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Baystar Confirms Microsoft Behind SCO Investment

Bruce Perens writes "Business Week has confirmed that Microsoft arranged the Baystar investment in SCO. A managing partner of Baystar says the call wasn't from Gates or Ballmer. But it wouldn't have to be, would it? Obviously, there's more investigation to do." Reader skreuzer writes "Yahoo Finance is reporting that SCO announced that the company's board of directors has authorized management, in its discretion, to purchase up to 1.5 million shares of SCO's common stock over the next 24 months. SCO has approximately 14.4 million shares of common stock issued and outstanding. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes." Newsforge (which is also part of OSDN) is also following the story.

51 of 468 comments (clear)

  1. This part is not unusual. by GMontag · · Score: 4, Interesting

    A managing partner of Baystar says the call wasn't from Gates or Ballmer. But it wouldn't have to be, would it?

    Nope, it would not have to be a "tip-top" person, just has to be a Principal or someone with delegated authority from a company officer to be valid. This is not anything uncommon at all.

    Yahoo Finance is reporting that SCO announced that the company's board of directors has authorized management, in its discretion, to purchase up to 1.5 million shares of SCO's common stock over the next 24 months. SCO has approximately 14.4 million shares of common stock issued and outstanding. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.

    This is nothing new, odd, illegal, unethical or strange either. It is a common business practice of publicly traded firms.

    Now, the underlying story is where the problem sits, not with the scenery.

    1. Re:This part is not unusual. by cmoss · · Score: 5, Interesting

      They say that they are initiating a buyback because the stock is a good value.

      This confilicts with the fact that ALL recent insider trades are sells.(after exercising options)

    2. Re:This part is not unusual. by vinsci · · Score: 5, Interesting
      Yahoo Finance is reporting that SCO announced that the company's board of directors has authorized management, in its discretion, to purchase up to 1.5 million shares of SCO's common stock over the next 24 months. SCO has approximately 14.4 million shares of common stock issued and outstanding. Any repurchased shares will be held as treasury stock and will be available for general corporate purposes.

      This is nothing new, odd, illegal, unethical or strange either. It is a common business practice of publicly traded firms.

      It would certainly be unethical if it's just the Canopy Group's way of transferring money from SCO to Canopy, in exchange for soon-to-be worthless SCOX shares. That's not unlikely, seeing what kind of deals Canopy has done with the companies they own in the past.

      That might even count as inisidertrading, depending on circumstances we can't know about, so chances are it's illegal, too.

      I guess they could defend themselves by saying it's been common knowledge for a long time that SCO is about to go out of bussiness. Of course, then they'd have been lying about their bussiness prospects... Oops!

      --

      Trusted Computing FAQ | Free Dawit Isaak!
    3. Re:This part is not unusual. by Anonymous Coward · · Score: 1, Interesting

      Nope, it would not have to be a "tip-top" person, just has to be a Principal or someone with delegated authority from a company officer to be valid. This is not anything uncommon at all.

      Not really. It may not have even been a "Microsoft" call. You have to remember that execs ARE people first and execs second. A junior exec could have overheard info about the suit and then called to tip off the fund based on personal speculation. His speculation was weighted heavier because of his MS status. ----Speculation over----- Honestly though, I believe it was someone high (just acknowledging the other possibility)

    4. Re:This part is not unusual. by NecroPuppy · · Score: 2, Interesting

      Part of me is wondering who they are going to buy the stock back from.

      Boise is due 400,000 shares.

      If Baystar/RBC provide some or all of it, it's a sweetheart deal where SCO redeams Baystar's investment, costing them nothing (they are just making shares up), and then buys them back, writing off the same expense twice.

      Baystar/RBC get their money, and SCO gets yet another chance to cook the books.

      --
      I like you, Stuart. You're not like everyone else, here, at Slashdot.
    5. Re:This part is not unusual. by k98sven · · Score: 4, Interesting

      Not when they're a couple of quarters away from insolvency. Stock buyback usually occurs when a company with low stock price have too much money on hand and no viable avanue of investement available.

      SCO has $50 million from the BayStar deal, with a redemption condition if the stock goes below ~$8.50 for 25 consecutive trading days.

      In light of that, initiating a buyback-scheme when the stock started dipping close to this mark is completely expected. Losing the BayStar investment is a much bigger loss than what it'd cost SCO to keep the stock price inflated.

    6. Re:This part is not unusual. by indigeek · · Score: 3, Interesting

      This is nothing new, odd, illegal, unethical or strange either. It is a common business practice of publicly traded firms.

