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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.'"

26 of 188 comments (clear)

  1. boosting share price by TheSHAD0W · · Score: 5, Interesting

    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...

    1. Re:boosting share price by WrongSizeGlass · · Score: 5, Funny

      I guess SCO could buy back their own shares ...

      ... if they were out of toilet paper or maybe had some other serious paper related dilemma ;-)


      warning: The above content may test positive for sarcasm and/or could be a failed attempt at humor and as such should be taken with a pound of salt.

    2. 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.

    3. Re:boosting share price by Anonymous Coward · · Score: 5, Informative

      I think his issue is that the poster didn't disclose that it was his own content, and even said "Quoting:" which at least implicitly infers that he just happened across the content, not that he'd written it. Disclosure = a fairly good rule of ethics for "journalists" (although the "blogosphere" (gack) is pretty good at being selective about when they want to categorize themselves as journalists).

    4. Re:boosting share price by theonetruekeebler · · Score: 5, Informative
      Their market cap is about $20m (at $0.94/share).

      Aside from rules compliance, and paying the annual listing fee, NASDAQ has three basic rules about staying listed:

      • Minimum share price of $1
      • at least 750k public shares
      • at least $5m market value.
      If they fall out of compliance for 30 straight days (and they last traded for $1 on March 13), they get a delinquency notice and have 90 days to get it together. Their ticker symbol will probably change from "SCOX" to "SCOXE" while they're under threat of delisting. [Source]

      SCO already did a 1:4 split back in 2002; I'm not sure how the exchange will feel about them doing it again, because had they not done that split, their share price would currently be less than a quarter.

      --
      This is not my sandwich.
    5. Re:boosting share price by badasscat · · Score: 4, Interesting

      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.

      I think you're confusing the issue a little bit.

      The reason reverse splits rarely work is that they don't solve the underlying problem that's causing the dropping stock price to begin with. They treat the symptoms, not the disease. Which means there's nothing "suicidal" about the reverse split, it's just that they don't really accomplish anything other than keeping the company on the market for a bit longer.

      It's kind of like taking an aspirin for the pain being caused by a brain tumor. You'll eventually die anyway, but it's not because of the aspirin, it's because of the brain tumor. Taking aspirin isn't "suicidal" and in fact has no bearing whatsoever on your health, it just doesn't solve the real problem.

      Lots of people think about stock prices as if they're somehow disconnected from company performance. That's a real dot-com era way of thinking, but we should all be back to reality by now. A reverse split *can* work, but only if it's combined with measures to make the company profitable again. But certainly, if I were a company shareholder, I would want any company that I thought had a good plan for a real turnaround to do a reverse split to keep themselves on the market until their plan started to bear fruit.

      Of course, this *is* SCO we're talking about, so I can't imagine a reverse split would do anything but delay the inevitable.

  2. 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
  3. Daddy Daddy help me by 140Mandak262Jamuna · · Score: 4, Funny

    Urgent message to Uncle Bill and Uncle Steve, Please stop throwing chairs and throw some money for us. Yours SCO

    --
    sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
  4. 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 LearnToSpell · · Score: 4, Funny

      Tie a bunch of sheets together, making a giant cloth balloon. Attach that to the bucket. Build a fire in the bucket, filling the balloon with hot air. Grab a bottle of champagne to celebrate when the balloon pulls the boat out of the water. Gasp in dismay as you realize you forgot to attach the bucket to the boat.

      --
      Haida Manga
    2. 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:You're on the Titanic by MrNiceguy_KS · · Score: 5, Funny

      I think someone's been playing too many adventure games.

      --
      Redundancy is good And also good.
    4. Re:You're on the Titanic by operagost · · Score: 5, Funny

      Not enough. He forgot to take the rope from the hanging corpse in the janitor's closet.

