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| SCO Teleconference to Explain Itself Friday |
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Thursday, October 16 2003 @ 11:02 PM EDT
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SCO has announced the details of the Friday teleconference. They say they will explain the $50 million from BayStar and tell us what they will do with it and say "SCO will provide further details on the investment led by BayStar Capital Management." Hmm. "Led by" means others? I'm sure every word will be true blue and well worth the time invested. Only "press and industry analysts" are invited. The announcement calls them "the owner and licensor of the core UNIX operating system source code". It will be Friday at high noon, EDT, and there will be an audio replay for those "interested media and analysts" if they will provide SCO with their email. BayStar Tells How to Invest Discreetly and Confidentially Here's an interesting document. It's a white paper prepared by BayStar on PIPE transactions. Hint: go to Google and type in "baystar capital microsoft" and click on the third pdf link down on the page. Look at page three of the document. And there it is. Or just click here. Here is how BayStar describes a PIPE transaction: "A PIPE is a private investment in public equity. A form of private placement, PIPE transactions enable companies to raise capital in smaller amounts and with less dilution, lower expenses and greater flexability than a traditional secondary offering. PIPE transactions provide greater control and discretion in raising capital by allowing companies to issue securities without revealing their deliberations to the market until the transaction is completed. PIPE securities, which can be equity or debt or a combination of both, are typically sold at a discount to the current market price to a small group of accredited investors and/or institutional buyers seeking to acquire positions in desirable companies. . . . PIPE transactions -- particularly for those companies looking to access the capital markets quickly and discreetly without the increased visibility of a secondary offering -- can be an equally attractive or even superior vehicle for raising capital. The ability to conduct transactions confidentially, the reduced fees and management time, and the enhanced flexability of the process, are all important considerations that highlight the increasing value of PIPEs as an effective capital raising technique." And who is listed in the top 10 list of investors in PIPEs since 1995? Why, Microsoft, silly. Who'd a thunk it? Disclaimer: this doesn't prove they made BayStar do this or gave BayStar the money to do it, or are the man behind the curtain or anything else necessarily. But it does mean we hope you journalists will read all about BayStar's investment philosophy in this document and ask SCO exactly where the $50 million is coming from, whether from BayStar alone or whether they are merely the conduit and if the latter, for whom? UPDATE: I want to stress even more clearly than I thought I already had that this document does not demonstrate any MS-BayStar connection. MS invests in PIPEs and BayStar does them, but it doesn't necessarily follow that MS invested in BayStar. It's important to be fair. Yes, to MS too. And until we actually find a provable connection, and we have not so far, I don't want to contribute to any talk that such a connection has been proven. I'm very clear that no such connection has been proven, but I'm spelling it out very plainly, because I've gotten a lot of email from people sending me this document and saying it proves a connection. It does not, in my opinion, do that. It does raise the question, but it doesn't provide the answer on its own.
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| Authored by: Anonymous on Thursday, October 16 2003 @ 11:38 PM EDT |
Delays IP license price rise (Stowell quotes)
http://www.theage.com.au/articles/2003/10/17/1065917590175.html
Baystart (Stowell and McBride quotes, note: even CNET is contrasting his current
statements to previous ones)
http://news.com.com/2100-7344_3-5092702.html[ Reply to This | # ]
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- Analysts... - Authored by: Anonymous on Friday, October 17 2003 @ 02:49 AM EDT
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| Authored by: Anonymous on Friday, October 17 2003 @ 12:02 AM EDT |
| > Only "press and industry analysts" are invited.
I am not sure it
is so exclusive - they may just be specifying their target audience. I have
listened in on many of these SCO conference calls. An operator asks for my name
and company affiliation initially, but I answer honestly and have never been
rejected. Linux users have a large stake in this issue, so it is only
reasonable that we call in. It helps to understand what future attacks they
have planned and Darl McBride often provides the same sort of inadvertant humor
as the Iraq Information Minister used to. In addition, SCO PAYS BY THE MINUTE
for you to listen in. As noted in the press release, USA residents should call
800-811-8824 at 9AM PDT (Noon eastern) with confirmation code 690025. You may
even get a chance to ask Darl a question live, although Q&A seems to be more
heavily restricted.
