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SCO Stock In Danger of Delisting, Again

Posted by ryuzaki0 on from the pennies dept.

hweimer writes "In 2005, SCO got into delisting trouble because they failed to file their annual 10-K report in a timely manner. SCO seems to be headed the same way again for a different reason: the stock price is too low to meet Nasdaq's requirements. Quoting: '[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean.'"

7 of 188 comments (clear)

  1. No one to sue by kkelly · · Score: 5, Insightful

    When your business model depends upon litigation, and you have no one else to sue. What do you expect to happen?

    --
    K
  2. You're on the Titanic by rolfwind · · Score: 4, Insightful

    and you only have a single bucket. How do you stop the ship from sinking?

    The answer? You don't. It's useless to try to stop the inevitable.

    1. Re:You're on the Titanic by AKAImBatman · · Score: 5, Insightful

      How do you stop the ship from sinking? You don't.

      That's not entirely true. If a company has revenue, there's a possibility that they can trim back to ONLY that revenue. If the revenue coming in is more than the cost to support that revenue stream, then the company can continue on. The problem comes in when your revenue is smaller than the cost of maintaining that revenue. Then you're screwed.

      If I were an SCO investor right now, I'd be getting together with the other investors to stage a coup. Do like Take Two and fire the board and executive staff. Then install someone who will fire SCO's "crack" team of lawyers (drugs aren't good for you anyway) and start sweeping through the company firing anyone who's not related to the few revenue streams that SCO actually has. Normally that would be a sad (and often dangerous) thing for a company, but in SCO's case, I doubt that many tears will be shed.

      Once the company is pared down, then the focus should be on two areas:

      1. Improve the customer relations that SCO has been driving into the ground for so long.

      2. Look for ways to leverage the remaining company to produce new or enhanced products; thus opening up new sources of revenue.

      Normally, I'd say that this is a plan put forward by a wannabe-CEO looking for a Golden Parachute job. As scary as it sounds though, I think it might actually work in SCO's case. *IF* (and this is a big "if") the investors get their tails in gear and flip the company upside down NOW. The longer they wait, the less likely they are to succeed.
      --
      Javascript + Nintendo DSi = DSiCade
  3. Re:potential source of income by fotbr · · Score: 3, Insightful

    Back it up with proof, and quit hiding behind the anonymous coward.

    Otherwise, you're just another SCO troll.

  4. not actually delisting... by rkhalloran · · Score: 5, Insightful

    After 30 days of trading below $1., they'll get a warning notice from NASDAQ. Then they have to trade above $1 for ten straight days out of the next 90, or get a second notice, and a second chance to get their stock above $1 for ten straight days.

    What is *more* troublesome for the SCOundrels is that if they're under $1 on May 15, they're likely to be dropped from the Russell Microcap index, which would likely trigger a selloff from funds referencing it.

    As much as this stock is being shorted by people waiting for the death plunge, either case may be enough to finally tip it over. And with the case obviously headed for oblivion, the likelihood of a Black Knight stepping in with bags o' money again is pretty slim.

    SCOX DELENDA EST!!

  5. Re:boosting share price by Jonny+do+good · · Score: 4, Insightful

    Many companies buy back their own shares, both to boost share price and to give stockholders a return not based on dividends. I don't know if SCO has the cash to do it any more, but...

    SCO is not in the position to buy back their shares but they do have a very simple option, a reverse split. Although it isn't common and often has a negative effect on the market capitalization of a firm because it is a sign of weakness in the market it will have the needed results. It is quite simple to do, legal, and only requires the board of directors to execute. Shareholders don't even have to agree, although most would if it means the difference between being listed or going the way of an OTC stock.

    Share repurchase programs usually don't have a significant effect on price by themselves. The number of shares needed to repurchase, and the cash needed to execute a significant repurchase program often doesn't make it feasible to significantly fix the stock price. Share repurchase programs are usually designed to server one of two puposes: to signify that management thinks the company is undervalued, or to consolidate ownership. The second option is only used when a company has piles of cash and it accounts for more than 10-15% of the market cap. Smaller programs tend to be used to accumulate treasury stock while the price is low, then re-sell that stock as the price gets at or above where management thinks it should be in order to raise capital without issuing more debt.

  6. Re:boosting share price by InvalidError · · Score: 3, Insightful

    Back in the post-Y2K .com bubble burst, I have seen many stocks going through reverse 5:1 or even 20:1 splits... and in the vast majority of cases, the stocks simply crashed back down immediately after the split. Doing a reverse 20:1 to get your stock from $0.50 to $10 only to have it trade back down to about $2 by the end of the week is pretty bad.

    Almost all anti-delisting reverse splits I have seen back then ended up as suicides... and even today, they still translate into extended near-death experiences often followed by bankruptcy.