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| Deutsche Bank: SCO May Sue Corporate End Users Soon After All --Decatur Jones: So? |
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Friday, November 14 2003 @ 06:04 PM EST
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Brian Skiba of Deutsche Bank has put out another SCO report, "Four Reasons Why This Story Remains Compelling NOW" and he is predicting that SCO will "finalize" financial arrangements with Boies shortly and then they will open up a new campaign front and start suing corporate end users, maybe as soon as the end of the month. Boies isn't getting paid enough already? Or were the earlier stories floated in the press just hype? Now they are finalizing arrangements? I thought they told us and the SEC they did that already. Who knows where the truth lies with these people, no pun intended.Should there be such "high profile" legal moves, Skiba writes, the stock could pick up nicely, because he says there has been "a relative dearth of news flow over the past several months". He's marking on a curve, evidently. Note also the disclaimer at the end: "Deutsche Bank and/or its affiliates(s) makes a market in securities issued by the following companies(s): SCO Group, Inc. (The)." Oh. No agenda there, then. Wall Street may go wild on this report, I suppose, briefly, because hype and emotion is all, it seems with those hungry dudes, at least the so-called "small" investors. The distinct impression I am getting, being new to finance, is that the big fish in the loop depend on the little fish outside of it going into a feeding frenzy on cue, but what do I know? I'm no financial analyst. Dion Cornett of Decatur Jones Equity Partners, the only other analyst following SCO closely, disputes the DB math, and shows in his October 27 report on SCO that, viewed rationally, no matter what SCO does, in his opinion, there is no way SCO can reach a $45 target from the licensing program, even at its most successful, and his math and his logic is compelling. He rates SCO "Underperform", which they define as meaning "returns at least 15% below the appropriate index". Part of his reasoning is that there are some workarounds that will make it hard for SCO to prove who is and who isn't using SCO code, even if you accept that any of it is theirs to claim, including a survival strategy of sticking with the 2.2 kernel for now and just upgrading applications on top. It's an interesting idea that technically could work for most SMBs. Some more financial facts on SCO on this Forbes page.
With that introduction, here are relevant snips from each analyst's report, including details on the survival strategy.
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"SCO Group, Inc. (The)
"Four Reasons Why This Story Remains Compelling "NOW
"November 14, 2003
"Rating: Buy
"Target Price: US$45
"Brian Skiba
" . . . Reason 2: Near term catalysts exist. Over the very near term we believe the company will finalize the contract with its tenacious law firm Boies, Schiller and Flexner. This will set the backdrop for a stepped up litigious game plan against corporate Linux end users, which we believe could occur as soon as the end of this month. These lawsuits could encourage other corporate end-users to sign license arrangements with SCOX. . . .
"We believe there are several reasons for investors to consider a position in SCOX now, in advance of the scheduled earnings call on December 3rd. Most notable, at less than 8X our CY04 proforma EPS estimate of $2, the valuation is compelling. Further, with the $50 million cash infusion, the company has more resources to pursue its legal strategy. We also like this entry point as we believe the company is close to finalizing an agreement that provides mutual reward and benefit with its law firm -- Boies, Schiller and Flexner. Upon completion of this arrangement, we expect Boies and SCO will begin a legal campaign against corporate end users of Linux in order to jumpstart its IP licensing program. We believe that a number of high-profile legal moves could bring to the forefront the IP issue around UNIX and Linux which would likely result in some monetization on the part of SCO in the form of IP licenses. We believe these events, should they occur, will be a positive for the stock, which has otherwise been in a relative dearth of news flow over the past several months. Our target price is $45, with is 22.5X our CY2004 EPS estimate of $2. Investors should consider an investiment in SCOX as extremely high risk and volatile. . . .
"Disclosures
"Additional information is available upon request.
"Deutsche Bank and/or its affiliates(s) makes a market in securities issued by the following companies(s): SCO Group, Inc. (The)."
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Decatur Jones
Equity Partners, LLC
Independent Equity Research
SCO Group, Inc.
October 27, 2003
Dion Cornett
"We reiterate our Underperform rating as SCO completes its fiscal year. . . .
"SCO Group completes its 2003 fiscal year on October 31 and is expected to report results in mid-November . . . .
"Investment Considerations:
. . . .
"However a small number of things taken together indicate that the company's Linux licensing initiative is not going as well as SCO expected;
"Higher prices may not be justified, even if SCO wins its case against IBM; . . .
"As exhibit 1 on page 4 shows, even making the above series of optimistic assumptions with regards to SCO's growth, the resulting DCF (Discounted Cash Flow) price for SCO is only $8. Clearly investors are betting on a win in the IBM lawsuit and significant Linux-related licensing fees to bid SCO up to current levels.