-Fyodor
Concerned about your network
security? Try the free Nmap Security
Scanner
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 17 2003 @ 12:08 AM EDT |
When I think of SCO the phrase 'justifiable homicide' comes to mind. I cant
tell you how utterly disgusted and sick to my stomach I am. But in the end I
know that no amount of money can change the truth. As the end nears, I hold on
to the belief that DB, BayStar, SCO , Canopy, McBride, Sontag, Stowell, Yarro
and all their investors will get ALL that they justly deserve.
JohnC
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| Authored by: Anonymous on Friday, October 17 2003 @ 12:22 AM EDT |
Well I think this investment is not really intended to
help SCO. They are not assuming SCO is gonna win against
IBM I guess. Rather than that, I can imagin that there are
some people still think the UNIX system is valuable even
SCO would be gone. So they are thinking that wether SCO
wins or loses the law suite the UNIX system will remain
and still need support for companies who have been running
UNIX for commercial use. That's the reason I think. They
are investing to the UNIX not SCO.
They will realize they don't need UNIX at all near future
though...
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| Authored by: PJ on Friday, October 17 2003 @ 02:04 AM EDT |
Here's my favorite part:
"Members of the open source community warned SCO last month in an
open letter they would initiate civil action under anti-fraud and
consumer protection statutes."
Yay! team!
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| Authored by: Anonymous on Friday, October 17 2003 @ 02:19 AM EDT |
Bill: Hey guys, can you help hold down Linux growth a while longer? Looks
like Longhorn's gonna be late.
Darl: Sure. I guess it'd take about
fifty million.
Bill: I think I can help. Here's the number to
call.
---
But SCO may have made a mistake. Investors want to get
something in return for their investment: A large chunk of control, a cut of any
profits SCO brings in (yah, right), or maybe, after IBM has crushed SCO, Darl's
head on a platter with a side order of Chris. I have to wonder if SCO management
will be finding itself very sorry they went after this sort of funding. And if
Microsoft is behind this funding... well, SCO should quickly make a list of all
the companies that Microsoft has invested in and then check which ones were
wildly successful following that investment. You can guess what they'll
want in return for the investment.
Someone told me years ago that when
things get tough, people tend to revert to past behaviour that they're most
comfortable with. For 'ol Darl, that's fundraising. Lord only knows what the SCO
board of directors was thinking when they hired a fundraiser to run the
company and not someone who's actually made profits from creating products and
selling them. Oh, darn, I forgot: SCO doesn't really have a product that anyone
wants to purchase. So I guess they had to resort to panhandling in the
investment community to feed their lawsuit habit.
And here's a thought:
Maybe they can now prolong their legal battle long enough for the SEC to wake up
and take notice of what going on with their stock. If Microsoft's involved, the
longer legal battle gives people time to ferret out Microsoft's involvement.
Wonder if the anti-trust decision would allow behind-the-scenes investment in
companies that attempt to destroy Microsoft's biggest competitor?
(Looking
forward to the transcript of the conference call.)
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- Fatal mistake? - Authored by: PJ on Friday, October 17 2003 @ 02:32 AM EDT
- Grim Reaper - Authored by: Anonymous on Friday, October 17 2003 @ 10:53 AM EDT
- Grim Reaper - Authored by: Anonymous on Friday, October 17 2003 @ 01:22 PM EDT
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| Authored by: Hygrocybe on Friday, October 17 2003 @ 07:24 AM EDT |
Although the links are very tenuous and I suspect will be impossible to prove
(unrecorded telephone discussions, shredded non-copied letters, secret single
person meetings), I have always believed and still believe that when the dust
settles, careful deduction will show that the hand of Microsoft was
"stirring the soup bowl" in at least some of SCO's moves against
IBM and Linux in general. Recent articles suggest that Microsoft is almost
"terrified" of what Linux is becoming, and that Microsoft has no
commercial way of blocking the ongoing Linux success. Again, since Longhorn
cannot reach completion and release until about 2006, every bit of the SCO case
could be re-construed as a deliberate attempt to limit the general Linux uptake
by big business and government before Longhorn's release.
