to be on its last legs. For years I had a friend who worked in the petroleum industry as a deep sea diver. Deep sea diving is one of the most dangerous jobs on the planet and when you looked at Matt's desk the first thing you saw was a wooden sign asking 'what have I forgotten?' When you are three hundred feet down the last thing you want is to find out you have forgotten an important tool, it's bad news all round. Matt lived to a ripe old age so I suspect that the sign worked. We all need to ask the same question about the SCO affair, 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."

Comments

This is nothing new

[koreth]

It's easy to find things to kick yourself about. If you look at the last year -- or any year -- you can probably find 10 investments that would have made you really wealthy if only you'd known about them ahead of time, all of them shady or of questionable long-term value. That this particular one happens to be in a field that you care about just means you notice it, not that it's unusual.

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.

Re:This is nothing new

[tarquin_fim_bim]

The question is; do you want to feel good about yourself or worship at the alter of Mammon. If the soul purpose of ones life is to die with as much money as possible then perhaps one may regret not buying SCO stock. But consider all the honest companies that may be lacking investment due to this anomaly.

Re:This is nothing new

[Tackhead]

> The question is; do you want to feel good about yourself or worship at the alter of Mammon. If the soul purpose of ones life is to die with as much money as possible then perhaps one may regret not buying SCO stock. But consider all the honest companies that may be lacking investment due to this anomaly.

(You don't have make it your sole purpose in life, but could you at least sacrifice a rubber chicken upon the altar of literacy?)

Spelling flame aside, I pay frequent homage and occasional tribute to Mammon. He's a lesser god, but his temple is always a hive of excitement. And it's from that perspective that I'm speaking.

I don't regret not buying SCO. The investment premise is that there's a one-in-ten chance that they'll be able to slip this scam past a judge, and sock IBM to the tune of ONE... BILLION... DOLLARS. (Or that IBM will simply buy the entire company for $500M to prevent the scam from working.)

That's it. If you buy SCOX, you're buying a lottery ticket. A hedge against fraud and stupidity, as it were -- if these dirtballs manage to make their scam work, it's the end of Linux and a very bad omen for the rest of the technology industry. If you're heavily invested in RHAT and NOVL, for instance, you might want to own some SCOX on the off chance that the judge falls for the scam and lets Darl wipe Linux off the face of the earth.

Had SCOX been optionable, I'd have bought put options, several months ago, and every one of those options would have expired worthless, because the scam has lasted a lot longer than I thought it would. But of course, going net short SCOX is just as much a speculation on a judge's ruling as going long SCOX.

The reason I didn't buy or attempt to short SCOX has nothing to do with a hedge against stupidity or speculating that the scam will eventually be unwound and Darl will finally get his much-deserved perp walk.

It's because I don't play the lottery. Either way. There are good and bad companies out there that are undervalued. Buy those. There are good and crappy companies out there that are wildly overvalued. Don't buy those.

SCOX is a crappy company for which there's no way to know whether it's undervalued or overvalued. The risk of going long or short do not justify the rewards.

My position on the behavior of The SCO Group is that they're a bunch of lying fuckweasels who deserve nothing less than a forcible sodomization with a diamond-grit-encrusted Louisville Slugger wielded by SEC Chairman Bill Donaldson himself. But so long as the stock's valuation is dependent upon the presence or absence of Clue Receptors in the neural pathways of a single human being, I have (and will take) no position in SCOX stock.

Re:This is nothing new

[AbyssLeaper]

As someone who has worked in the investment industry for almost 6 years, I have to agree with Koreth on this. A rise in stock price means absolutely nothing. The line traders no little or nothing about Linux, SCO or the dispute. They know what they read in the papers, what the read from Bloomberg, and what analysts say.

Recent news tells us that all of these people can and are wrong sometimes. The fines imposed on the likes of Merrill Lynch and JP Morgan should tell use wonders.

Personally, I'm waiting to see if SCO can produce anything substantial in court, which is where they will live and die with this. Here's my prediction: If SCO cannot produce any substantial evidence to their claims, the price will drop to the sub-$.25 level faster than Bill Clinton's trousers with an intern. ;-)

Skeletons in the closet

[mark99]

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...

Re:Skeletons in the closet

[commodoresloat]

No; that's an advantage of open source: no closet. If there be skeletons, they be out in the open where they can be discovered by anyone looking for them.

Re:Skeletons in the closet

[nathanh]

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...

But it's not the case that a single skeleton would destroy Linux. Judges don't say "wow, in this code base of 17 million lines there are 150 lines that belong to SCOX... SCOX now owns all of Linux". It doesn't work like that. The judge will do his or her best to award fair compensation but revoking the rights of 1000s of Linux developers isn't fair.