"And since most Linux deployments today are generally built and maintained in-house using mix-and-match pieces, how is it even possible to audit whether a user picked pieces that belong to SCO? SCO has stated itself that it does not believe meaningful infringement exists in the Linux 2.2 kernel. What about companies still running that kernel or who upgraded with pieces not overlapping with SCO's disputed code?
"Furthermore, the amount due even for users that acknowledge using a yet-to-be-proven infringing product may be miniscule. Some have claimed after examination of the code bases that only 87 lines of code appear to have been cut and pasted. Hypothetically, if a court were to rule that only 87 lines of 2.5 million lines of code contained in a version of Red Hat's code infringe, then SCO may only be able to collect a proportional $0.02 of the $600 received for the complete code. In other words, Red Hat would owe SCO $1,600 for its entire installed based of Red Hat Enterprise Linux customers to date."
And I note no disclaimer at the end about Decatur Jones "makes a market in securities" issued by SCO, either. So, take your pick. Hype or reason? It's up to you. But Jones' point is well taken about using the 2.2 kernel and just upgrading applications on top. It's a survival strategy for corporate users, most of whom don't use any of the high-end code SCO is claiming rights on. I asked Robert Dohnert if the strategy would work, and here is his reply: "With certain types of applications he is correct. Firewalls and mail and web server applications --they will still run efficiently on the 2.2 kernel. We still run our servers at work with SuSE 6.4 which still runs on a 2.2 kernel and we just backport most of the security patches and upgraded libs because my motto has always been if it isn't broke, don't fix it. meaning for our firewall and file servers 2.2 works well. For other things such as XFS which we rely on as our journaling filesystem and Oracle 9i they require certain core components that are only satisfied with the 2.4 kernel but those components can be back ported and incorporated in kernel 2.2 so in theory he is correct, someone would just have to prove it.
"But remember it has been established that those code submissions that SCO showed that were submitted by SGI, only have to do with 64 bit computing and are only tied into SGI's Altix offerings. Things like RCU and NUMA are not normally used by anyone unless you get into the extremely huge multiprocessor units. We just signed on with SGI because one of our clients just bought an Altix system to handle imaging and over dinner tonight myself and SGI's-second-in command of their Linux department had a conversation and he told me that they can prove that all of their kernel engineering practices are original work and that if SCO wants to escalate their war on SGI they have enough ammo to protect themselves, which explained to me why SCO withdrew their confrontation with SGI so quickly. For the average small business owner, SCO offers no threat as those types of businesses typically don't use the features SCO is complaining about. We have over 290 clients ourselves and maybe 15 percent of them use the advanced feature sets that SCO could have anything to lay claim to." What this means is that the pool of companies SCO could stick up successfully is small, even if it had a prayer of success of collecting against anyone. I'm sure SCO won't tell you this when and if they make an announcement about suing end users, so I thought I'd give you a friendly heads up in advance and let you know about the suggested workaround.
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:02 PM EST |
This entire SCO vs. IBM "stock pump-and-dump" reminds me in a way of
the Enron fiasco (which played out about 20 miles away from me).
This time, as a hardcore Linux (and *BSD) user/administrator, I somehow feel as
if I have a "ringside" seat, or a "fly on the wall"
position as this nightmare unwinds.
I keep thinking, "Do they *really* think they can win"?
Or am I (and many others) missing something fundamental to this strategy?
Is is really this simple? SCO starts talking "all grown up" and
ignorant investors jump on the bandwagon?
I've been watching this scenario play out on Groklaw, and it's been a very
fascinating education. Hats off to the Groklaw guys (and gals) ! [ Reply to This | # ]
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:13 PM EST |
I like this line from the Deutsche Bank quote:
"Investors should consider an investiment in SCOX as extremely high risk
and volative. . ."
So they're kind of being honest...[ Reply to This | # ]
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| Authored by: glarepate on Friday, November 14 2003 @ 11:15 PM EST |
So I take it that if I'm planning to short their stock I'd better move soon or
the game will be over before I can make any money off of these slime bags.
---> insert evil grin here[ Reply to This | # ]
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| Authored by: Dave Lozier on Friday, November 14 2003 @ 11:15 PM EST |
Well if this isn't reason enough for RedHat to move forward with it's case
against SCO then nothing is. Also, this should be a warning shot to make
Hollywood take aim and fire back. Why should anyone wait to be sued if they can
sue first?
---
~Dave[ Reply to This | # ]
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| Authored by: valdis on Friday, November 14 2003 @ 11:20 PM EST |
"Further, with the $50 million cash infusion, the company has more
resources to pursue its legal strategy."
So let me get this straight.
The company has no real sales.
The company has no real products.
The company had to bum $50M worth of quarters from somebody else in order to
pursue the only possibly-viable income path they have available, because they
don't have enough money to pursue it themselves.
If they actually make any money using this $50M, some law firm is going to get
20 percent of the gross. Not the net, the gross.
