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BayStar Interviewed Regarding SCO Investment
Gonzo_Warrior writes "BayStar's managing partner explains what led him to 'ask' SCO for their money back. In this article, Lawrence Goldfarb describes '...the wayward corporate behavior on SCO's part' that led him to reevaluate BayStar's position. In a letter to SCO last week, BayStar claimed that '...SCO's behavior violated provisions of the investment agreement and that BayStar's convertible preferred stock be redeemed.' The article notes that since its founding in 1998, BayStar has never before asked a company for its money back." CNet has a story based on talking to a BayStar spokesdrone.
It sounds to me that Baystar is unhappy with the way SCO has been doing things and will likely come to an agreement that allows SCO to keep the money (for the moment) in exchange for some management changes - perhaps.
OpenOffice tips:richhillsoftware.com
1. Concentrate on and press the legal issues and win. Results for BayStar are obvious.
2. If the court cases are to be lost/abandoned etc then SCO needs to have some public goodwill in order to attract new customers.
It isn't doing (1), all we are seeing is grandstanding and namecalling.
It surely isn't doing (2) - SCO is the most hated company in tech.
Darl fancies himself a scrapper who can take the heat, but he's sacrificing SCO and all of the shareholder equity to buttress his ego. A CEO should put shareholders first.
Regardless of the language, to me it looks like a no-confidence vote.
That which does not kill her only prolongs my agony.
An inefficient SCO is scary enough. One that drops the hype and just goes about this quietly could be worse. If nothing else, it would reduce the number of SCO-related articles here on /.
On the other hand, maybe that's a good thing... ;-)
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SCO did just name a new financial officer, and the market may also be anticipating more change in leadership following Baystar's request. Darl says he won't quit though. But he's been talking out of his ass for a while now.
IANA stock analyst. The only bath I ever took was in the market.
More music, fewer hits
We all know the type. Slick management type, wearing neatly pressed suits. Reads the type of trade publications that feature head shots of middle and upper managements atop articles full of jargon, but devoid of content. Power lunches. Golf trips. Owns a Lexus. Won't give a lowly programmer type the time of day.
These fools with millions and millions of dollars to spend somehow didn't get the information that the rest of us got for free.
I'm not sorry for them. Not even a little bit.
Fascism trolls keeping me up every night. When I starts a preachin', he HITS ME WITH HIS REICH!
I found it interesting that Baystar wants SCO to give up on UNIX to pursue the "intellectual property process." In other words, Baystar wants SCO to give up the only service it offers and pursue legal action against Linux (and Linux users) even more than it is now! In fact, if they do this (and a few other things), then Baystar might change their mind about recalling their stocks..
I wonder who would benefit most from this (cough Microsoft cough cough....)
ps - I do like the idea of no more Daryl McBride, except for the fact that he probably will help the Linux community more in the end with all his irrational rantings and ravings!
Their biggest investor is saying (in the Cnet article) "your products are crap, just stick to suing people". This is good news for SCO?
Because:
1. There's nothing illegal or wrong about giving frequent and grand about public statements, at least here in the US of A, where we have the right known as "free speech".
2. SCO is _expected_ to talk smack about their competition. Did you think they were just going to politely assault one of the biggest computer firms out there? No way. They've got to go out with guns blazing if they're going to attract investors.
Let's face it: SCO, so far, has done nothing illegal. They've made total bastards out of themselves, sure, but there's nothing illegal about that in this country.
-Erwos
Plausible conjecture should not be misrepresented as proof positive.
Baystar's problem is not with SCO's position on the issues, but their handling of the issues. Some quotes from BayStar spokesman Bob McGrath in the article make this clear.
"We think there are limited prospects of that business ever generating growing and significant revenue," McGrath said.
"And we believe it is diverting resources from going where they would have the most value--the intellectual property process."
BayStar asserts SCO's Unix products business doesn't hold long-term value for shareholders"
In fact, if SCO would get their act together and focus on just legal issues they would consider continuing support for them.
"We think they need to strengthen the senior team to get people with experience and background in the legal issues," McGrath said.
If SCO addresses BayStar's concerns, McGrath added, the investor is open to reversing its redemption request."
It is bad sign when your investors tell you to stop acting like a technical business and persue your legal intellectual properties as your business model.
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
* >> SCO is the most hated company in tech.
Wouldn't that be M$?*
no, there are quite a lot of people who choose ms products over others for no other reason than their being ms products and quite a lot of ceo/cto/suits have 'trust' in them as a 'good choice'.
not so for sco.
world was created 5 seconds before this post as it is.
Didn't Darl file for a buyback when the stock was at $10, saying that the company felt that the price was a bargain? By now, since the stock has slipped so much since then, shouldn't SCO be jumping at buying back all those shares at an "even better" bargain?
Or was the buyback filing and press release just another attempt to pump up the stock price through FUD? Does anyone else think that the buyback filing and subsequent press release was purely a stock-pumping ploy?
Why should SCO have to pay them back so quickly? The lawsuit was total BS right from the beginning. First making a false claim, and then raising it to $5B? It's more obvious that they are taking it to any length and not making rational business decisions.
But really, wasn't the lawsuit irresponsible right from the start? They didn't show any actual or empirical evidence of the copyright infringement. If BayStar was stupid enough to think that SCO would win, to invest in them, damn right, they should have to stick with it.
If they win against SCO, though, I won't be complaining. SCO is a dishonest company, and they deserve to be put out of business. It's a shame that a company (well, two companies, actually) that used to be innovative, and a good company to do business with, be run in to the ground by a bunch of litigous bastards.