SCOX wants an outcome that isn't fair. That's the #1 piece of evidence that what they want is not going to happen. Judges don't like unfair! A contract can even be revoked if the judge thinks the outcome is unfair. There are special legal words like "equitable" that come into play and I admit I don't understand the finer details. But I'm certain that a fair outcome won't involve the judge revoking the rights of 1000s of Linux developers just to uphold the rights of 1 little Utah company.

If there is a skeleton and if it is significant and if the code isn't already in the public domain and if SCOX can prove they have clean hands and if there is no way to remove the code without destroying Linux... only then should we worry. Right now, we haven't even gotten past the first if statement. But that's what SCOX has to prove by Jan 11 (court order, no more delays) and we'll all find out about it roughly 2 weeks after that.

Invalid Assumption

[kaffiene]

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.

Re:Invalid Assumption

[thales]

"Investors aren't often all that smart and a bit of media buzz is often enough to make them invest."

Investors don't buy stock in companies like SCO. Speculators do. SCO stock isn't an investment, it's a wager.

POV

[GnrlFajita]

Point of view - that is primary thing most people forget when looking at things like that jump in share price. If you are working as a stockbroker, or even just an average joe that dabbles in the market, and you see this tech company (that has been around a while) claiming billions of dollars worth of licensing fees for its intellectual property, don't you think it'd be worth throwing a few dollars at them just in case they're right? Especially considering the magic words: 'intellectual property,' 'licensing fees,' and 'tech.'

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.

A key thing to remember:

[odano]

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.

For all you Canadians out there...

[earthforce_1]

Remember BRE-X?

http://geology.about.com/cs/mineralogy/a/aa04209 7. htm

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.

Think Pump and Squeeze

[dmaxwell]

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.

You miss the point.

[AltGrendel]

Are all our ducks in a row?

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.

We forget...

[MrHanky]

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.

Re:SCO

[diersing]

The difference being Enron was in the press after the place was a blaze and smelling of gasoline. Other then a baseball field in Houston, the masses knew very little about them prior to see suits in handcuffs and giant paper shredders on the evening news.

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.

Expected value

[Gzip Christ]

OK, let's calculate out the odds that the market is giving SCO then... The $3 billion from IBM would be a one time deal, and so would just go towards SCO's book value and not their recurring revenue, so let's ignore the $3B for a moment. Stocks are trading at around a price to earnings ratio of 20 now, so multiply SCO's current market cap by 20 and we should get the expected value of SCO's earnings. Their present market cap is $251M which means their expected yearly earnings would be $12.5M. At $699 per license, that means they are expected to sell 18,000 licenses per year. The Linux Counter websites estimates that there are 18 million Linux users. Let's say for simplicity that each Linux user purchases a new computer and needs a new SCO license every 5 years. That would result in 3.6 million licenses needed per year. So the market is giving SCO a probability of 0.005 of capturing the Linux market as it claims it will do.

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.

Re:did you even read the article

[Tiroth]

The article is predicated on the assumption that the stock price means something about the fundementals of the company. I'd say a comment on the realities of speculative investing is on-topic.

We forgot to underestimate people.

[corvi42]

"Never underestimate the power of stupid people in large numbers" says the old cynic, and it is just as applicable in its own way to SCO. "Never underestimate the power of greedy people who can hire lawyers". Sure WE could see that the SCO case was built on hogwash from day 1, so could most of the industry, which is why it has had little or no impact on the use of linux. However, all that aside, its still a way to make money if you can ride the bubble and get out before it bursts. If you feel you're good enough at playing financial chicken with the stock market, then yes, you can make a lot of money.

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.

Re:SCO

[Waffle Iron]

If that were really true, then if you are smart, you should be able to make a killing at the stock market.

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.

Re:SCO

[Astin]

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.

Re:It's not what WE missed...

[Lordofthestorm]

Actually, we do.
I work for an investment bank and IB analysts pull information from EVERY source. What technologists often miss, is that we look at it from a different perspective. Professionals don't care how cool a technology is or how miserable SCO's actions are, they care about the changes in future revenue this could cause, how far that revenue is in the future, the risk associated with achieving that financial goal and the different profit scenarios associated with each level of risk.

SCO might be a bubble, but with the attention it draws, it also has a very solid chance of not being a bubble. The larger investors will be watching this stock VERY closely and would dump it way before you have any idea that SCO is going down. One aspect in their favor for you to consider is that of all of the posts here I don't see anyone giving this argument any credit at all. That's the most dangerous sign I've seen yet and I hate SCO as much as anyone here, but I'm not blind either.

SCO could win this in several ways and no, it doesn't have to be inbred juries. The GPL has never been tested in court, I haven't seen anything indicating that this is 100% reliable. Losing that would be huge and the impact on the open source movement would be tremendous. SCO also might actually have a 'silver bullet' of stolen or misappropriated Unix code. There are good reasons why they wouldn't release this code. If they did, the Linux community would make sure that the offending code wasn't in the next kernal release (which would probably be all of a week in coming) and then SCO could only go after users for past use of their code. That wouldn't generate anywhere near the revenue that they will if they can catch the Linux community cold and then force you to pay them or abandon your IT infrastructure until a patch comes out. That's much more enforcable as well.