Will somebody please call Brian Skriba and explain to him that the dot-com
bubble burst several years ago, and that the average investor wants things like
a business model that looks at least *plausible*?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:22 PM EST |
IANAL.. But wouldn't SCO suing endusers/companies depend fully on the outcome
of the IBM case? I don't see how they could win against anyone with no evidence
whatsoever. [ Reply to This | # ]
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| Authored by: skidrash on Friday, November 14 2003 @ 11:47 PM EST |
filing suit will be safer for SCOG than sending invoices, won't it? No need to
have to prove SCOG's not a fraud artist to the USPS.
SCOG will have had 9 months since the IBM suit was filed to line up a user.
SCOG will have had almost a year since they started planning to "enforce
our IP"
SCOG will have had 3 months of delays in the RH suit (and we only know of
what's occurred since the RH suit was filed, we don't know what kinds of
delays and tricks SCOG pulled to keep RH from suing earlier than RH did.).
They've used every opportunity to spread as much FUD as anyone could dream up.
They must have stayed awake so many nights brainstorming
1. delay tactics
2. FUD tactics
3. spin
4. abuse of every process they've been involved in
4a abuse of the court system
4b abuse of the press
4c abuse of Linux users
4d abuse of contracts (I'm wondering what happened to the good faith clause if
the IBM contracts)
4e 'gaming' all these systems, playing each one for all it's worth to their
benefit
4f abuse of securities law
But back to the possible suit, SCOG will have had all that time to set up some
company to file suit against, and I STRONGLY suspect SCOG will have a backroom
deal for that company to fold soon after the suit is filed.
After all they've done what's another skirting/gaming/abuse of the law?
Either this or they will have selected a company which in some way has
telegraphed that they're trembling with fear and ready to settle.
SCOG's had a long time to butter up the intended target.
The thing to ponder now is does SCOG have something ready to give to IBM if the
court compels it? I bet they have a ton of arguments ready to try to escape
being compelled, and they do have something ready to show IBM if the court
compels.
OR will SCOG drop the IBM suit and immediately file the allegedly upcoming suit,
claiming like they did after RH filed suit
"IBM failed to live up to its obligation to indemnify, so we now have to
go after the end users who are violating our IP"?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:50 PM EST |
Hey SCO,
Try going after these enthusiastic Linux adopters first:
http://www.caldera.com/company/press/quotes/scolinux.html
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:54 PM EST |
if sco sues end users, don't they open themselves up to all kinds of law suits?
isn't it a gpl violation? isn't it fraud?[ Reply to This | # ]
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| Authored by: Anonymous on Friday, November 14 2003 @ 11:56 PM EST |
Looks like a few short years ago SCO was very friendly to SuSE:
http://linuxpr.com/releases/1302.html
I wonder if that partnership will hold now that Novell has bought SuSE?
: )
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| Authored by: skidrash on Saturday, November 15 2003 @ 12:02 AM EST |
The next 2 weeks of FUD may be the last gasp.
This may actually be a great sign, a sign that SCOG's days are numbered AND
SCOG KNOWS IT.
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 12:05 AM EST |
"Deutsche Bank and/or its affiliates(s) makes a market in securities
issued by the following companies(s): SCO Group, Inc. (The)."
I seem to recall the last DB replort said they had no ties to SCO, but hoped to
do busness with them in the future.
Am I wrong (again)?
Or has since then SCO started doing biz with DB?
"making a market" does not seem to be the kind of thing that would
have happened since then (typicaly that would happen with a IPO or a new release
of new stock (not the 45M shares SCO has ready to release)).
Dennis[ Reply to This | # ]
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- DBAB - Authored by: radicimo on Saturday, November 15 2003 @ 12:35 AM EST
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| Authored by: belzecue on Saturday, November 15 2003 @ 12:36 AM EST |
Brian Skiba: "Upon completion of this arrangement, we expect
Boies and SCO will begin a legal campaign against corporate end users of Linux
in order to jumpstart its IP licensing
program..."
Blake Stowell, 2003-09-25:
Since the response to its appeal [Linux licensing] was adequate, SCO didn't
send bills to thousands of Linux users, company spokesman Blake Stowell
said.
[ Reply to This | # ]
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| Authored by: calibax on Saturday, November 15 2003 @ 12:57 AM EST |
If SCO does start lawsuits on the basis of "their IP is in Linux"
wouldn't this give reasonable cause for Red Hat to ask for a preliminary
injunction to stop them broadcasting this claim? If it's too late for Red Hat
to do this, perhaps another Linux distributor (SuSE for example) could start an
action against SCO and ask for a preliminary injunction?
There seems little doubt that taking legal action against end users of a product
sold by another company could have a very chilling effect on sales, so a good
case could be made for immediate relief.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 01:08 AM EST |
Now we know why 'indemnification' has been hyped so much
lately.
