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BayStar Sets Lawyers on SCO
myster0n writes "According to The Register: 'SCO's attempts to rescue its relationship with BayStar, its biggest backer, have come to naught. On Friday morning, Eastern time, SCO announced that the stock buyback deal it agreed with the unhappy investor had closed. Two hours and five minutes later, Baystar issued a statement saying that a) no it hadn't and b) we'll see you in court, matey.'" Thanks to The Reg for the write-up.
Actually they are in California, so it should be "we'll see you in court, dude." You are probably thinking of Royal Bank of Canada (RBC) that originally was apart of the $50m cash infusion that backed out a while ago when Baystar bought them out.
Yes there is - a matter $30m, roughly. If Baystar get their way, they could get back their entire $50m, as opposed to the $22m that SCO are offering, as far as I can tell.
When those dueling press releases were issued friday July 23, 2004 only long time SCO2 watchers Stephen Shankland of Cnet "SCO, BayStar resume squabbling" and Eweeks Steven J. Vaughan-Nichols "BayStar Threatens to Sue SCO" reacted to the PR releases of SCO and Baystar (the later with a good double feature), joint by USA Todays Tech Investor "SCO says BayStar deal closed; BayStar disagrees".
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Today a second wave of Bad PR build up, starting with two refrubished Stephen Shankland
articles in Australia, followed by Tom's Hardware Guide noting that SCO2 is in a "FiaSCO - SCO's war on Open Source about to be fought on six fronts" (notice that this is the same side that debunked Darl's Naked German Shorts before the last conference call was over)
http://www.tomshardware.com/hardnews/20040
Next was Londons The Register to notice that "BayStar sets lawyers on SCO"
When daylight crossed the atlantic, SCO2 tried to build a dam agaist the wave of bad PR and issued two press releases at 8 o'clock US east cost time in a desperate move to cover the bad news at the top of their news heap, to scroll it off the screens like a Troll posting bogus messages. Let't get some popcorn and see if it holds.
It read that way because the full text of the story was lifted from the story on The Register.
My rules of investment which are also followed by Warren Batty (or do I follow his rules? ehh I like my wording), is to never short a stock. The most money you can make from a short stock is the current price times the number of share you buy. Meaning that as the company approaches zero, the less likely you are to make more money. See in a regular stock purchase, your highest price approaches infinity because there is no limit to how high the stock can go; therefore, your better off to buy a positive company.
In the case of SCOX, the most you could make is $4.15 per share as of 10:38AM ET.
This is more or less standard in business. We don't hear about it most times because most cases of this nature are not high profile. It is posturing. SCO is a big old machine that's at the end of it life; everything is shaking, and soon it will just fall apart.
And this is exaclty why the suit will never happen, BayStar knows that in the end, with a law suit they will only help bring down SCO before they get any money at all. The threat of a law suit (and that's all it is right now) is BayStar's way of saying "look here, SCO, do what we want or else". In the end, it will probably work.
"Who are in control, they are not in control of anything - they don't even control themselves!" - Glen Beck
To be more clear, the most you can do when you short a stock is to double your money if the stock goes to zero.
...and release all UNIX IP to the public!
I think it's been said before, but I'll say it again. No one company has complete control over all of the UNIX source code. Each vendor's version drowns in code it licensed from other vendors, making the whole thing a legal quagmire to even look at.
I can't find my source...it was a Linux Journal interview with the former CEO of either SCO or Caldera.
tasks(723) drafts(105) languages(484) examples(29106)
Call your broker if you don't believe me. its not possible with SCO.
FYI, the Royal Bank of Canada (RBC) is the Canadian investor you're thinking of. They originally bought in for $30 million, while Baystar's stake was $20 million. RBC sold their stake to Baystar for a substantial loss.
Here's a link to a ZDnet article about RBC fleeing the SCO fiasco.
While I agree that shorting SCO right now, if it were possible, wouldn't be the greatest idea, the people who shorted SCO at $24 are happy.
Both traditional investment and short selling have limits. Speaking both technically and practically there are limits to high high a stock can go. There is only so much market share available before you have to start dealing with anti-trust legislation and market saturation. Things get increasingly difficult the bigger you get. For this reason, stocks rarely go above certain values.
Conversely, there is a lower limit to stock price for shorting a stock, $0, but that doesn't mean your gain is limited. If I decided to risk big and short SCO for a million dollars, confident that SCO will be out of business real soon now and then they do go bankrupt, I just made a million dollars. It doesn't matter if they were trading at $0.01 or $1,000,000 per share when I bought them, I still made a million dollars.
