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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.
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.
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.
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.
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!
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"??
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.
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
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.
...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
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!"
oh brave new world, that has such people in it!
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 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:
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
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.