Will any of Red Hat's $1 million defense fund be available to
corporations? Will it be available to OSS code contributors to
counter-sue SCO on any IP claims made against a corporation?
Is there a way to challenge SCO's standing to make these claims
and put such suits on discovery ice until the IBM and Red Hat
suits are resolved?
Would offering a defense response template or database be
feasible? I realize differences in state laws could make this
challenging. But it seems like it should be useful to create a
database of useful items for corporate legal teams to use in
responding to any SCO lawsuit. [ Reply to This | # ]
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| Authored by: Hygrocybe on Saturday, November 15 2003 @ 01:27 AM EST |
As an onlooker, I think that the advice of Brian Skriba to "Buy" SCO
stock is at best ludicrous and very risky, and at worst verging on deliberate(?)
misadvice on behalf of his firm's interests - although these are only my
impressions. I note the end disclaimer about SCO stock and that investors
should consider: "SCOX as extremely high risk and volative", but
that in no way removes from an adviser the ethical stance of being perfectly
honest - and in the present circumstances, without products, without income,
with a $50 million debt in the wings and very low likelihood of any future at
all, an investor in SCO at this stage needs their 'head read'. At the very
least, any serious investor should hold their hand until the outcome of December
5th is known.
I add my voice to the growing number of Groklaw members in that I think this is
another attempt to beef up the SCO price and fleece the little investor.
---
LamingtonNP[ Reply to This | # ]
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| Authored by: Thomas Frayne on Saturday, November 15 2003 @ 01:30 AM EST |
SCO keeps promising to send invoices later. The last date was October 31, and I
haven't heard of a single invoice sent out.
Now their spokesperson from DB (so they can deny it later: "that was not
an official SCO announcement"?) says that SCO will be filing suit later
this month.
I presume that the next announcement will be that they have decided to give
their "customers" more time before SCO files suits, but I'll be
surprised if SCO sends the invoices even then.
SCO is still trying to pump SCOX, but their statements have less and less
connection with reality, and journalists are starting to catch on.
Meanwhile, the courts grind on. Something is going to happen in the RH case in
the next few weeks. Something is going to happen in the IBM case on Nov. 21.
Something is going to happen on December 5.
I don't think any of these events will be good news for SCO, and I don't see
any reason why the judge can't or won't compel SCO to disgorge appropriate
answers to IBM's interrogatories soon after Dec. 5. This will be the start of
a continuous series of bad publicity for SCO, which won't end until bankruptcy
and jail.
My guess is that when IBM has the answers, it will determine that SCO has not
made any specific claims other than ones that can be decided on the basis of law
and the contracts in evidence, and IBM will move for summary judgement.
SCO must know all this, and they are making one last try to pump the stock. How
they think they can avoid a criminal indictment from the SEC I can't imagine.
(I filed my complaint in September.)
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| Authored by: stdsoft on Saturday, November 15 2003 @ 03:00 AM EST |
Skiba: “ at less than 8X our CY04 proforma EPS estimate of $2, the valuation is
compelling.”
Does Skiba really expect anyone to buy this? Perhaps Skiba needs to bone up on
basic financial analysis or simply has trouble with mathematics. If SCO does not
realize any SCOSource revenue beyond the remaining Sun payment, then it is
fairly straightforward to forecast revenue and earnings in 2004. Downsizing to a
bare bones staff as revenue declines, SCO would still lose about $27 Million in
2004. To reach the $2 target, SCO would need 55 Million in SCOSource revenue
above the $2.5M payment by Sun in Q1.
SCO WOULD NEED ROUGHLY $57.5 MILLION IN SCOSOURCE REVENUE TO REACH THE DEUTSCHE
BANK TARGET FOR 2004
Excuse me Brian, but there isn’t a leprechaun and pot of gold at the end of a
Lindon, Utah rainbow. This is the real world, and SCO will be fortunate to see
any more than the $2.5M Sun payment, much less the pie-in-sky $57M.[ Reply to This | # ]
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| Authored by: bobh on Saturday, November 15 2003 @ 03:28 AM EST |
| To me, the most remarkable thing about the Skiba "analysis" is the brutal
honestly with which it promotes the stock of a company whose business is suing
people.
The façade is gone. This is no longer a software company with a
lawsuit. It's a lawsuit company. It has raised capital for the purpose of
pursuing lawsuits, and here we have a stock salesman -- excuse me, an "analyst"
-- essentially promoting the bright prospects of all the lawsuits they can file
now.
I am not aware of a previous instance of a company that so openly
promoted itself as being in the business of suing people. It's almost a cultural
awakening. "On this day in 2003, attorneys came out of the shadows to take their
place alongside industrialists and entrepreneurs as front-line participants in
the economy. Suing people is now a Line Of Business; the Commerce Department
will have to issue it a SIC code."