      I don't know about unethical or illegal, but it is certainly odd. A buyback occours only when the company feels that the share prices are too low. Now if the prices are low now, they certainly were low a few months back at 50 cents or so. What has changed between now and then which causes the values of the company to grow 18 fold? Even if we assume SCO's lawsuit has merit now, we must then assume that it had merit then.Its not as if Linus added code worth 17 times the value of SCO into the kernel in the last year. And SCO certainly must have known either way.
      So either the lawsuit is odd or the buyback is odd

      I would think this is a simple trick to use shareholders money - the company capital - to buymore shares, thus inflating the prices artificially. This would let the "insiders" sell their shares, celebrate a "going bust" party and go off to the Caymans. And then, it would be both unethical and illegal

  2. Where's the incentive to profit? by monstroyer · · Score: 5, Interesting

    Anyone still denying that FUD isn't an instituted marketing practice of Microsoft, even after being convicted of monopolist practices, can now bow their head in shame.

    Business Week is in no way a Linux Zealot and even they confirm that Microsoft enjoys competing on a level far removed from technical innovation.

    What was to happen at the end of these shenanigans? Once the lawsuit is over, where does SCO expect to get it's money? It's not like Microsoft will continue to invest in them once this crap is over.

    And does this come out of the MS advertising budget? Any advertising against our competitors is good PR? There is no way MS could re-coup anything from this other than FUD points. Where's the incentive to profit?

    1. Re:Where's the incentive to profit? by molarmass192 · · Score: 5, Interesting

      Once the lawsuit is over, where does SCO expect to get it's money?

      Dude, SCO doesn't have a long term continuity plan! McBride and his cronies are all set to cash out about this time next year. Once McBride flys the roost he'll probably turn around and sue SCO himself for something like he typically does. The stockholders will be the ones left holding the bag in the end and it's why I still can't understand why SCO isn't a penny-stock.

      --

      Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws-Plato
    2. Re:Where's the incentive to profit? by dnoyeb · · Score: 4, Interesting

      Dude, next year? Everyone but McBride has been selling their shares like nobodies business. The only thing we are waiting on is McBride to sell his. I think he had some restriction on selling, but I believe that is far gone by now.

      SCO is not a penny stock because SCO is a quality marketing (FUD) machine. SCO is not a software company. Once you accept that, their situation makes sense.

      As for the stock holders, the majority of them are institutions at this point. Slight majority though. The stock is so illiquid who could afford to be in it but big players.

    3. Re:Where's the incentive to profit? by njdj · · Score: 4, Interesting

      There is no way MS could re-coup anything from this other than FUD points. Where's the incentive to profit?

      Are you serious? Destroy Linux, and the only current threat to the Microsoft monopoly is gone. Every time a company buys Microsoft instead of installing Linux because of fear of lawsuits, that's more profit for Microsoft. Microsoft had every incentive to fund the SCO lawsuits.

      IANAL, but I'd like to see a lawyer comment on whether Microsoft could be convicted of conspiracy to violate antitrust laws.

  3. CYA time, Mr. Goldfarb by grub · · Score: 5, Interesting


    Mr. Goldfarb is trying to look like an honest man while distancing himself and Baystar from MS and SCO. He readily admits that "senior executives" from MS phoned him but won't name names. He's scared. Leaked documents and an unmanagable conspiracy of silence are forcing him to admit to snippets of truth which paint him and the firm in the best possible light.

    --
    Trolling is a art,
  4. Nail 'em! by Orien · · Score: 5, Interesting

    I hope they finally get nailed on this one. I knew that insider trading would never stick because 1) they sold off a bunch of stock, but the price has only gone up so it wasn't a "sell before it drops" ploy ala Martha Stewart. 2) It was easy enough to say they were low on cash and sold the stock to get equity. Now this whole scandle seems a lot more viable. Let the witch hunt begin!

  5. Guess Who Invests in Baystar? Paul Allen by Anonymous Coward · · Score: 4, Interesting

    Paul Allen is an investor of Vulcan Capital, and they invest in Baystar. There's your connection.

  6. Now every time I read about SCO.. by Channard · · Score: 5, Interesting

    .. I get the same 'nefarious ties' feeling that I do reading about one of Scientology's front groups, eg Narconon etc.

  7. Re:Microsoft bailed out Apple by Jim_Maryland · · Score: 2, Interesting

    Yes, but wasn't that to keep at least one competitor around to show that MS isn't a monopoly? It would be very difficult to defend against lawsuits if you were the only OS vendor for the desktop market.

  8. 3:56 PM - funny you should mention that... by Chordonblue · · Score: 4, Interesting

    SCO painted their stock with quite a few shares starting at 3:55 PM yesterday. Call up a chart on SCO and look very carefully at the last few minutes. The line continues on it's downward pace then all of a sudden *bang* shoots up a few points.

