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McBride At A Loss For Words
An anonymous reader writes "That, at least is the verdict of Linux Business Week's Maureen O'Gara, who reports that, with all the latest twists and turns, with BayStar and RBC in particular, SCO's CEO was finally bereft of words to describe what it's all been like. In the end he settled for 'This is like...nothing.' As O'Gara herself says, the latest SCO news is plain weird."
the site seems to be slowing, but not dead yet. here's the text:
SCO CEO Darl McBride, the most hated man in the computer industry, says he's reached for an analogy to describe SCO's experience since suing IBM. "This is like...," he's said to himself, groping for an elucidating comparison, only to conclude, "Nothing...Nothing compares to what's happened in the last year."
What happened in the last few days proves his point.
BayStar, the venture capital outfit that wants its money back from SCO - a highly uniquely situation even for the computer business - has suddenly and out of the blue doubled its position in the company.
The Royal Bank of Canada, which BayStar brought into the $50 million investment the pair made in SCO last fall, the investor that has reportedly never expressed doubts about the strength of SCO's position or, unlike BayStar, has never complained to SCO about its behavior, sold $20 million worth of its SCO shares to BayStar.
And the bank is converting the rest of its preferred stock - that it paid $10 million for - into 740,740 shares of SCO common presumably to dump it on the public market. Presumably too it won't sell the stock immediately since the conversion cost it $13.50 a share, more than double what SCO's been selling for.
BayStar and the bank's $50 million represented 17.5% of SCO.
Neither BayStar nor the Canadian bank will discuss what happened. The bank merely calls its action a "business decision" and BayStar claims it was presented with "a strategic and financial opportunity."
McBride claims he doesn't know any more than we do. He's had barely any contact with the bank and all he knows is that he got a letter from them last Wednesday outlining what it was doing, but not explaining why.
McBride also claims that he doesn't know what BayStar's about either.
BayStar hasn't withdrawn its demand that SCO return its money and BayStar's lawyers, he said, still haven't told SCO's lawyers how SCO breached their contract. So McBride figures BayStar doesn't have a legal leg to stand on and won't be able to get its money back. The money of course is paying for SCO's legal pursuits.
McBride said he didn't know how buying the bank's shares would strengthen BayStar's position. BayStar, for instance, doesn't have a seat on SCO's board and the shares it owns are non-voting stock.
Presumably, the shares that the Canopy Group owns - and remember, Canopy got close to $300 million out of Microsoft to settle an antitrust suit - would trump any notions BayStar might harbor about a hostile takeover.
BayStar managing partner Larry Goldfarb, the guy responsible for the firm's investment in SCO, told the New York Times a couple of weeks ago that he wants SCO to drop its remaining Unix business, jettison its current management, husband its resources, focus on pursuing its IP claims and mind its Ps and Qs in what it says publicly.
Apparently BayStar's lawyers have been saying the same thing to SCO's lawyers.
One wonders whether Goldfarb taking the Times into his confidence made the bank lose its confidence in its investment, hold BayStar responsible and demand that BayStar buy it out.
BayStar's comment about buying the bank's shares being a "financial opportunity" hints that BayStar paid less for them than the bank did.
Goldfarb told the Times and his PR guy told us - Goldfarb was reportedly out of the country when the news broke and couldn't speak for himself - that despite his disapproval with the way SCO is run he is convinced of the legitimacy of its IP claims and of its winning its case against IBM.
According to BayStar's Web site, Burst.com is part of its portfolio. It's unclear what the VC's position is, but Burst is the company, reduced to one or two people, that's suing Microsoft for a tidy packet. It's one of the private antitrust suits that Microsoft has yet to settle.
Burst claims Microsoft, which it collaborated with for two years, ripped off a media transmission technology it designed to send video and audio files electronically and stuck it in Media Player 9.
Burst has no other business outside its suit and evidently is the model BayStar wants SCO to emulate.
I work at another Canadian bank, but can confirm that some of my contacts (ex-colleague of mine, actually) in the IT section of RBC are *very* happy with the investment banking's decision to pull out of SCO. For once it appears like the right hand knows what the left hand is doing... their IT department has a few linux pilot projects (one including desktop replacement!) which suggest a conflict of interest internally.
John Maynard Keynes: "When the facts change, I change my mind. What do you do?"
well they're not thriving anymore. It's kind of sad really, SCO use to be contender.Don't they have a spot secured on the UNIX timeline along with ATT and the others somewhere? Too bad mgmnt/greed/stupidity/etc got in the way. oh well, you know what they say, out with the old in with the nucleus.
In this case, very literally out with the old. This company isn't the historical SCO at all, but rather an offshoot of the Linux company Caldera, renamed to SCO after buying many of that original company's Unix assets.
The original SCO lives on renamed to Tarantella -- which was basically their only profitable software product at the time of the sale.
Yes but Baystar is not buying the currently-$5-and-dropping publicly traded shares. Baystar is buying 20,000 Series A shares worth $1000 each. Now the interesting part is that if SCO is forced to redeem these special stocks, Baystar gets considerably more than the $1000 per share because of the penalty clause - I think it's a 20% premium, so make that $1200 per share. So Baystar is unlikely to be out of cash if SCO is forced to re-imburse it. In fact Baystar will be up $8 million dollars on their holding of 40,000 Series A shares.
Cheers,
Toby Haynes
Anything I post is strictly my own thoughts and doesn't necessarily have anything to do with the opinions of IBM.