This will raise a lot of interesting
issues for the accounting profession. For example, should SCO be capitalizing
the expenditures on the IBM lawsuit? This is its business now... the IBM lawsuit
is its chief asset, and the only one it is investing in. If SCO were developing
software they would be capitalizing the expense; this is the same kind of
intellectual-property "product." "We'll spend money today, and reap the benefits
when development is finished." Instead of engineers, they have lawyers; but it's
the same idea.
Many people are shocked by the way SCO so brazenly marries its
legal and PR activities, but just wait until the advertising starts. They'll
probably have a little "Boies Inside" logo on their next annual report. And
they'll have to start giving the lawsuits names, like you would any other
product. You can hear Didio now: "SCO's new Cataylst lawsuit program
offers customers the conveniece of online billing! Never has court-powered
extortion been so user-friendly."
I don't know that this is a positive
development, but I think it's a necessary one. Just as many open source
developers are wary of these seemingly friendly huge corporations who suddenly
want to "help" them, attorneys must now get used to the idea that marketing
professionals like Brian Skiba and Darl McBride are part of their world.
Attorneys and their lawsuits are now to be packaged and sold, with
press-relations circuses and fast-talking salesmen hyping the "goods." This will
be David Boies legacy... the law firm as "product."
And it can be Judge
Kimball's honor and Place In History to preside over the first lawsuit ever
marketed to investors as a product. What a thrill for him to be in on the ground
floor of this new and exciting commercial use of the court system. [ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 03:31 AM EST |
I posted this in the newer story's comments section, and just realized, I
actually should have posted here:
=======================================
They've been talking about suing end-users for months and months. Have they
sued any yet?
There are three possible explanations
(a) They will sue end-users
(b) It's hype. They will NOT sue end-users
And the one everybody is forgetting:
(c) They will try and get a bunch of users added as additional parties to the
IBM lawsuit
(I can't see any logic to this under the current circumstances, but that
doesn't mean I don't think they will try)
IMHO I personally think (c) is likeliest:
- SCO only wants to sue IBM
- When SCO talked about and hyped suing another unnamed vendor
("IHV") in their words, for a while. Who did it turn out to be?
Answer: An IBM subsiduary
- It doesn't look like the IBM lawsuit is going too well for SCO. If there are
a bunch more parties in the IBM case, it would allow SCO to muddy the waters,
and maybe one of the end-users will get fed up and want to settle this thing.
- SCO have been pressuring and pressuring IBM to indemnify end-users. If IBM
had, I would have thought that might help with SCO's justification of why
these
additional parties needed to be involved in the SCO v IBM case.[ Reply to This | # ]
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| Authored by: stdsoft on Saturday, November 15 2003 @ 04:13 AM EST |
Deutsche Bank's guidance looks more suspicious all the time. In chronological
order:
10/15/03
--------
Deutsche Securities initiates coverage on SCOX:
http://tinyurl.com/v3ql
Deutsche Bank "estimated SCO could post earnings per share of $1 in
calendar-year 2003 and $2.29 per share in 2004."
11/04/03
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Just fourteen business days later, and for no obvious reason, DB re-iterates the
Buy rating on SCOX. At the same time, they reduce the Q4-03 guidance and lower
2003 annual guidance from $1.00 per share to $0.86 per share.
11/15/03
--------
Then just eight business days later, and again for no obvious reason, DB
restates the buy position rationale. At the same time, they reduce the 2004
earnings estimate from $2.29 per share to $2.00 per share.
http://www.groklaw.net/article.php?story=20031114180438824
This is not normal folks! Analysts are not in the habit of issuing guidance
corrections every week or two on the same company. Neither is it normal to so
quickly reiterate a recommendation and then do it again a week later.
Two guidance changes and two reiterations in one month? This smells, and the
smell just isn't right! No wonder IBM wants to depose DB. These abnormal
activities happen to coincide with the exact moments the price desperately needs
a lift.
Finally, DB still has plenty of corrections to make to 2004 guidance. SCO will
not, of course, have any chance of meeting a $2.00 EPS target in 2004. In fact,
it is highly unlikely that SCO can show a profit in any quarter in 2004,
including Q1 that benefits from the Sun payment. Look for guidance on the 12/3
call. Either there will not be any guidance, or it will mention the possibility
of red ink in Q1. You can take that to the bank. Just don't use Deutsche Bank.
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 06:40 AM EST |
Here`s a picture of Brian Skiba -
http://www.buyside.com/mag/0501/Images/0501nst6.JPG . Know your enemy ![ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 07:25 AM EST |
If end users are officially threatened with a law suit on SCOs bogus claims, can
the end users then get together and sue SCO for something like racketeering?[ Reply to This | # ]
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| Authored by: Steve Martin on Saturday, November 15 2003 @ 07:42 AM EST |
From the Forbes page linked to above:
"The SCO Group, Inc.
develops and markets software based on the Linux operating system and
provides related services that enable the development, deployment and
management of Internet access devices and specialized
servers."