    THAT my friends is desparation! To explain their obvious fooling around they came up with some sort of stock buyback scheme today hoping that no one will notice their tinkering.

    --
    "...Well, there's egg and bacon; egg sausage and bacon; egg and spam; egg bacon and spam; egg bacon sausage and spam..."
  9. Behold the next move from SCOX/MSFT by patrixx · · Score: 5, Interesting

    The ability to run Linux without Linux!
    (http://www.sco.com/products/lkp/faq.html)

    Linux Kernel Personality FAQ
    For UnixWare 7

    What is the Linux Kernel Personality?

    The Linux Kernel Personality (LKP) is a feature of the UnixWare 7 operating system which enables the installation and the direct, native execution of Linux(R) applications. The primary attributes of LKP are:
    Exploit the power and scalability of the UnixWare kernel to run Llinux applications. the Linux Kernel Personality contains most of the RPMs required to execute native Linus applications, but it does not include a Linux kernel.
    Applications compatibility: Linux applications install and run without modification. UnixWare 7 customers now have a powerful tool to assist in the migration from Linux to UnixWare.
    UnixWare 7 feature availability: Linux applications can benefit from the features and options available for UnixWare including a journaling file system, RAID support, and increased scalability, security and reliability.
    Versatility: Users can dynamically choose either environment, Linux or UnixWare 7 or mix both, as needed.

    Didn't SCO suspend its Linux product line?

    Yes. The Linux products were suspended due to intellectual property issues associated with Linux. The LkP feature doesn't contain a Linux kernel, and therefore to the best of our knowledge, there should be no infringement issues. If the prior statement were proven inaccurate, SCO would take appropriate steps. In the meantime, the LKP feature is available to assist customer migration from Linux.

    Why is The SCO Group(R) doing this?

    SCO recognizes that many customers want to migrate away from Linux, but can't afford to disrupt their day to day operations, nor can they afford the engineering resources to port and test the Linux applications in a UnixWare environment. The Linux Kernel Personality addresses all of these concerns. Native Linux applications runs unchanged on UnixWare, which provides the following benefits to the customer:
    Customers can asses using UnixWare in their environment without making costly application program changes.
    Customers who want to migrate to UnixWare, but some of the source code for critical applications they need to continue to run is no longer available.
    Customers are considering migration to UnixWare but are concerned about the risk of changing both the operating system and the application at the same time.

    Does LKP emulate a Linux application environment, much like lxrun?

    No, LKP is not a Linux environment emulator. An LKP installation includes the Linux application environment running on a UnixWare kernel. Unlike the LxRun environment, LKP doesn't contain an emulation layer.

    How can I install Linux applications? Do I have all the tools?

    Yes, you can install Linux applications. Linux libraries and system tools, including the rpm installer, the shell utilities, and the configuration files, are provided in UnixWare 7. The UnixWare 7 installation loads the entire (former) Caldera OpenLinux Server system, with the exception of the Linux kernel.

    How is Linux compatibility provided?

    LKP is a standard feature ofUnixWare 7. LKP and the necessary OpenLinux RPMs are part of the basic media kit.

    Do I get a full Linux distribution with UnixWare 7?

    LKP does not provide a Linux kernel. With the exception of the Linux kernel, however, the entire Linux distribution is installed in a /linux directory.

    Is the use of Linux applications transparent?

    Yes. Linux ELF binaries are treated as first class executable programs. The Linux process coexists with other UNIX processes and shares the system equally. You run with Linux shells and desktops and use familiar Linux tools and utilities. The system keeps track of your environment for you, so that Linux and UNIX functions and utilities do not collide.

    How can I access the Linux environment from UnixWare 7?

    Run

  10. SCO *HAS* To Buy Back Stock by Anonymous Coward · · Score: 5, Interesting
    It's so nice of SCO Group to announce a buy-back program, but you'll note that these buy-backs do not have to occur on the open market.

    1. SCO Group must buy back shares from certain investors because of their stock price and the looming failure to file the PIPE registration.

    2. This is an excellent way for Canopy to liquidate its holdings in SCO Group.

    The average investor won't make a dime, and will likely be left holding the bag on this one.

  11. it's about SEC by wotevah · · Score: 2, Interesting

    I think it is more of a preemptive reaction to the SEC investigation rumours. So that later they could say that they genuinely believed in this, otherwise why would they plan to buy 1.5 million shares.

  12. Recognizing paranoia by Anonymous Coward · · Score: 1, Interesting
    Some distinguishing characteristics. These apply to many situations, not just Slashdot posts.

    Mr. Goldfarb is trying to look like an honest man while distancing himself and Baystar from MS and SCO.

    Ascribing motivations. Somebody wants something. The somebody is always powerful, and the motivation is always malevolent.

    He readily admits that "senior executives" from MS phoned him but won't name names.

