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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?
All the way back to 1998, a whole six years ago. Now there's history for you. Almost dynastic in its scope..
Cheers,
Ian
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
over the years, SCO is the first that they've asked for the money back from. If that isn't a tell, I don't know what is.
And the URL.
"SCO's management, he said, was traveling too much and spending too much when it should have been concentrating its efforts and resources on its legal strategy."
nice. money for nothin, but does he get the chicks for free?
I think you are looking at the wrong stock. SCO groups symbol is scox not sco! Currently trading at 7.98 on yahoo!
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.
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
Regardless of the language, to me it looks like a no-confidence vote.
That which does not kill her only prolongs my agony.
"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.
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... ;-)
The Busy Coder's Guide to Android Development
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.
OK! WHOOT! I'm a CLASS-A Idiot this morning :)
I looked up SCOR, not SCOX
SCOX is at 8.05, *up* a 1.25 today.
As another post put it, I'm glad I'm not an investor, this kind of news causing the stock price to go up just befuddles me.
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?
The SCO website is planning a different legal strategy.
...A court hearing most likely.
The Large Button on top of their page is advertising "SCO Forum 2004 *The power of Unix*" On the bottom of the button it says:
Register Early and WIN!
What do you win?
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!
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.
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!
Offtopic but.... Link on SCO's home page: "Why SCO could Win: Week Two. -- eWeek.com." However, if you actually click on it the article title on eweek is "Why SCO Thinks It Can Win"??
Before 1998 there wasn't Google, MySql, iMac, Seti@Home, Microsoft Access and well... Microsoft Windows 98. :)
Look here for more.
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.
Well, you know what they say, "easy scome, easy sco."
Dogma - "let's just say we'd like to avoid any empirical entanglements."
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.
I think it's even more telling of BayStar that they believe SCO should be investing more in thier legal team, as opposed to, I don't know, DEVELOPING GOOD PRODUCTS AND IMPROVING RELATIONSHIPS WITH THEIR CUSTOMERS!!
"Ask not what your country can do for you." --John F. Kennedy
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?
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."
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.
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.
...there's the long-term investors. They go by the percieved real value increase. The real value doesn't change significally over short periods of time. These typically look for underpriced / overpriced stock and measure investments in years.
The rest are all trying to second-guess what others will want. The mid-term traders try to predict the long-terms, the short-terms the mid-terms and the daytraders the short-terms.
This typically result in "waves" in the stock price even where the real change is slim and none. Think of it as a bullwhip where the realinvestors give a nudge, and it comes out as a snap. Even if the original nudge is purely downward, the whip will go both up and down until it resettles.
This whole picture is even more clouded by derivates such as options and futures, which can act both as accelerators and brakes to such a process. You have e.g. the short squeeze and the dead cat jump, caused by options coming to a close.
The stock market has its logic. But it is definately that of its own, where expectations drive almost everything. Witness the 1929 stock crash or even the dotcom wave to see that. Eventually reality will catch up and ask "Yes, but do we make any money in the real world?" but it takes literally years.
Kjella
Live today, because you never know what tomorrow brings
"We understand (BayStar general partner Larry Goldfarb is) disappointed that the stock price has been going downward lately," Stowell said. "We haven't been real excited about that ourselves. But we believe the long-term prospects of the company are good."
Good for me to POOP ON!
"Our funds have never taken part in toxic or death spiral convertible financings of any sort" -BayStar's managing partne
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.
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.
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.
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.
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.
The reason for the increase today is because they named a new CFO yesterday. Look for it to continue its downward trend next week.
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
From this news article from yesterday:
shouldn't that be sleazy come, easy sco?
PHP is the solution of choice for relaying mysql errors to web users.
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
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.
"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.
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.
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.
The community should come together and petition SCO and BayStar to keep McBride. It took YEARS after Dan Quayle left office for someone this high quality to come along. Let's not let him get away this easy...
BayStar to SCO: "No, no... Not evil enough..."
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!
Motley Fool article about Baystar and SCO.
There are a huge number of yeast infections in this county. Probably because we're downriver from the bread factory.