Several things are worth considering: government uptake is accelerating as is
also business usage. Articles are now in print that suggest that Microsoft's
arrogance in refusing to make its system cross compatible with other systems is
now acting against Microsoft's own interests; and I have read at least three
separate articles which suggest that several large Windows software producers
are now seriously considering Linux releases before they begin to lose very
large future markets. The rash of Windows viruses is also aiding Linux. The
viral susceptability of Windows has led at least one journalist to pronouce that
Windows is the best virus incubator that the internet has produced and that the
costs of this non-secure system are now reaching more than 50 billion -
strangely that is just what is believed to be in the Microsoft war-chest.
Perhaps the pipeline into SCO may start flowing even more ?
---
LamingtonNP[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 17 2003 @ 07:49 AM EDT |
http://www.marketwire.com/mw/release_html_b1?release_id=58011
Anyone know anything about 'SCO Capital Partners'?
Yes, I am probably connecting too many dots, but then I like the rarefied
atmosphere of the tenuous.[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 17 2003 @ 08:36 AM EDT |
This being Gorklaw I would not be surprised if this has not
been posted before but if so I am unaware where.
This is a link to the IBM - Novel/SCO attachment to the
AT&T Sys V contract.
http://pel.cs.byu.edu/~sorenson/SCO/Docs/SCO-IBM/ExhibitD.qxd.pdf [ Reply to This | # ]
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| Authored by: mflaster on Friday, October 17 2003 @ 10:31 AM EDT |
| I am very interested to hear the details of this financing. In particular,
assuming the features are as favorable to BayStar as I think they will be, it
might be clear that BayStar did it simply to make a chunk of change, regardless
of how SCOX performs.
The things I'm most interested to hear:
- What
is the coupon, if any? i.e. how much interest does SCO have to pay to
BayStar?
- What kind of reset provisions are there? In other words, is the
number of shares that they get fixed, or if SCO's stock goes down, can they get
more shares? This often leads to what is called a "death spiral". You can read
here about The "Death
Spiral" PIPE.
I still think there's a good chance that there
doesn't need to be any conspiracy theories, there doesn't need to be any
Microsoft money in BayStar - BayStar is just doing it to make money!
So far,
the market seems to like it, SCO is up a bunch. But we'll see what happens
after the conference call.
Mike
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| Authored by: shadowman99 on Friday, October 17 2003 @ 11:26 AM EDT |
I don't have the resources to capture that call to an audio file, but it seems
like it would be a useful thing to have for later. At least Darl wouldn't be
able to play historical revisionist later.
What would the legality be of recoding an open public conference call?[ Reply to This | # ]
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| Authored by: eamacnaghten on Friday, October 17 2003 @ 12:33 PM EDT |
An interesting - and possibly(probably) relevant article...
http://www.b
owne.com/newsletters/newsletter.asp?storyID=227[ Reply to This | # ]
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- Toxic Convert - Authored by: Anonymous on Friday, October 17 2003 @ 06:53 PM EDT
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| Authored by: mdchaney on Friday, October 17 2003 @ 12:38 PM EDT |
This is a rough log of the call. I don't understand some of the financial
terms, but you get the gist. There's nothing new here that I can see except
for one thing, and that is that Darl says they're looking at going after really
large companies who have a Unix license and are using Linux. These are not
vendors of Unix, rather large companies that have directly licensed Unix from
what I gather.
Anyway, here you go:
Baystar $50M
Private placement of non-voting series A convertible shares
They are convertible to common shares
The conversion price is $16.whatever
17.5% of the companies outstanding shares
No dividends to be paid for 12 months on these shares
After 12 months, they will be get an 8% dividend on that money
It rises 2% each year, capping at 12%
Cash is $61M
It provides additional resources for their business, including
"scosource" of course
*1 for questions
Steven Shankland?
Last May you said you'd not be gettin equity investments because of
scosource, why'd you backpedal?
Darl:
It's easiest to raise money when you don't need it. We took a small
amount of dilution given our market cap. We weren't looking for
capital. We had people approaching us saying "can we buy some shares,
can we get into a private placement with you?" We said "this could
be
very valuable".
The stock was under $10 in May, and the dilution would have been
significant on $50M. Now...
Why go through the Baystar?
Baystar has a very strong track record. Companies who have PIPE
investments from Baystar have done well. Strong in the tech
marketplace.