    Withholding information equals concealment. It could, in fact, simply be for privacy reasons, but the paranoiac assumes that something is being hidden.

    He's scared.

    Projection. Self-explanatory.

    Leaked documents and an unmanagable conspiracy of silence are forcing him to admit to snippets of truth which paint him and the firm in the best possible light. Persistent belief in conspiracy. Essentially, there is a conspiracy unless proven otherwise; and evidence to the contrary would just serve as further proof of evidence planted for the cover-up, wouldn't it?

  13. Conflict of interest by voss · · Score: 2, Interesting

    It would be interesting to find a shareholder of baystar that opposes the SCO investment, and get them to sue baystar for an investment that is a conflict of interest and not in the best interest of that fund.

    baystar is making investments based on outside concerns and not the fidicuciary interests of their shareholders.

  14. Re:Tell the truth, dammit by fishbonez · · Score: 5, Interesting
    "Contrary to the speculation of Eric Raymond, Microsoft did not orchestrate or participate in the BayStar transaction."

    "Microsoft has no direct or indirect financial relationship with BayStar."

    Those two statements are very close to lies but may just be deceptive statements that omit very important facts. I say this because it actually appears that Paul Allen orchestrated the SCO investment. I say this because:

    1. Paul Allen is a former member of the board of directors of MS and the second largest shareholder. Paul Allen now serves as a senior strategy advisor to top Microsoft executives.
    2. Paul Allen is one of the largest investors in BayStar Capital.
    So Paul Allen is in a position to advise and influence both MS and Baystar. He also has significant financial holdings in both companies. There is no tinfoil hat necessary to draw this connection.
    --
    Frylock: That's not a toy!
    Master Shake: You say that about everything you own. You should own toys. They're fun.
  15. New site logo by gmuslera · · Score: 3, Interesting
    Slashdot News about SCO. Stuff that could matter.

    SCO had done enough merits in slashdot to win its own specific (i.e. no caldera, when they had that name not were so deep in the dark side) logo, section, faq entry, exceptions in slash code and even users-optional tagline pack.

    Even when they lose their lawsuit (that seems less inminent than when all of this started) and the company is closed, buried and sold even the chairs and the pencils of it, still will be for years news about sco and their directors here (i.e. Darl McBride raped in prison, or even die in poverty, from the remember-when-we-roared dept.).

    Anyway, this story is more about Microsoft than about SCO, but well, Microsoft had the merits since the start of Slashdot and if there was nothing done about them yet, maybe never will.

  16. Because They Face No Consequences by MooseByte · · Score: 3, Interesting

    "But why would Microsoft want to back such a chancy scheme? Bad publicity when the case fails must more than make up for the FUD they've managed to spread."

    Because they face no real consequences? They've never had to pay any reasonable penalty for their behavior. Giving away free copies of MS products?!? That's a marketing expense, for cryin' out loud! "Allowing" hardware resellers to add something to the desktop? Oooooh! The pain! Make it stop!

    So what, exactly, does MS have to lose with even such a bizarre scheme as this?

  17. Fight back -- make plain OSS = jobs, MSFT != jobs by fruscica · · Score: 2, Interesting
    From a discussion thread w/ MSFTie Robert Scoble:

    Small businesses create most jobs (A Small Business Administration study found that nearly 77 percent of the 6.9 million jobs created from 1990 to 1995 were created by small businesses).

    Open source software lowers capital barriers to market entry.

    Proprietary software vendors will not create jobs for Americans:

    "Technology companies are seeing a rebound in business, but top executives this week said any jobs added to meet growing demand will likely be in countries where labor is cheaper than the United States."

    Reuters
    February 27, 2004

    So the OSS community should bring out its own heavy artillery, and just RELENTLESSLY hammer home the point that, ON THE WHOLE, OSS expedites job creation, MSFT et al. do not.

    That is a message that will RESONATE, and hence make it politically untenable to allow MSFT et al. to practice such underhandedness with impunity...

    IMHO :-)

    Frank Ruscica 3/6/04; 3:40:29 PM

    Frank, the problem is, that argument doesn't wash completely. Look at Greg Reinacker. He created a new company around Microsoft technology. And he's getting paid for it.

    Most people don't understand how Linux creates jobs when it's given away for free.

    Especially when they are getting fired from their jobs cause WalMart wants their products for less than it costs them to produce them.

    Robert Scoble 3/6/04; 3:53:10 PM

    Robert,

    I lost you there...

    Let's follow the money: if a small company uses LAMP technologies, the money it saves will go toward growing the business -- and hence, will generate jobs (that's how Linux creates jobs when it's given away for free). If the company buys licenses from a BigCo, the above-cited Reuters article tells us the money will not generate jobs for Americans.

