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SCO and Baystar Strike a Deal
comforteagle writes "As you'll no doubt recall, SCO financier wanted to cash-in on its stock because of how SCO was being run. It appears they've struck a deal. 'The SCO Group, Inc. today announced it has entered into an agreement with BayStar Capital II LP to repurchase and retire all 40,000 shares of Series A-1 Convertible Preferred Stock currently held by BayStar.'" Summary: Baystar and the Royal Bank of Canada invested $50 million in SCO in October 2003. In 6 1/2 months, they've now converted their investment to $13 million in cash and $13.7 million of common stock, for a loss of almost half their investment.
In 6 1/2 months, they've now converted their investment to $13 million in cash and $13.7 million of common stock, for a loss of almost half their investment.
Nelson: Ha ha!
Seriously though. This should be a lesson to VC funds and financing operations that finance companies whose business models are built upon legal action and sucking off the hard work and sweat of people who make ideas work through the creation of products that improve our lives. These companies based on litigious action are typically fairly sleazy operations and will not generate any "good will" for the financing operations or companies.
I personally would much rather support and fund (and yes, even make money from) companies who are out there to make a difference. Work to make something new or make a difference rather than prostituting yourself for mere money and parasitizing off of others hard work and insight.
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Getting some of their money is better than losing it all when sco gets their ass handed to them.
Next time I would suggest in doing more research...
One of the finest examples of real world karma in action..:)
Even the rats that funded this FUD operation see the handwriting on the wall. Half their cash is better than none....
Obviously this requires they case is decided before they are totally broke. A big if, but looking better every day.
Thirdly we will have a clear wipeout of SCO. If they went bust before the fat lady sings this could still leave some doubt (FUD residue) about the GPL etc.
Help fight continental drift.
I suppose we won't be seeing any Baystar 3 step plans to profit jokes with this story.
I would call this poetic justice, but since we all know the money came from microsoft originally. A loss of about 24 million dollars is nothing to them.
What is really sad here is that people who could do something about activities like this Baystar/SCO/Linux/Microsoft/Sun/IBM/etc debacle don't care.
A Fatal OE Exception has occurred, Sig will now reboot.
Baystar had better dump that common stock right away. The price fell more than 7% today alone, and I can't imagine how bad its going to tank on the 10th, when SCO has to announce its earnings (the call got pushed back from tomorrow so they can have time to properly prepare their FUD). This will have to put a serious dent in their legal budget, and combined with the inevitable fall in stock price and decreasing revenues, I think the end for them might be very close.
At closing today, it's lower than it was a few days ago...yet it's STILL above the $3/share it was a little over a year ago. !?!?!?! Why is that?
MS have good business sense, that's what put them on the top today. I'd think even they, in their evil ways, know it's a bad idea to take up a suit against IBM that'd already bankrupted SCO, especially when SCO clearly don't have a case.
heh, banks don't want your money, they want your debt.
That means $50 million cash for SCO, and $50 million worth of SCO's stock.
(AKA 'Reichsmarks', 'Confederate dollars', )
Then it turned out that noone else felt that $50 million dollars of this SCO-money was actually worth $50 million. So they wanted their money back.
They got $13 million. And some stock. The stock doesn't cost SCO anything.
So SCO gets 50-13 = $37 million out of the deal. Not bad. But, they have totally screwed their reptutation with any potential investors.
Now given that SCO:
Is not going to win any of their lawsuits
Their Unix business is losing money big time, and they have nothing to attract new business with, being generally dispised.
They have no way of getting more funding from investors.
They're sinking. Big time. However, Microsoft may very well pitch in to keep them afloat through the lawsuits.
The fact that you think investors merely "suck off the hard work" of other people shows how little you (and most people) grasp economics. Without investment capital, many ideas cannot get off the ground; VC firms lose money all the time as they invest in new ideas.
The upshot of this is that people get the opportunity to try new things even if they can't afford to take the risk personally -- this actually feeds money into the economy, creates jobs, &c.