Not lately!
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 08:26 AM EST |
Just like SCO, I'll ask His Honor to adjourn until disposition of SCO's
lawsuit against IBM.
Which will serve SCO back a large measure of poetic justice given their delaying
measures, and do bad things to their revenue targets.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 08:48 AM EST |
As I've stated previously, if SCO sues an end user, it will take years to go to
trial, and possibly years more to go through appeals.
One positive outcome, regardless of whether SCO wins or loses, is that that the
alleged infringer will certainly ask the court for SCO to document every file
and line of code they claim as theirs and prove that it's theirs. The defendant
will also demand the ability to cease infringing by removing the code. This
will give the defendant the ability to "clean" the Linux kernel
source tree and be able to distribute an unencumbered version of the source to
the rest of the world, even if it doesn't compile or run properly.
It will be simple for kernel developers to diff the source trees and remove or
replace whatever SCO code was removed.
[ Reply to This | # ]
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| Authored by: p0ssum on Saturday, November 15 2003 @ 09:13 AM EST |
Now I am far from the most learned pupil, but the words monetize and
monetization have shown up repeatedly in things SCO has said:
SCO has contributed to the Open Source community in the past, and I'm sure that
SCO will contribute to the Open Source community in the future. SCO isn't going
to give away intellectual property that the company could be monetizing for the
benefit of its shareholders.-- Blake Stowell, 2003-03-04
"The silent majority is behind SCO, and they're hoping that SCO prevails
in the end. It gives other companies the ability to monetize their intellectual
property."-- Darl McBride, 2003-08-14
Immediately, he says, he started thinking about ?how to monetise our assets??ie,
Caldera's rights to UNIX. Roughly as apes and humans allegedly have common
ancestors, several operating systems can trace their lineage to UNIX, including
Linux. Sure enough, says Mr McBride, he soon found ?massive and widespread
violations? of Caldera's intellectual property in the Linux code. At a more
general level (and surprisingly for a Linux distributor), he found the entire
free-software trend ?communistic?, he says: ?We don't get the whole free-lunch
thing.?-- Darl McBride, 2003-08-28
And now Brian Skiba brings us:
We believe that a number of high-profile legal moves could bring to the
forefront the IP issue around UNIX and Linux which would likely result in some
monetization on the part of SCO in the form of IP licenses.
This is a rare word to hear, at least I think so, but I have heard it more in
the last 8 months than I have in the rest of my life. I just find it a little
too coincidental that the same word happens to fall from Brian Skibas mouth. Its
almost as if this was written by SCO for him.
Maybe it's just my inner conspiratist(really a word, I dunno, but who cares;-)
but its just too weird in my book to overlook, I think it's important somehow.
If someone can research Skiba a bit more, see if he has EVER used this word
before. Speech/Writing patterns can be dead giveaways sometimes. I hope this
made sense, no coffee yet...
---
If you are not the lead dog, the scenery never changes.[ Reply to This | # ]
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- Same speechwriter - Authored by: freeio on Saturday, November 15 2003 @ 09:29 AM EST
- Explanation? - Authored by: Anonymous on Saturday, November 15 2003 @ 09:57 AM EST
- Explanation? - Authored by: Anonymous on Saturday, November 15 2003 @ 08:21 PM EST
- Boxed himself in? - Authored by: Anonymous on Saturday, November 15 2003 @ 09:01 PM EST
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| Authored by: Anonymous on Saturday, November 15 2003 @ 09:45 AM EST |
"Volative" is not in my dictionary. I suspect that the intended
word was "volatile."
Scott McKellar[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 11:21 AM EST |
Hi everyone,
Admittedly, I am relatively new to the SCO vs OpenSource+IBM issue and have no
legal background, but I cannot even get past the initial philosophical points,
let alone understand or follow the daily developments.
It is my hope that someone can offer me an explanation on the following
(simpleton-type) questions:
1) In regards to the laws of, and (idealistic) existence of software patents:
a) Does the concept of software patents stand on shaky philosophical foundation?
Did the architects of software patent law began with the a reasoning that:
"we know of software code as something completely invisible/undetectable
to the user" and then concluded, "therefore we need to establish
laws that function provided we detect the undetectable"?
"furthermore, lets make it so the *action* of detecting something secret
is a violation of its own"
b) If a software code is something always hidden/unreadable from the user, then
how has it been possible in the past 15-20 years for any company to enforce
(claim, detect) software infringement on something which is invisible ? (other
than glaring GUI similarities)?
2)Does US law have any sensitivity/sophistication to recognize the damaging
effects of tentative/unsupported defamation (within human society structures,
business or civilian) ? Does the mere nature of software-code (being invisible
to the user) inhibit infringement discovery and thus fuel unsupported defamation
practices in the first place?