    My takeaway, then, is: whenever a small company can substitute OSS for proprietary software, the American job market benefits.

    If Greg Reinacker is building atop MSFT technology for which no OSS substitute exists, he does not embody a true counterargument.

    If he is building atop MSFT technology for which an OSS substitute does exist, he is hurting the U.S. job market...

    Where Wal-Mart fits into this, I have no idea...

    Frank Ruscica 3/6/04; 7:18:54 PM

    Frank: that's a good theory. But, if a company can't afford Windows licenses, don't you think it's likely to offshore its labor too?

    Microsoft money does create jobs. 5000 in the past year alone (mine was among them).

    Also, the argument is that you can get the same done with open source software that you can with stuff you pay for. Really? I didn't know that GIMP is as good as Photoshop. I don't know any print shop that accepts files from an open-source version of Illustrator. There's tons of things that you simply can't do with open source. Also, if you're a small company you probably can't afford a Linux geek to be on staff. When I helped run a camera store, I surely couldn't afford a geek on staff.

    Most of the cost of software is NOT in the acquisition of it. If it were, your argument might have some merit.

    Robert Scoble 3/7/04; 3:04:23 AM

    Robert,

    You wrote:

    >Also, the argument is that you can get the
    >same done with open source software that you
    >can with stuff you pay for.

    Incorrect. I wrote:

    "My takeaway, then, is: whenever a small company can substitute OSS for proprietary software, the American job market benefits."

    Also, to be clear, by 'substitute' I implicitly mean(t): replace at You wrote:

    >if a company can't afford Windows licenses,
    >don't you think it's likely to offshore its
    >labor too?

    From the standpoint of making a data-driven determination, of course all we have to go on here is historical precedent. But the log

  18. Re:I don't get it by thue · · Score: 2, Interesting

    Your post presumes that MS is omnescient. Perhaps they thought that SCO had a better chance of winning that they appear to have now.

    Consider that MS probably got a good deal of their information from SCO. There is no reason to assume that SCO was any more accurate with their estimates towards MS than they are towards us. And MS at the time they made their informed (or misinformed) choices didn't have the benefit of all the information that has become available in the last months.

  19. TrollTech ownership by Anonymous Coward · · Score: 1, Interesting

    Canopy owns part of TrollTech, but the employees own much of it too.
    If Canopy goes out of business, the TrollTech shares from Canopy would be given to the liquidators of Canopy, if I've understood it. For TrollTech, it would be a change of ownership, not a bankruptcy.

  20. Re:[OT] Re:Darl at McDonald's by the_flatlander · · Score: 2, Interesting
    The executives at McDonalds knew this was happening and didn't change their policies on the serving of coffee.
    Quite right. Moreover, it was the jury, which became angered over McDonald's callous disregard for their customers, (this was far from the first such case), that ordered the enormous reward. The Plantiff had only asked to have her legitimate medical expenses covered.

    Sorry to rant but, I hate how the facts of this case get left behind in the rush to engage in hyperbole over it.

    The Flatlander

  21. Help me understand... by GreenCrackBaby · · Score: 5, Interesting
    Lawrence Goldfarb, managing partner of BayStar, says that senior executives at the software giant had telephoned him about two months before the investment. Would he be interested in investing in SCO, they asked? Goldfarb wouldn't identify the executives, but says neither Chairman William Gates nor CEO Steve Ballmer were among them. He says Microsoft didn't put any money into BayStar or the SCO investment. A Microsoft spokesman says that the company has no "direct or indirect" financial relations with BayStar, but declined to comment when asked whether execs called BayStar to suggest investing in SCO.


    Help me understand this....

    You manage a fund that has $400 million available for investment. Microsoft does not put any money in your fund. Senior executives from Microsoft call you up and say "Please put $50 million into this company called SCO."

    I'm sorry, but why did the fund's managers do what they did? It doesn't add up. You do not just invest 1/8 of your available capital because some guy calls you up and says, "hey, please do this."
    --

    "The market alone cannot provide sufficient constraints on corporation's penchant to cause harm." -- Joel Bakan
  22. pithy analysis, a good chart by puzzled · · Score: 2, Interesting


    See lilmissmolly0, before she is buried under a flood of stock manipulator noise:

    http://ragingbull.lycos.com/mboard/boards.cgi?bo ar d=SCOX

    This one sort of tells the story - there was an ask of $9,000.00 on SCOX yesterday close and a bid of $0.01 - definitely interesting times for the SCOX management.