Herbert Jackson:
Can you give any color to the strategic partnership initiatives you've
alluded to in the release?
Darl:
We have multiple opportunities in front of us. Over 2M Unix servers
running today. We have a strong installed base of SCO Unix. We've told
the installed base in the last two months that we're going to keep
moving forward, customers are happy.
Web services where we have the ability to put web services around the
OS. Various discussions about that, happy about them.
Small percent of company working on scosource. Clearly a lot of
opportunities here. SCO owns Unix, having ownership is "gigantic
marketplace opportunity".
Looking at growning the company, we now have a "war chest" to use.
Does Baystar have the right to do partial conversion? What remedies are
available if SCO can't pay up on their obligations later?
SCO:
They can beging to convert immediately, 100,000 common shares converted
at a time.
There is mandatory redemption, once the stock reaches a certain price
(150% of current) or after 20 days.
"We need to increase the liquidity out there."
Darl:
We're looking at the track record of other companies that have taken
Baystar.
Peter someone:
You are backing off litigation and invoices. How does the investment
play into this?
Darl:
Investment is independent, but strengthens and bolsters the licensing
program.
"We're signing up people"
Basically saying we're not going to sue home users, but companies need
to pay. We might have to sue companies in the future, but we'd rather
just make deals with them.
We're having very good traction with our licensing discussions. As long
as people are licensing us, then we're in great shape.
Peter:
80% of businesses don't care about SCO, are you concerned?
Darl:
20% of people are concerned, just with 6 months of us talking about it.
I can tell you from being out and meeting with large (global 1K)
customers, there is impact in the marketplace.
As more people start licensing, and others don't and we end up in court,
it'll have an impact.
We're discussing this with customers, and it's going well.
CRN:
Negotiations with IBM? Settlement within the next year?
Darl:
We've met with a number of people that we can't mention, but we don't
rule out the possibility of reaching a "global settlement". This is
not
just an IBM issue. The entire industry has to determine how to solve
this.
CRN:
What is the status of the lawsuits?
Darl:
RH: back and forth, filed a motion to dismiss, expect we'll hear
something about that. If it's going to be heard, we'll go in and show
we have a valid claim against IBM.
IBM: That one is in the claims/counterclaims response mode, within the
next week more should come out.
Someone:
It sounds like you're already making license revenues. Is that
something that Baystar was aware of?
Darl:
Baystar did due diligence, understand the opportunies that we have.
They have an understanding of current business operations.
Evan Bark, Computer Wire:
What's going on with SGI? New deadline? What's up?
Darl:
We have discussions going on with SGI, working through issues, no
rescinding of contracts. "We're pleased with SGI's behavior"
during the
last 60 days. They've publicly announced that they removed a couple
hundred lines of code from Linux, etc.
CW:
?
Darl:
We don't see anything else on the horizon that is troubling to us. We
have over 6000 Unix licensees with end users who may be using Linux,
we're looking at that as a possible enforcement venue.
(Blake - forward looking statements)
Darl, closing:
Points to clarify
1. Baystar has a stellar track record in the marketplace. We had
strategic discussions with them. We're both enthused by the prospects
held by SCO.
2. SCO's business is growing in every way. All products, operations,
and share price of course.
SCO believes in the value of proprietary software and intellectual
property.
We've done well by buying back 4M shares at under $1/share last year,
and getting $50M for just 2.9M shares this year.
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| Authored by: mec on Friday, October 17 2003 @ 12:38 PM EDT |
| SCO Call
2003-10-07
Take it easy on my poor little mom-and-pop-running-Linux
ISP.
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| Authored by: JoeyTheSaint on Friday, October 17 2003 @ 12:53 PM EDT |
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Yesterday, though, SCO claimed the licensing program, launched in July,
was a success although it refused to say which organizations or how many had
taken out licenses.
Instead, SCO intends to provide further details
during its fourth-quarter financial briefing on December 5, the spokesperson
said.
"We have met our goals," he said.
Is it just me, or is
this rather off-handed quote pretty frightening? I mean, it's probably taken
completely out of context, but in this particular context doesn't it sound like
the (unnamed?) spokesperson is saying that even without making money off their
licencing program, they've accomplished what they wanted to do with
it? ---
-Joe. [ Reply to This | # ]
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