Read what you C&P'd again. Baystar thinks that they need to spend less money on Unix and more money on executives with more savvy about IP cases. In other words, they want to get rid of Darl, and hire someone who can actually win cases to cripple Linux. (Not that such an outcome is likely or even reasonably possible.) Baystar is not our friend, unless they successfully take money away from SCO which will stop their operations rapidly.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Don't invest your money in some other company's war.
Baystar will be out $20 million because their people were persuaded by Microsoft's people to fund SCO's attack on Linux.
Some Baystar people need to be fired for that one.
yeah. That is REAL money. Just think what that could have been used for: funding a great new product, trying to dampen a social ill somewhere, anything really.
In the end what a shame.
The reason for the increase today is because they named a new CFO yesterday. Look for it to continue its downward trend next week.
I'm not in financial services, so I really don't know your reasoning, but why would you think this means don't trust Baystar? This has only happened in less than .25% of their investments, and they're doing it because SCO allegedly broke one of the contract stipulations. If anything, I would say the moral is "don't fuck with an investor who has the legal grounds to take their money back".
do not read this line twice.
When you want out of a deal - you rarely say "I want out because I found a prettier women to spend my time with." You generally say - you've stopped doing your part of the deal - so I want out, and pray like hell nobodyy figures out the real reason.
I'm not saying you're wrong about motives - but what people say are the motives and the motives are disticts. In this case - actions speak volumes, the words mere wallpaper.
AIK
The enemy of your enemy is NOT your friend.
I'm sure that Baystar would leave their money with SCO if Microsoft could find a way to funnel $20 million to Baystar.
SCO wants money.
Baystar wants money.
Darl wants media attention.
Microsoft wants to cripple Linux.
We'll see how this plays out.
This is a shot across the bow of SCO management. In other words, a public warning to the management team that their days are numbered unless they focus on what their owners want.
org.slashdot.post.SignatureNotFoundException: ewg
The moral of this story: when Microsoft points you to a place that you can spend tens of millions of dollars of your own money, they aren't doing it just because they like your tie. They are doing it for their own reasons, and won't really care if it turns out badly for you.
I hope BayStar doesn't get a dime back from SCO--hopefully they'll consider the merits of the issue more carefully next time Microsoft gives them a "hot tip." And hopefully BayStar losing tens of millions to SCO puts a chill through the investment community to beware of Microsoft advice.
--
$tar -xvf
"We're unsure what their issues are," Marc Modersitzki, a SCO spokesman, said yesterday. He added that the BayStar letter was "a notification, not a legal action," and that SCO hoped the two sides could settle the matter. - so if someone is not suing you but trying to be civil about things and is just asking you nicely it means you do not have to be civil back, you must always wait for a court date to solve your differences? No wonder USA is known as the most litigious nation in the world.
You can't handle the truth.
Remember, Baystar basically bought a lawsuit. They did that on behalf of Microsoft, who is their client either formally or informally - we don't know for sure which way.
SCO's public behaviour is increasingly becoming an embarassment for them both in the courtroom and as far as the credibility of their FUD. That means Baystar/Microsoft is no longer getting what they paid for, so they're rattling SCO's chain.
With this in mind I have to wonder if Baystar's disposition towards SCO is even more negative than the public story indicates. This is still a serious vote of no confidence that damages Baystar's investment and, of course, they know it. So how badly do they really want to bail out in light of their willingness to let this degree of friction get public?
Here's a useful Google link for ya, that might help you understand the grandparent's original point about Baystar's dynasty:
define: sarcasm
God invented whiskey so the Irish would not rule the world.
But isn't that a sign that the shorters think this is the lowest price SCOX will be at for a while -- so pretty much the same thing as for any other buying?
In addition to everything others have said... there's also diminishing return at work. If you shorted stock at $10 and its $2 now, a further fall of your maximim gain possible from this point on is pretty small. Not counting broker fees, interest etc., if you'd shorted $1000 of stock, you'd now make $800 in profit. Assuming its value falls away completely, your profit will only increase by a further 25%. On the other hand, the potential for loss is unbounded.
Baystar requests redemption just to shake up SCO management? If they didn't like Darl, why did they give him the money in the first place?
They aren't trying to shake the SCO management out of the goodness of their heart, to reform the world. They invested in SCO because they believed they had a big-enough shot at their lawsuit to at least raise their valuation significantly. Not it turns out Darl's antics detract from that, so they decided to crack the whip.
They invested in SCO in the first place because of their perceived gain potential from the lawsuit, not because of the great sales they excpected for SCO Unix.
I'd be worried if you did. There is none. The stock market is an irrational system, loaded with confidence schemes, accounting tricks, high-stakes gambling, and "wealth" created from and vanishing into thin air. Despite which it is treated as the cornerstone and bellweather of our economic system, and presented by pundits as the ideal way to "invest" our resources for the future.
http://alternatives.rzero.com/
Great! With Baystar withdrawing their money, SCO was instantly bankrupt (RBC would certainly do the same, to avoid investor liability). No warning shot, no nothing, immediate bankruptcy. That would have been the worst outcome of the whole saga, for us, because then IBM, RedHat, and Novell (and perhaps Chrysler and Autozone) would not have the chance to obliterate SCO in court, clearing away the FUD around Linux in the process.
Now, if Baystar is satisfied with canning Darl and his cronies, and making the new management focus in the lawsuits, and agrees to keep SCO in life support, we stand an excellent chance of watching many wonderful things. Think of...
Naturally, I do not expect all of these to happen, I don't think we are that lucky. But, overall, I think these are great news. Go, Bay Star! Keep your money in SCO, help Microsoft screw the Linux hippies!