    http://finance.yahoo.com/q/bc?s=SCOX&t=5d&l=on&z =l &q=c&c=

    --
    I am very easy to get along with, but I don't have time to waste being nice to people who are being stupid. -Theo
  23. OH MY GOD: microsoft is 9th largest baystar invest by goombah99 · · Score: 2, Interesting
    Cant beleive I missed this in my previous post: On that same chart which is dated 2002, it also list Microsoft as the 9th largest investor in Baystar. So paul allen is the number on investor in baystar (1.8 billion) and Microsoft has 0.6 billion invest baystar.

    all of the other major companies investing (janus, Warburg, Putnam, wellington, citadel) are just brokerage houses and are not going to be activist partners just passive investors. Thus microsoft and its senior advisor paul allen are in the driver's seat at this company

    --
    Some drink at the fountain of knowledge. Others just gargle.
  24. SCO only allowed to buy employee shares by isn't+my+name · · Score: 3, Interesting

    This is a repost from the Yahoo SCOX board. Apparently, there is a clause in the PIPE deal agreement that says SCO cannot buyback shares, but they can buyback employee shares.

    So, unless we are about to see another SEC document modifying the PIPE deal, then this 1.5 million announcement is either BS to prop the stock price or SCO is about to reward a bunch of insiders:

    Restrictions on the A1 Pfd
    by: thwackamole 03/11/04 11:49 am
    Msg: 108276 of 108282

    Going along with a previous poster's comments, it appears (to me) that the indenture on the A1 preferred stock prohibits them from buying back shares in excess of those issued for employee stock options.

    Otherwise they could ship all of BayStar's money to Canopy.

    So this buyback is basically a non-event.

    So long as any shares of Series A-1 Preferred Stock are outstanding, the Corporation shall not take any of the following corporate actions (whether by merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by the DGCL) of the Majority Holders:

    (v) redeem, repurchase or otherwise acquire, or declare or pay any cash dividend or distribution on, any Junior Securities. Notwithstanding the foregoing, the Corporation shall, without the prior approval of the Majority Holders, be entitled to repurchase Junior Securities from employees of the Corporation in connection with employee compensation plans approved by the
    Corporation's Board of Directors;

  25. Re:Tell the truth, dammit by Elektroschock · · Score: 3, Interesting

    As far as I know is Microsoft obliged not to enter the UNIX market due to earlier agreements. The downward spiral of SCo may affect Microsoft as well. When Sco's management would go to jail because of license fraud it will probably affect Microsoft managers too.

    Scosource Gregory Blepp (hired from SuSe) was many times very close to break the injunctions on the German market. If SCO tried to sell licenses or spread FUD at CeBIT, Hanover the rapid response would be to report the offence to the police and let them put the managers in jail.

  26. Riggggggght. by digitaltraveller · · Score: 2, Interesting

    I doubt it's Paul Allen.

    If (and I stress if) the senior management in question was Paul Allen, he should be going to jail. Wall Street does not take pump and dump schemes lightly and that's exactly what this is; except in this case SCO is the proxy, rather than the principle in a zero-sum game.

    MS political contributions aside, the SEC is the least likely federal agencies to bend to political pressure because their credibility is what keeps the market in check. Pissing them off is not a good move. It wouldn't have been Paul Allen, his lawyers couldn't possibly be that stupid.

  27. Hmm. avoid the public light? by linuxtelephony · · Score: 2, Interesting

    From the Newsgorge article:
    This will allow SCO to repurchase its shares from time to time in accordance with the requirements of the Securities and Exchange Commission on the open market, in block trades and in privately negotiated transactions, depending on market conditions and other factors, the company said.

    Does this mean SCO can buy the stock options from McBride and others without having to go through the publicly traded market? Would this be a way for the execs and other higher-ups to hide their dumping of stock? In a private trade, couldn't SCO pay *more* than market value if they wanted to?

    --
    . 62,400 repetitions make one truth -- Brave New World, Aldous Huxley
  28. Re:Tell the truth, dammit by js3 · · Score: 2, Interesting
    did anyone read the article?


    Would he be interested in investing in SCO, they asked? Goldfarb wouldn't identify the executives, but says neither Chairman William Gates nor CEO Steve Ballmer were among them. He says Microsoft didn't put any money into BayStar or the SCO investment.


    so if microsoft didn't put any money into it why would baystar invest in SCO.. just for the hell of it?
    --
    did you forget to take your meds?
  29. This part is most unusual. by Pontiac · · Score: 2, Interesting

    I picked up this little tidbit from Thwackamole on the SCO Yahoo Forum

    So long as any shares of Series A-1 Preferred Stock are outstanding, the Corporation shall not take any of the following corporate actions (whether by merger, consolidation or otherwise) without first obtaining the approval (by vote or written consent, as provided by the DGCL) of the Majority Holders:

    (v) redeem, repurchase or otherwise acquire, or declare or pay any cash dividend or distribution on, any Junior Securities. Notwithstanding the foregoing, the Corporation shall, without the prior approval of the Majority Holders, be entitled to repurchase Junior Securities from employees of the Corporation in connection with employee compensation plans approved by the
    Corporation's Board of Directors.


