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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.
SCO's stock price, which fell 38 cents yesterday to $6.80 a share, has dropped 30 percent since last Thursday, the day BayStar sent its redemption letter.
.. but now it's at 7.96. That's why I'm a geek and not a Wall Street suit, I can't see any logic in the stock market. Isn't this NYTimes article more bad news for SCO?
Why is this behavior obvious to everyone but SCO, and our courts?
Sehr geehrter Toilettenbenutzer!
More on this at Groklaw and the Mercury News
"BayStar Capital Management LLC believes SCO needs to hire executives with more savvy about intellectual property cases and spend less money on its Unix products, BayStar spokesman Bob McGrath said Wednesday."
"SCO's chief executive is Darl McBride, whose cash compensation totaled $986,047 in the company's fiscal year ending last October. That pay package troubled BayStar, McGrath said, given SCO's small size - the company has annual revenue of $79 million and about 300 employees."
Baystar may finally be the one's to shut oldSCO's mouth for us so that IBM can finish the execution cleanly
If thou see a fair woman pay court to her, for thus thou wilt obtain love
Since BS is essentially bankrolling a luxurious experiment by a few well paid lawyers - it seems that for its part - it would rather have the money back than continue to invest in the salaried of attorneys - which can only mean that it doesn't think the risk/reward ratio is positive any longer.
A strange because it suggests that the business model really was FUD - that they didn't have a leg to stand on - but they could threaten in the hopes of creating an avalanche of copitulation (large firms signing up for licenses) If this had happened prior to court - the case could have been dragged out - while the revenue came in. Clearly MS was willing to lower some of the risk by cost sharing - but from where I sit - they don't have any more of a case than they can make - and there will likely be no more response to identified code - than removing it - and since it is clear now that no-one has acted intentionally - the reality of huge punative awards is unrealistic.
Kudos to OS for dodging the biggest bullet to date - I doubt there are any more of greater significance looming on the horizon - the other legal accomplishment would be to uphold the GPL without frightening the world that OS is similar to the RIAA.
AIK
"For his part, Mr. Goldfarb said that with reforms in
management practices to address BayStar's complaints,
it might keep its funds in SCO."
This is troubling. Baystar thinks they have a chance.They are saying get rid of some yooboos and stop living off our cash and we'll still play with you. I think SCO has done it already with the CTO leaving. Thie question is if that is enough good faith. The stock is up. Someone might think so.
http://finance.yahoo.com/q/ecn?s=SCOX
This one shows the standing orders for buys and sells, which if you do a comparison, shows possible daily trend. More Sell orders can mean declining price. Also look for the variation of prices between the sell and buy sides. A huge descrepancy can mean valuation problems within the market.
Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.
What about the statement from Blake Stowell of SCO that, "Contrary to the speculation of Eric Raymond, Microsoft did not orchestrate or participate in the BayStar transaction."?
Now, who needs a tin-foil hat?
Perhaps he was an easy sacrifice to the money gods. It would seem though that SCO's officers like the limelight more than the business of business.
Hopefully they'll keep wasting investor cash. That is the quickest way of halting this strange saga.
More interesting is the article over at ZDNet. In that article, Baystar contends that Darl should step down, and that SCO is wasting it's time with the Unix business. Baystar suggests that SCO make litigation its only business.
I would like to thank the submitter for using the google partner link to the NYT article.
And me also, but for different reasons. I've been in the financial services industry since before this company was founded, and I've never heard of a comparable case. The moral to me is to distrust Baystar as a potential investment partner.
Cheers,
Ian
BayStar doesn't see the SCO UNIX business as viable (no surprise there), and wants SCO to become an IP lawsuit mill. Wazzup with that? There's *no chance* SCO can survive that way, 'cause they don't HAVE the IP to win their current cases, let alone any new ones. So either:
1) BayStar got into this "sure thing" by bad judgement, is blowing smoke about their present motivations, and actually want some money out now, quick, before "the plane hits the terrain", or
2) BayStar is shilling for soMeone elSe and doesn't give a soaring adlunar coition about SCO's prospects for survival or monetary return, or
3) they are in some altered reality where they still think SCO *can* win. In that case I don't want any of what they're smoking, it impairs judgement too much.
"My strength is as the strength of ten men, for I am wired to the eyeballs on espresso."
Sarcasm never seems to lose it's edge. However, there are some interesting revelations to this statement:
> All the way back to 1998, a whole six years ago.
BayStar formed as fate itself would begin to turn on the dot-bombs. BayStar, and the rest of the world, witnessed the plethora of cunning weasels around the world die of financial mass-suicide; but why invest in SCO to begin with? I find it hard to believe that BayStar would forget about the dot-bombs long enough to jump into SCO stock, with both feet -- unless for Microsoft's heavy-handed tactics, by means of an investment recommendation. Such a recommendation seems terribly crooked, as Microsoft is not a trader and has no business telling anyone which stock to buy. Any freshman would know that the SCO follows the dot-bomb philosophy (to a T), grabbing all the loans and investments they can, as if the very bundles of neatly wrapped Benjamins somehow could form a flotilla of Titanic-sized life-jackets.
So someone at BayStar realized that the SCO was bad for business and they pulled out. Good. But you have to ask why they jumped into that deal, and examine Microsoft, again.
The dangers of knowledge trigger emotional distress in human beings.
litigating is seen as (or in this case, REALLY IS) more profitable than actually creating or servicing a product. If this isn't a case of rich people trying to get richer without any effort (and I don't know about you, but I don't consider hiring a team of legal sharks to do dirty work effort), than I don't know what is. Go ahead and flame me, but this is everything that is wrong with capitalism as currently being practiced in this country. Reminds me of an old "Wizard of ID" cartoon. "Don't you know what the golden rule is?" "Sure, whoever has the gold makes the rules!"