We may not imagine how our lives could be more frustrating and complex—but Congress can. – Cullen Hightower
It's not screwing anyone. It's a standard hedge. It reduces the holders profit potential, but it lessens risk since it basically locks in the shares at the short price.
The only way you could ever consider this screwing anyone is when SCO initially issued the convertibles... convertible debentures and convertible preferred and the like dilute the stock, the same as any other stock issue, it's just that convertibles dilute the stock in ways that might be subtle for the beginning investor. (The dilution isn't immediate).
I've had enough abrasive sigs. Kittens are cute and fuzzy.
You know the joke about the whole SubGenius thing..."If you're so smart, why aren't you rich?"
Here is a prime example of why we are all SubGenii. We all knew that SCO would tank. We had a golden opportunity to make some serious cash. And you know what? I'll betcha not a single person on all of Slashdot cashed in on these fools. Damn.
It's not often you have a sure thing in a horse race. And I just missed mine. Double damn.
Weaselmancer
Weaselmancer
rediculous.
They have a ton of stock to unload and they have to try and prop the price up while they unload it.
They are limited to 10% of the average daily volume by the terms of the agreement, so it's going to take them awhile.
You actually expect any arm of the government to actually do something against Microsoft?
<snicker>
And you think that the DoJ's previous behavior is because they lack balls rather than because they're on the take?
Bwahahahaha!
Use 'slashdot stuff' in the subject line in any email you send me if you want to get past the spam filter.
This makes Boies look like a genius.
1. Take a ridiculously bad case for buttload of money.
2. Wait until the client runs out of money.
3. Scram before the case is resolved so there is
no case loss on your resume.
4. Duh!
At one point in my life, before the death of three companies that tried to go public only to get all long term R&D money yanked away in pursuit of the three-month bottom line, I actually played around with being a conservative. It went so far that I voted for Bush in 2000- BIGGEST MISTAKE OF MY LIFE. Within a year I had been pushed out of private industry alltogether- and it was 26 months before I finally landed a job with government. There is no good left in capitalism- it's broken to the point that long term research or even short term breakthroughs have become impossible. And we wonder why the computer revolution has hit a plateau.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
remember: this is not a business investment. it's a third-party-funded smear campaign against Free software. there's plenty of money available to keep this going, and to keep all the players happy.
dance, puppets - dance on your strings.
pr0n - keeping monitor glass spotless since 1981.
I'll give you an example. Two brothers, Bob and Joe, have become very wealthy hockey players. Bob pisses away his money. He buys expensive cars, has statues erected and lives the high life. Many people are employed and jobs are created to provide the expensive items he is buying. However, these items are quickly consumed and there is no lasting benefit to society.
Joe invests his money in a telecommunications company. Using investor's money the company is able to fund research into high-speed data transfer methods. Money that Joe made from his hockey career is now paying for this research. Jobs are created, total knowledge of society is increased and society (consumers/businesses) receive better products and technology. This is the magic of our free markets.
Now take a different example: Bob spends his money on expensive cars. The car company takes the money they made off his purchases and invests it in R&D, and develops an entirely new power source, revolutionizing transportation.
Joe, on the othe hand, invests his money in a telecommunication company that subsequently fails. The technology the company develops is lost and Joe becomes a homeless preacher screaming "God will seek vengance on your souls" to passerbys in Times Square.
The point? That your examples are meaningless. You simply attributed a positive outcome to the action you endore, and a negative outcome to the action you disagree with.
The whole idea of a "market" is that, on average, any investment will return approximately the same value. Usually higher risk investments, such as those that VC's engage in, return more, since it is necessary to have a lot of money in the first place to participate in those. But in general, the market itself performs the equalization, making sure that there is not a huge advantage to investing in one area.
Investing money is only beneficial to society if the end result of the investment benefits society. Is it beneficial to invest in a company that makes nuclear weapons to sells them to terrorists? In that case, I think we would rather that you spend your money on the Ferrari.