    What the heck does that mean? basically without a majority vote they can't buyback stock from anyone except employee's..
    Hmm that would be people like the CEO and other senior executives??

    To put it another way they just gave executives a 13 million dollar payday.

    --
    If you think it's expensive to hire a professional to do the job, wait until you hire an amateur. --Red Adair
  30. Re:Tell the truth, dammit by cyanics · · Score: 4, Interesting

    Lets pose a hypothetical situation:

    SCO starts wins over IBM, Linux becomes illegal.

    Microsoft, who is now apparently backing SCO, aquires SCO in a take-over. Microsoft now owns the rights to UNIX and a significant portion of Linux.

    How can it be a monopoly, if there is no competition?

  31. Any chance this will boost Linux adoption? by criquet · · Score: 2, Interesting

    The "fact" that Microsoft is so aggressively attacking Linux should be a huge sign of how much Microsoft has determine Linux its biggest threat. Good signs for Linux's capabilities. Not so good for the community and consumers until this all subsides.

  32. The question is... by Anonymous Coward · · Score: 1, Interesting

    Who made the phone call?

    Here are a few directors to choose from...

  33. Re:Tell the truth, dammit by fshalor · · Score: 1, Interesting

    I was pointing out that M$ may be behind SCO's current move what seems like a year ago. There's just too many coincidences and illogical moves.

    Remember the released doc from M$ "The biggest threat to Microsoft is Linux" (paraphrased.) ... SCO's antics seemed a good, logical way of eliminating the teeth of that threat to M$.

    Cooling the wildfire of linux through it's Unix underpinnings (elidged) is an elligant and handed way of things, but it has begun to work in some sectors.

    My 2 centavos... This isn't a supprise at all.

    --
    -=fshalor ::this post not spellchecked. move along::
  34. Re:Tell the truth, dammit by SillySlashdotName · · Score: 5, Interesting

    Well, if a Microsoft representative called Baystar from his private phone during a holiday, then it was technically not Microsoft who orchestated this.

    Wrong. If an employee, in the preformance of assigned duties or at the direction of their employer - or even just with the knowledge of the employer, or if the employer SHOULD HAVE KNOWN - performs an illegal act, the company is responsible. In addition, the company does not lose their liability if the employee is told to wait until a non-working day and use a phone other than their office phone.

    If the employee, on their own, with no knowledge or approval, or expectation of approval of their employer did whatever evil and nefarious act, then the employer is not responsible or liable.

    In this case, if a person identified themselves as a Microsoft representative to BayStar and in some way gave BayStar the idea that Microsoft was interested in BayStar doing a deal with TSG, and BayStar, acting on the belief that it was in fact a Microsoft representative and a Microsoft request, entered in to the deal with TSG, then Microsoft IS technically "orchestrating this."

    I wonder if Microsoft could be sued at all for unfair competition if Bill Gates chose to openly fund SCO shares from his private money?

    Interesting thought. The answer is "No, to a point."

    If B.G. buys stock on the open market, he is buying from some other individual that owned the stock. D.McB. might like that - especially if he is buying the stock from D.McB. - but TSG (the company) would derive no benefit from the transactions.

    Up to a certain point he doesn't even have to declare his stock ownership (I believe it is around 5% of outstanding shares) - and it would take a much larger number of shares to actually be able to manipulate the actions of the company.

    The BayStar transactions, on the other hand, directly funded the further operations of TSG - including the attacks on Linux (and Linus) which seen to be in line with (and possible intended to further?) Microsofts' interests.

    Remember that there are things that a free marke company CAN do that a MONOPOLIST CAN'T do. This would seem, in my opinion, to be one of those things...

    --
    Acts of massive stupidity are almost never covered by warranty. --me.
  35. Interesting, lies, possibly criminal by Performer+Guy · · Score: 2, Interesting

    Now we can safely call SCO execs liars. It also means that SCO execs may have been caught lying to the Feds, and as Martha discovered we all know what that means.

    This may ultimately prove to be one of the more significant developments in this sordid case when it comes down to any criminal investigation.

  36. This makes no sense... by EmagGeek · · Score: 5, Interesting

    A company that invests in life sciences pouring fully one EIGHTH of their total managed fund into a FLOUNDERING software company?

    That makes NO sense... after all, when SCO dies, so do those 50 million clams...

    Unless....

    There were some back door agreement that indemnifies BayStar against total loss of that capital... say, for example, another memo were leaked that blew the whistle on such an agreement between them and a certain Redmond corporation..