What disturbs me the most about eWeek lately is the fact that every single article on Linux has those stupid M$ "GettheFUD" ads showing.
What's really funny about those ads: If you go to their site, they offer to mail you a package with the MS vs. Linux papers and a trial copy of Advanced Server 2003. Now that in itself is not funny. But the fact that the form where you enter your information was broken in every browser I tried besides IE. Nice One! If someone's not using Windows, MS doesn't let them get information on converting to Windows.
I think they would have done this long ago, if it were not for the fact that they would have a pile of pissed of developers. Who knows what skeletons they could dig out of SCOs closet.
investing in UNIX completely. Since Baystar's investment can only make them money if SCO wins the IBM lawsuit, this makes sense. Spending time on an actual product, building a good relationship for longtime company growth, etc. won't make them a dime. As far as they're concerned, it's wasted money.
The moral to me is to distrust Baystar as a potential investment partner.
I get the feeling that the moral to most people would be to not violate investment agreements.
Incriminating stuff on Microsoft's recommendation from the article:
"It was evident that Microsoft had an agenda," Mr. Goldfarb said.
This from the guy at Baystar who was involved in the deal. Earth calling D.O.J. Earth to D.O.J. come in please.
SCO excutives decided to make enemies and maybe an incredible amount of money. SCO products are horrible when compared to most of the other options out there. Over time, they would have to restructure (ala Novell) or slowly scale back as customers slowly went away.
If SCO wins, Baystar could have a cash cow that could last decades and drag in a boatload of investors to Baystar. If SCO looses, Baystar is out $20 million and has to cover those losses or loose investors. If Baystar says "give me my money back" they can tell investors "see, we are looking after your investments".
If SCO wins or looses, Baystar has invested in SCO...and they have to show that the money was spent wisely or they will be in deep trouble with current and future Baystar investors.
No doubt they would. The 'score or we're taking the ball home with us' tactic is smart even if Microsoft benifits (and MS has).
A firewall can not protect you from yourself. Turn off what you do not need. Do not use the firewall to do your work.
Here.
...
For the tinfoil hatters:
Perhaps Microsoft, secretly orchastrating these arrangements, felt the heat and did not like the way it was heading considering they have a track record with being associated with events like these; the results of which do not favor Microsofts image.
OR
This is Microsoft's way of getting rid of a business "ally" since it is becoming apparent to even mainstream media they have no future; which includes Microsofts primary interest in killing the FOSS movement and Unix server market mindshare.
OR
Sorry, just trying to get in character for the audience.
BSD is designed. Linux is grown. C++ libs
It's little editorials like this (calling a PR spokesperson a "spokesdrone") that keep Slashdot from being considered as a serious news site. When I first saw the article, I was hoping that perhaps Slashdot had scooped the interview from other major news outlets. Seeing how the Slashdot editors treat the PR department of major corporations, I can understand why Slashdot is incapable of providing an interview of anyone who *really* matters in the business world (not to say the OSS software engineers, programmers and zealots don't make a difference, but they have yet to make a serious impact in the marketplace). I'm not saying the editors have to forget their ideals out to snag the interviews (and news) that matter, but a little dignity in thir work goes a long way for credibility.
But hey, if this is a sounding board for the editors to get their personal views of the world off their chest, then by all means, go ahead. Just don't start whining to the general populous about the low number of paid subscriptions.
But to make SCO's case stick, the company needs to change its management, focus on its legal case and communicate in a more "sensible, businesslike fashion," BayStar spokesman Bob McGrath said.
Knowing how conservative these groups are, especially when criticizing a company your company has invested in, one can only imagine what might have happened to spurn this. It's not like SCO's weak case wasn't obvious to anyone with knowledge of the situation.
This is the kind of PR spin you put on a situation where, say, Baystar's CEO walks into McBride's office and finds him wearing a diaper and playing with Barbie dolls.
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?
The SCO management team is the same one that existed when the deal was made. SCO products are the same. Other than adding litigation as a line of business, they are the same company that existed at the time of the PIPE deal.
Redemption is an extreme action on Baystar's part, and I don't buy their explanation that the only problem is now SCO's senior management and their non-litigation products. Whatever the real reason is, this is NOT it.
I think MSFT is at it again, lobbying Baystar to give SCO a chance to avoid redemption, in exchange for ?????? This whole concept of "Make a few changes and you can keep the money" is 100% bogus.
Since it has been known for a while that their products are crap, it doesn't make much difference if someone says it. However, if Baystar sticks to the money back demand, it bankrupts SCO, making the stock worthless.
Some people still believe that there is a possibility that the lawsuits may bring in money. A bankruptcy precludes that (even if the lawsuits continue under a new owner, the money won't go to the stockholders). Thus, Baystar not forcing them into bankruptcy is good for SCO stock.
Which should we find more convincing: where Baystar put their money (if they remove the money back demand, they are indicating that they think they will get more money if they wait, i.e. that SCO will be more valuable after the lawsuits); or what they say (that SCO has crappy products).
Yes, we have now gotten to the point where the comment, "your products are crap, just stick to suing people," actually is a rosy view of SCO's future. No one believes in their products. At least some people still believe in their lawsuits. SCO is no longer a tech company. They are just a bundle of lawsuits hoping that one will carry through to a big reward from the deep pockets of IBM, Daimler Chrysler, or AutoZone.