3) Is this an acceptable legal sequence: a) Issue a tentative accusation for
compromising secrets which cannot be revealed for examination, b) Execute the
civilian by lethal injection and hold his relatives financially accountable, c)
Perform a trial after the execution, d)issue a verdict of guilty/non-guilty.
-Is the German legal infrastructure of higher logical quality than the one in
the US ?
4) Does the legal system has any understanding/distinction between the two
isotopes of "secrets" as well as their significance for existence?
a) Defensive. (Crime prevention: Aversion of valuable (endogenous) work product
from predation /pillaging)
b) Offensive. (Crime concealment: Stashing of stolen items to prevent
retribution from the victims.)
Note, that benevolent or not, a secret always implies potential conflict of
interest (government, corporation or individual) against the ambient society.
?????? ???? ???
--[ Reply to This | # ]
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- Not about patents - Authored by: Anonymous on Saturday, November 15 2003 @ 02:11 PM EST
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| Authored by: Anonymous on Saturday, November 15 2003 @ 01:35 PM EST |
IF SCO does sue end users and they do become too afraid to run Linux they don't
have to use one of SCO's products, or even Sun, HP's or IBM's product. There
are three popular BSD flavors which have most of the features of the Linux
kernel.
Users who like using the GNU utilities rather than the BSD utilities can do that
without the Linux kernel. See the Debian on BSD port for an example.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 01:57 PM EST |
So the SCO Group is no longer sending invoices but suing corporate end users
instead? And suing against the backdrop of a totally failed PR campaign, a RH
lawsuit that it can't make go away and increasing legal pressure from IBM?
Against the backdrop of a couple of fast approaching crucial IBM and RH court
dates that may very well determine which way the lawsuits will go? Against the
backdrop of an HP idemnification promise and Novell's acquisition of SuSE?
Well, we can't stop the SCO Group from making almost any stupid move it wants
to make, but we can make sure to extract a terrible price from the SCO Group and
we will.
DB and Brian Skiba have thrown their lot squarely behind the SCO Group. Brian
Skiba's trike target price of $45 virtually insures that the SCO Group will
have to make some extremely aggressive move to justify that strike price:
let's make sure that this move turn out to be extremely foolhardy for the SCO
Group and extremely dangerous to DB's corporate health.[ Reply to This | # ]
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| Authored by: mdchaney on Saturday, November 15 2003 @ 06:47 PM EST |
And here I wondered where the middle-of-the-month-right-before-the-planned-sell
pump was going to come from. IBM has subpoenaed everybody in SCO's little
circus because it's obvious that they're working together to milk this thing
for all it's worth. I wish the SEC would get on the ball...[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 08:15 PM EST |
I wouldn't call putting money down on SCO stock on the basis that they might
win this court battle investing, I'd call it just plain gambling. And I say
anybody stupid enough to "invest" on such a shaky basis as this
deserves to get burned.[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, November 15 2003 @ 08:42 PM EST |
One thing that slightly disturbs me is the repeated assertion (in many news
stories and message board) posts that nobody has really benefited from the rise
in SCO's stock price, and the argument that the percentage of insider selling
as a percentage of inside stock holdings is small is somehow makes this
insignificant.
SCO, Canopy and SCO's executives have all benefited from the rise in stock
price. Considerably. This is an undeniable fact. I will show you how in a
moment.
Whether you judge they have been improperly benefited because the stock price
has been artificially inflated (as alleged in IBM's counterclaims, and in Red
Hat's law suit) - is up to the reader to decide. I will reserve judgement on
this particular issue for now.
Background:
1. SCO's share price now is hovering at over $14. About a year ago, the share
price was ~$1. I'm going to use approximate figures, below to illustrate the
points.
How SCO have benefitted:
1. Fact: According to SCO's filings, up to 400,000 shares may be used to pay
SCO's lawyers (as well as cash etc.). Assuming a price of $14 per share,
that's the equivalent of $5,600,000 of legal fees that they can potentially
save.
2. Fact: SCO bought back a lot of shares last year at low prices. Check 2002
news reports. Now they can (and effectively have) reissued shares at higher
prices.
For example, consider they wanted to pay somebody $1m in stock, they could do
that using (1m/$14 ~ 70,000 shares) and those could be effectively the same
shares they bought back last year at ~$1 each (~$70,000). In other words, they
have converted ~$70,000 to $1,000,000 in about a year, which by anybody's
standards is a great rate of interest.
3. Fact the big one: They got $50m from Baystar and RBC, by issuing
approximately 3m shares @ ~$17 each. If they had issued 3m shares a year ago,
they would have go ~$3m. Given it's likely that there are some fixed costs in
legal fees, etc., the ratio of net (as opposed to gross) proceeds from such an
equity sale, would be even better.
4. Probable benefit: We know SCO have a stock incentive plan for employees and
officers. In general, it's entirely proper for a company to have a plan.