  37. Re:Pump and dump theory out the window by Vancouverite · · Score: 2, Interesting
    If the company is buying back their own stock, they must believe in their case. How can they be dumping if they're buying back outstanding shares?
    Not quite true. There are several more reasons why a company might pursue a buyback.
    1. A buyback announcement, in and of itself, will tend to push the stock price higher, which SCO would really like.
    2. There is nothing in the announcement saying that SCO will buy back, only that they are authorized to do so.
    3. The structure of the buyback program is such that SCO can choose who to buy back from, and at what price. A Buyback does not need to be at market prices. This provides a mechanism for buying off the shares of favored partners at greater than market, for buying the stock held by Canopy, or for paying the directors for their shares directly
    4. SCO is using money raised by selling stock to buy stock? Seem a little circular to you?
    Unfortunately, a buyback plan does not guarantee that SCO is not "...misleading people to inflate their stock worth". A buyback plan can be used for just that purpose.
    --
    We are the Music Makers, and We are the Dreamers of Dreams...
  38. In the end MS is good for us. by aka_big_wurm · · Score: 2, Interesting

    They had them put money into SCO in the chance that really do own rights to the linux code. If it pays off they will make billions. Its like playing the loto for them 50 mil is like buying a 1.00 powerball ticket for a chance at 200 mil. If any of us had the chance to go back and invest in MS or Apple we would do it. MS has a chance to go back and invest in Linux. Now I am not a MS fanboy or anything, I really dont hope that SCO wins. But in the end MS is good for the software market. Why? Because they make all us software developers work harder to make our software better. Years ago people were saying IE would rule the world. For a while it did. However after Netscape went opensourse it has became a much better program than IE. One day Linux will be there but its not, it will be there when my mother can use a linux box.

  39. The stock buyback bumped the price for one hour by Animats · · Score: 2, Interesting
    Today's buyback announcement boosted the price of SCO stock for about an hour, between 0930 and 1030 EST. But it didn't help. Thursday's high is still below Wednesday's high, which was below Tuesday's high, which was below Monday's high. The stock is down 50% since December. and about 20% this week.

    Note, that in typical SCO style, they didn't do a stock buyback, they announced a stock buyback.

  40. M$ may have an option agreement with Baystar by Recalcitrant+Labrado · · Score: 2, Interesting

    Just a few comments on the original memo and Baystar's statements. The easiest way for Microsoft and Baystar to claim they have "No Financial Relations" with a straight face is for Microsoft to have given a "Put" option to Baystar. I'm betting that this is what they've done. This means that Microsoft has agreed to buy Baystar's SCO shares at some time in the future for a guaranteed price (ie baystar "puts" the shares to Microsoft). The option exercise price would be set so that Baystar therefore cannot lose money if SCO tanks and in addition would be guaranteed a substantial return on its investment. Baystar probably gets to keep the shares itself if SCO wins and its share price leaps. In other words Baystar is in a "can't lose" position and is probably set to double its money no matter what happens to SCO. If SCO needs more money Microsoft will "introduce" more Venture Capital funds to SCO after providing the VC firm with said Put Option. No VC in his right mind is going to pass something like this up. As for SCO's long term strategy (Don't get riled at the term "Long Term") it was obvious from the last para of original memo. I interpret it as saying that they intend to buy up whatever Unix IP they can find on the open market and use it as a foundation for even more lawsuits. The idea is to make themselves the dog in the manger in that no one is going to have clear title to anything involving Unix or Linux. Their exit strategy as it says in the memo, is to then sell their IP portfolio to Microsoft, who will of course make licences available for a small fee, or appropriate the whole thing as Microsoft Linux. So if you have any Unix patents in the cupboard, go and sell them to SCO;)

    --
    Just because I'm Paranoid doesn't mean they are not out to get me.
  41. Re:[OT] Re:Darl at McDonald's by cornjones · · Score: 2, Interesting

    Exist but go to a fund. THis fund could be for any number of things (something should be picked) but I prefer free legal consultation services.

  42. Re:Tell the truth, dammit by Stephen+Samuel · · Score: 2, Interesting
    Cooling the wildfire of linux through it's Unix underpinnings (elidged)

    Oh, Linux has definite and real UNIX underpinnings, but what SCO 'owns' (or claims to own) isn't UNIX. SCO has the rights with respect to the code base that was once known is System V, which was a version of unix. There are other versions of UNIX.. some of which have an AT&T beginning and some of which don't.

    The name "UNIX", and the right to call something "UNIX" devolved to a group that has no relation to SCOG. What SCOG controls now may, or may not, qualify today as "UNIX". On the other hand I believe that at least one release of Linu has it's UNIX certification proess.

    --
    Free Software: Like love, it grows best when given away.