Sometimes your strategy is good. Sometimes it is bad. There are few absolutes in investment.
Random and weird software I've written.
Ignore SCO? Not so soon, bucko.
SCO still has considerable cash, though it's a finite sum. They will continue to find ways to trim the budget. The expenditures earmarked to prosecute the DaimlerChrysler suit are now lessened and money budgeted for it can either be funnelled to the other suits or to their regular operating expenses.
As Steven Vaughn-Nichols pointed out last week, this show ain't over. The fat lady may be rehearsing but she's not even been asked to step into the amphitheatre, let alone sing.
I think we need to take a good look at what they claim to own in their court filings:
JFS? ported from OS/2.
RCU? Initially refused by Linus until IBM granted all of opensource use of IBM's patent on the technology.
ELF? Released to the open public as a standard by Novell, Old SCO, and Intel.
There are more but they are along the same lines.
This case is baseless.
No, it doesn't. That question isn't worth considering until after a trial has at least started.
You raise a very good point: No trial has even started. (someone correct me I am wrong here) but every case is in the pro-trial mode, with Discovery and Motions galore, but SCO hasn't been able (or willing) to actually begin a trial yet.
At this stage, it is entirely possible that no trial will EVER take place with SCO on either side of the issue. Even RedHat and others may drop their suits once SCO has imploded and ceased to exist as a corporation.
I can see it now, SCO's office, with only Darl left sitting at a desk in an otherwise empty building, doing an impersonation of the Music Industry Guy in the South Park "Chef Aid" episode: "I am above the law!!!!" [*spooge!* add hair cream...].
Tequila: It's not just for breakfast anymore!
Sco keeps on making press releases in order to keep their stock price up but they they are still free falling Scox on NYSE in the lower part you can see 2 press releases this morning.
This is totally insecure, but very convenient.
It looks like the people who were buying into this whole traveshamockery are starting to wake up. If this keeps up, it looks like SCOX will be in the toilet by the end of the year. The sooner this is all over the better.
"I think you mean SCOX"
Yes, because SCO2 implies that there was a SCO1, so I prefer it to "ex-Caldera" or "counterfeit SCO", just for those who confuse Darl's little litigation company with the former software seller The Santa Cruz Operation. In stock abbr. it is SCOC vs. SCOX
That's exactly what it means. Your potential gain is limited to $1,000,000. Shares of a pubically traded company can't go below zero, so that's the mathematical limit of your gain. On the other hand, if SCO wins their lawsuit and the price skyrockets (unlikely I admit), your potential liability is limitless. Obviously, when we're talking about gain/loss, we're talking fractional, like your investment went up 10%. Of course you could make more by simply investing more, but when people talk about limited gain, we're not talking about investing a different amount of principal.
To sum up: Normal stock = loss limited to principal, unlimited potential, as stock can only go to zero but can go up arbitrarily. Shorting = exact opposite. If the stock goes up a ton, you have to buy enough shares to cover your position.
Who's Warren Batty? You're not referring to Warren Beatty? That would be weird, since he's famous for acting, not investing.
There are a number of good reasons for wanting to sell a stock short.
For one, arguing along the same simplistic lines as you did: There are far more ways of running a business into the ground than running it sucessfully. Failure is also easier to predict than success.
I could've told you two years ago that SCO was going to go out of business. And they will, just watch.
The more serious reason for wanting to short a stock is to hedge your position. If you are holding a long position in 100 shares of a company when things start looking bad, you can short 50 shares, hence halving your losses, but also your eventual profits in the short term.
Investors like stability.
As for a more serious reasons NOT to short stocks, especially SCOX, is the large risk of cornering the stock. A short only works when someone is prepared to buy it back at lower price. In the case of SCOX, a significant percentage of the outstanding stock is shorted. When these guys want to cash in, there may be so few sellers left the price will go up.
This is one of commonly found (but misguided) applications of the infamous "rubber band theorem of probability"; which insists that chances of independent events should mutate over time to bring universe closer to equilibrum; it's only fair that after long time period of monkeys not flying out of your butt chances must have been accumulating for it to eventually happen. That's obviously complete rubbish, to anyone with basic knowledge of statistics, yet it appears frighteningly intuitive to "common folks", who often think it's perfectly valid reasoning. "They have had 6 sons, now it must be REALLY improbable that they'll get seventh"..
I admit, though, that in general even uneducated folks should be able to see more clearly the fallacy of the theorem, when presented with your particular example of an event... I think I'll start using it as the counter example from now on. :-)
Check out this InternetNews article for more background information on the BayStar - SCO lawsuit.