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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.
This is really going to hurt SCO, really going to put a large dent in their legal warchest. Let's say SCO does run out of money and they are forced to drop their suits...what happens when someone else purchases their "patents" and starts the whole thing over again (hi, Microsoft)? I'd almost rather SCO see this to the end, as it appears that they have a penchant for shooting themselves in the foot.
Their (even bigger) loss.
AC comments get piped to
Quoth the article:
Now if they're so happy, why are they buying their shares back?
A fool and his financiers are soon parted.
It's been fun watching the SCOX hover around the $5 mark. I only hope they stay alive long enough for IBM and Redhat to be able to drive the stake through their undead hearts.
Now for the REAL question - with evidence that Microsoft was behind the feeding of SCO, will the DoJ find the balls to actually investigate? Perhaps if the SEC launches action against the SCOzos...
Would this be seen as profit for SCO? I'd hate to see them have more funding for the FUD campaign from hell.
My personality is like a coupon, it's 10% off.
Baystar investment managers have left Baystar "to pursue other opportunities." These include, running technology funds for Mutual Fund companies!
Gotta love the way the ol boy network functions in the financial sector. Just give your classmate from Yale a call, and boom - you are off to lose more money for other people...
Financial analysts need permanent records. I need to be able to Google the guy running a fund, and have it say "this moron thought SCO was a good idea in 2003."
Any takers?
===== Murphy's Law is recursive. =====
This reminds me alot of Junk Bond trading from what I remember of reading in the newspapers (remember those things...newspapers that is...well, soon SCO too) at the time.
With what the remainder of the stock is selling for now and considering outside held debt, this would not be a good time to invest in SCO
I have a theory that the truth is never told during the nine-to-five hours. -- Hunter S. Thompson
... on how long it takes Baystar to come out and say that SCO is talking shit and something much, much worse is happening from SCO's end than they're letting on to. Like Baystar starting a lawsuit or something.
Seriously... I wouldn't put it past them.
Alito: A vote for Alito is a punch in the eye to put that bitch back in her place!
I hope you're not a stockbroker - the link you have given is for the Speedus Corporation. Try looking at The SCO Group.
According to this site, the changes in the stock price have been: (-57.4% - last 3 months, -70.0% - last 6 months, -22.5% - last 12 months)
And analysts still recommend it as a "strong buy".
Why should they care? VCs expect to lose about 85% of everything they invest -- that's the level of risk they take. They make so much back on the other 15% that it's worth it to them.
This is why they're not really bothered about due diligence, and why they aren't interested in ways of reducing that 85% -- it's chickenfeed compared to the profits on the other 15%.
Yes, that's "Banker" spelled with a "W"...
From the PR:
If Baystar is lucky, right now that's about 250,000 shares a day average, or 25,000 shares a day that they can sell.But, let's assume that they can get the sales up to 500,000 shares a day average, letting them sell 50,000 a day. With 2,846,004 shares to be sold, that means that Baystar, if they sold every day, would need 57 market days (about 11 1/2 weeks) to sell out... with 25,000 a day, you of course double that. This means that, if they could start selling next Monday, Baystar would be out of the stock around the First of September (around Thanksgiving if they sell at 25,000/day)
Poor Baystar....
NOT!
We are the Music Makers, and We are the Dreamers of Dreams...
Now SCO has $13 million LESS to harass people with. This shortens their lifespan considerably.
Not to mention, they are unlikely to get ANY further investment...
I think, with the inevitability of certain doom, even imminent, Canopy does what Canopy does best:
Funnel the remaining cash into their own pockets and lets the SCaldera shell die.
This is what they've done time and time again. Think Caldera got the money from their DR-DOS lawsuit?
Nope. Canopy did. They formed a new Caldera corp, moved it's operations there and continued the lawsuit with the shell of the original corp.
Anyone investing in SCaldera should remember that...
Corporatism != Free Market
There's an interesting interview with Darl at The SCO 2004 forum
Darl: I was trying to explain this to my father the other day. We grew up on a ranch, and he was asking the question "What was up with all the lawsuits - sounds very complicated?"
"Well, it's quite simple, it's like our days growing up on the ranch If you took the cattle up on the mountains in the Summer-time, and in the fall, you went to round them up, you had to bring the cattle back in, and whenever they had a brand on their side, you could establish which brands were yours. In the meantime, if somebody came and took your cattle, you had the rights to go track them down. When I was growing up we had a case very similar to this. Someone stole our cattle, we went and found our brands. The Brand inspector helped us get restoration of those cows back to us, and we were whole again with our property. That's exactly what's going here. Copyrights of software are very similar to brands on cattle. And what we're doing is we've found that the copyright [works] we have here have made their way into other properties. We're in the process of rounding these up, and once we have them rounded up, then we will feel that we have restitution and justice, for our intellectual properties demands that we have out there."
Well, if he'd tell us what his brand looked like, we could return the lines of source code to him. Unfortunately, until we know what his brand looks like, these could be the stolen lines of SCO UNIX for all we know:
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
That means that Microsoft now owes Baystar something in excess of $50 million - $13 million = $37 million and $50 million - $26.7 million = $23.3 million.
The former is more realistic, and Baystar execs deserve something for their willingness to play the fool. So, in the next year or two look for Microsoft to do something that'll net Baystar a quick and easy $50 million in profit.
Am I being cynical or conspiratorial? I think not. Just realistic.
Mike Perry, Inkling blog , Seattle
I bought at 5 and sold at 10... never dreamed it would go to 20, I mean seriously... who thought there were that many silly people in the market.
I felt sure that there were enough silly people to push it to 10 tho.
Didn't have the balls to play on the short side, because I can't tell who all is in that bed... so, I couldn't really tell how long the ride was gonna last.
And, I'm still not rich. But... it didn't hurt.
--Phillip
Can you say BIRTH TAX
Baystar only put in $20Mil originally. RBC put in the other $30 Mil. I'm figuring they probably paid RBC 7-8Million for the their 20,000 shares. So you figure they have about $28 Million. They get 13 cash and 2.1 Million shares(currently at $4.80) for another 8 Million. If they were smart(they are) they have been shorting SCO for some time(probably shortly after the deal was done) around the $15-20 stage. They will at the very least break even, but Im thinking they will actually make a very modest profit in the area of 3-5 Million. All that aside, I am sure even if they were to take a small loss, they are very happy not to have lost their shirts. They were sweating, the more they read on the case, the worse things looked. They talked about SCO dropping UNIX entirely and focusing on the IP. I think someone must have lifted the sheet and revealed the fine turd they had bought;-)
SCO re-scheduled the earnings call for June 10. This is one day after the hearing on Daimler-Chrysler's motion to dismiss. Perchance SCO wants to have an early opportunity to spin the results of the hearing?
Bruce
Bruce Perens.
We as a society can't afford to fund every idea and possible invention out there. We need people whose job (full or part time) it is to allocate capital and resources to the most deserving projects. Those that have the highest chance of success. Those people are called investors. Granted they don't make perfect decisions, however, if you could do a better job you'd be rich and you could decide which projects to fund.
The man who invests his money and attempts to create further value for society is to be commended over the man who gluttonously consumes his wealth.
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.
We need more Joes and fewer Bobs.