In fact, SCO's 'public letters' could all be a smoke and mirrors game, and the code they've released so far to endless ridicule here on /. could be a ruse to make the linux community overconfident and not look as closely as they should.

The author of this original thread had an excellent point - sure it's easy to dismiss them as non-technical people who read 'serious' magazines. But you're missing the point, you're talking about people who have made a LOT OF MONEY investing in companies, it's what they do. If SCO was just smoke and mirrors don't you think some analysts would be crying that? Surely at least one arbitrage firm would be setting up a short position (and yes you can do short positions while mitigating your upside risk). But I don't see any of that - before you accuse the 'other side' of reading misleading press check your own.

Now, you may be right, SCO might be full of it, but after seeing all the posts on this article and not seeing any actually talk about places where SCO might actually have a good point, I'm actually worried now that they might have a much stronger position than I had ever thought. Before this, I didn't really follow SCO, but now I'm very concerned.

The science behind finance and pricing and valuation at the large IB's is just as valid as any amount of technical knowledge you have, just in a different area. And I imagine people have been all over SCO's future and the potential embedded profit scenarios in their legal action and that's reflected in their current price. SCO isn't in the same situation as the internet bubbles, people have seen these types of lawsuits before, they know how to value them, this is not new. This concerns me.

I still can't bring myself to buy stock in SCO, but I'm very concerned know that they might actually have something.

Re:It's not what WE missed...

[greenrd]

I work for an investment bank and IB analysts pull information from EVERY source.

That may or may not be so. Analysts also sometimes lie, as the New York Attorney General recently demonstrated in a successful court case. I won't speculate on whether it's more of a case of ignorance, lying, or a cynical evaluation of the ignorance of the market on the part of certain investors, that has been driving up the price in this case.

SCO might be a bubble, but with the attention it draws, it also has a very solid chance of not being a bubble.

Let's apply Occam's Razor here: I move that they are getting lots of attention because (a) they are sqwarking a lot; (b) they are scaring some Fortune 500 companies, at least temporarily until the CxOs talk to their legal advisors; (c) there is a lot of money and a catastophic harm to the Linux market puportedly at stake here, if you believe SCO.

Attention does not imply correctness. Popularity does not imply correctness.

The GPL has never been tested in court, I haven't seen anything indicating that this is 100% reliable.

Well, admittedly there is a flaky argument prevalent on Slashdot and Groklaw. The arguments runs that if the GPL were "invalidated" it would revert to "no rights to copy", which would kill SCO in punitive damages. Not necessarily. Another possibility is that the court might try to find the "nearest charitable purpose" that is similar to the spirit of the GPL but doesn't break the law.

So that counter-argument doesn't really work. But the problem with your argument is more fundamental. In order to talk about this sensibly we have to speculate on what precisely the judge might try to strike down. No-one, to my knowledge, has put forward a good argument for why any law or constitutional amendment would invalidate any aspect of the GPL - least of all SCO.

Granted, the least popular aspect of the GPL is the copyleft idea. But it is a completely logical fallacy to argue that because it is unpopular with some, then it is somehow legally dubious. Yes, it is perhaps the most likely aspect for SCO to attack. But without a visible chink in the armour, why should we worry?

I think the onus is on you to suggest an actual argument for why the GPL might fail in court.

There are good reasons why they wouldn't release this code. If they did, the Linux community would make sure that the offending code wasn't in the next kernal release (which would probably be all of a week in coming) and then SCO could only go after users for past use of their code. That wouldn't generate anywhere near the revenue that they will if they can catch the Linux community cold and then force you to pay them or abandon your IT infrastructure until a patch comes out. That's much more enforcable as well.

Note that SCO (both predecessors in interest, old SCO and Caldera) has contributed to Linux massively, and even sold it, and continued to offer it for months after evidence of infringement was allegedly discovered. So what we have here is a company spending years giving out its own product for free and misleadingly giving the impression - in a very clear license, the GPL! - that the product being given out is unencumbered in all relevant respects. Even if SCO could persuade a judge that the infringements were not noticed due to gross incompetence on SCO's part, any reasonable judge would give all parties a reasonable grace period to wait for the patch to come out and apply it.

And the law (and IBM's contract with SCO, incidentally) obliges SCO to reveal what code is infringing before it can claim damages. Damages incurred by users prior to that time are innocent infringements, and although they may be technically liable, would any judge in the land award SCO money based on its own failure to mitigate the alleged damages? No, it would not. There is no successful precedent that I have heard of for such abusive rent-seeking towards innocent third-

Have we been trolled?

[einhverfr]

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.