However it SCO want to use the plan as part of the compensation package, the
high stock price could make such compensation worth a lot more - which allows
them to attract/retain people better, and/or keep wages (actual money as opposed
to stock options) down.
How Canopy (SCO's largest share holder) benefited:
1. Selling SCO stock. See S/3 and S/3a's filed this year
How SCO's executive benefitted:
1. Selling stock they held, and from options acquired cheaply. They have made
several million dollars.
2. The argument is often made, that the executives sales are a small percentage
of insider holdings. This argument is misleading. Insider holdings include
Canopy holdings (just under half the company) and Canopy neither has nor can(it
could crash the price) sell such a big holding in the open market quickly. I
believe, the real insight into executive sales is to be gained:-
(a) Look at each executive's sales as percentage of that particular
executive's holdings. If you look at it this way, the percentages are much much
more significant.
(b) Look at what executive's as a whole are doing. Are they buying or selling?
Answer - except for excercisings options, priced well below market price - they
are selling. Only selling.
How Morgan Keegan (SCO's investment banker) have benefitted:
1. According to SEC filings they sold or intended to sell 200,000 shares. If the
stock price is high, that's more money.
2. According to SEC filings, Morgan Keegan are down to get between 1% and 6% of
equity financing. In the case of BayStar/RBC's $50m, they got 4%, or
$2,000,000. As already covered, if the stock price had stayed low, an
equivalent financing (in number of shares) to BayStar/RBC would be ~$3m. 4% of
$50m is a lot more than 4% of ~$3m.[ Reply to This | # ]
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| Authored by: Anonymous on Sunday, November 16 2003 @ 07:14 AM EST |
Something I'm puzzled with, mostly because of my lack of knowledge about it, I
suppose. So I hope somebody can take away my UD.
In general it is illegal to trade based on knowledge about a company that is not
common knowledge or commonly available knowledge. This resulted in the insider
trading rules.
Question 1: To which extend is this true.
SCO has shown Skiba/DB and others information about their case against IBM under
a NDA. Skiba/DB have had accesss to information that is not commonly available,
but that information influences the value of SCO on the stock market. E.g. they
have insider information.
Question 2: Is SCO allowed to give information only to a selected group of
people.
Question 3: Or did they make it commonly available, because they show it to
everybody that is willing to sign the NDA.
Question 4: If the answer to 3 is Yes. Are there no restrictions to the
restrictions you can put on people that want to see it? For people in Europe it
is for example undoable to come to Utah to have a look at the information. And
also the restrictions SCO put in the NDA, are they legal in this respect.
Hans[ Reply to This | # ]
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| Authored by: Anonymous on Sunday, November 16 2003 @ 08:20 AM EST |
If I were IBM, I would have jury consultants who are hard at work right now
finding out what types of jurors would be more favorably enclined to my case. I
would also have my lawyers trying different evidence presentation and argument
formats to find out how to present my case in the most effective way possible. I
would also watch the judge like a hawk during the trial to amass grounds for
appeal, if necessary.
The IBM legal team has left very little to nothing to chance in its pleadings. I
expect that this same attitude will prevail throughout the legal proceedings.[ Reply to This | # ]
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| Authored by: Anonymous on Sunday, November 16 2003 @ 11:17 AM EST |
If SCO really starts suing end users, it will totally destroy their defense
against Red Hat. SCO's entire defense rests on the notion that they never
threatened Red Hat with litigation, and as such there is no actual controversy.
It will be hard to reconcile this position with litigation against end users,
most of whom are probably using Red Hat as their primary Linux distribution.[ Reply to This | # ]
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| Authored by: elrond_2003 on Sunday, November 16 2003 @ 03:44 PM EST |
Should Red Hat now supeona DB for the source of their threat against Hollywood?
Since they alledge Lahnam act violations, perhaps they should be echoing the IBM
subpeonas?
---
After all, it isn't rocket science.[ Reply to This | # ]
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| Authored by: Anonymous on Monday, November 17 2003 @ 06:20 AM EST |
Finance people don't care about merits of any claims, just "how to make
money".
If I were a big investor, risk hungry and some company share price may rise
temporarily in the near future, it makes sense to buy now and sell the share
then. Its sound financial decision. Morality, accuracy of any claim is
<u>irrelevent</u>, as long as I can make my profit before the stock
collapse.
On the other hand, if I were a long term invester, than issue of morality,
accuracy of any claim <em>is</em> of paramount important. Do I trust
Investment reports? I will have to take them under advisement but eventually,
it's my head on the block if something goes wrong. If I were an investor, what
will I do? On the face value of the two quoted report, I would do more research
before making a decision. The research in on the risk/return on investment
ratio, all these mumbo-jumbo about validity of SCO claims contributes to risk,
hence, I have to check the market value claims by SCO/Deuche Bank, and decide
whether it is worth the risk. That's all I will consider.[ Reply to This | # ]
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