      --

      Gamingmuseum.com: Give your 3D accelerator a rest.
  5. Re:New CEO by Bloke+down+the+pub · · Score: 5, Funny

    Remember, companies don't have to be profitable anymore, they just need enough investors to pay the bills.
    Wow, slashdot's slow today - a post from 1997 just arrived.
    --
    It's true I tell you, feller at work's next door neighbour read it in the paper.
  6. Re:potential source of income by M.+Baranczak · · Score: 4, Funny

    I'm something of a UNIX insider, and I can tell you that SCO is on to something [...]

    Hold him back, he's desperate.

  7. Re:Easy fix? by daeg · · Score: 5, Informative
    Wrong: Does NASDAQ accept reverse stock splits as a method to regain compliance with the minimum bid price requirement?

    Yes. NASDAQ views reverse stock splits as an acceptable method to regain compliance. If the company determines to implement a reverse stock split, it will need to provide certain information to NASDAQ. See the following Frequently Asked Question for additional information. Furthermore, to inform the market of the reverse stock split, NASDAQ will append a fifth character, "D", to the company's symbol for approximately 20 trading days following the reverse stock split.
  8. 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!!

  9. In other news... by Shadow+Wrought · · Score: 5, Funny
    Several news sites are reporting that SCO has filed a lawsuit for $1.5 Billion against NASDAQ for harming their business model. "Our entire operation is predicated off of being able to pump and dump stock," CEO Darl McBride was quoted as saying outside the US Courthouse, "by threatening to delist our stock they are essentially claiming ownership over our business model."

    Technology experts Dan Lyons and Maureen O'Gara were also on hand to bolster SCO's claims. "We've seen all the SCO materials and while its far to secret to disclose, there is no doubt in our minds that NASDAQ is actually a front for Groklaw."

    --
    If brevity is the soul of wit, then how does one explain Twitter?
  10. I know what they can do.... by SQLz · · Score: 4, Funny

    "According to our experts, Microsoft has stolen our code and put it into Windows. I have proof right here in my magical breifcase"

  11. Re:reverse split? by KokorHekkus · · Score: 4, Informative

    NASDAQ also has a minimum regarding the market value of the company and that is set to $5 million which means that they can't continue doing reverse splits ad infinitum. Current market value of SCOX is just shy of $20 million.

  12. very viable business model by teh_chrizzle · · Score: 4, Funny

    When your business model depends upon litigation

    the SCO business model is simply the application of public relations and litigation to a large scale version of the business model employed by that crackhead cousin of yours that shows up at family functions from time to time looking for cash: getting paid to go away.

    the sheer number of crackhead cousins in the united states is evidence that this is a viable business model.

    --
    sarcasm:
    -noun
    1. harsh or bitter derision or irony.
  13. Re:Easy fix? by Applekid · · Score: 4, Funny

    That would make their trading symbol
    SCOXD
    for 20 days.

    I know I'd smile every time I saw it.

    "Hey hey, guy, buy shares of SCO! XD"

    --
    More Twoson than Cupertino
  14. Actually, he's close .... by Anonymous Coward · · Score: 4, Funny

    "I'm something of a UNIX insider, and I can tell you that SCO is on to something [...]"

    He's only out by two letters. It should read: " ... SCO is on something ..."

  15. Re:Easy fix? by Opportunist · · Score: 4, Funny

    would probably accelerate the collapse of the company.

    You say that like it's a bad thing...

    --
    We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
  16. Re:Boosting prices by AKAImBatman · · Score: 4, Informative

    As amusing as it is, it wouldn't work. The SEC has recently started halting trades on any company mentioned in such spam emails. I don't remember for how long exactly, but the hold is something like a week. Which means that such spam will most likely do more damage than good.

    http://it.slashdot.org/article.pl?sid=07/03/09/023 5222

    --
    Javascript + Nintendo DSi = DSiCade
  17. Re:If SCO goes out of buisness. by TangoCharlie · · Score: 5, Funny

    Here's what happens:
    1) Novell gets Unix back.
    2) Novell does deal with Microsoft.
    3) Novell changes name to SCO.
    4) Novell (i.e. SCO) stops SuSE.
    5) Novell (SCO) sues IBM.
    6) Prifit!

    --
    return 0; }