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SCO's NASDAQ Prospects
Friday, February 25 2005 @ 12:10 PM EST

Well, SCO missed yesterday's deadline. No 10K, no nuttin. Bob Mims has an article explaining what happens next:

"The annual report remained unfiled, apparently still being scrutinized by SCO auditors, when the markets closed with SCO shares at $4.11, up 5 cents. A first-quarter report for the 2005 fiscal year, expected this past Wednesday, also remained unfiled.

    "'All I can say is SCO declines to comment at this time, pending any securities filings on Friday,' company spokesman Blake Stowell said."

Of course, the stock is up 5 cents. It seems to always go up on bad news, something I assume someone will be analyzing someday. Look for an 8K today, Mims says.

But for sheer fun, I suggest you read analyst Robin Bloor's piece on "Captain McBride and the SCO Titanic". He writes about SCO steering straight into the iceberg deliberately:

"And this is the point. From a legal perspective, Open Source licenses and intellectual property may be a valid point for debate and legal action, but from a fashion perspective, taking on Linux and Open Source is a stupidity, and severely damaging to an organization's brand – as SCO has proved quite comprehensively. Open Source is an idea whose time has come. Whether it turns out to be a positive commercial force remains to be seen, but there is no doubt that it is a driving trend in the software business. It is the iceberg that Darl McBride steered SCO into."

One reader, who sent me the link, says in his view, SCO is actually steering the iceberg. Anyway, it's very funny, and I will have to be careful from this day forward not to lump all analysts into the same category.

UPDATE:

The 8K was filed, and the hearing is set for March 17, according to It Manager's Journal. Here's what the 8K says:

"Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.  

As previously announced by The SCO Group, Inc. (the " Company "), on February 16, 2005, the Company received a notice from the staff of The Nasdaq Stock Market indicating that the Company is subject to potential delisting from The Nasdaq SmallCap Market for failure to comply with Nasdaq's requirement to file its Form 10-K for the fiscal year ended October 31, 2004 in a timely fashion.  The Company also previously announced that it expected to make a request for a hearing with the Nasdaq Listing Qualifications Panel on the matters.

 "On February 21, 2005, the Company submitted its request for a hearing with the Nasdaq Listing Qualifications Panel. On February 22, 2005, the Company received a notice from the Nasdaq Listing Qualifications Panel indicating that the Company’s application for an oral hearing had been accepted. The hearing is scheduled to take place on March 17, 2005."

PC Pro says that this will be enough time for the accountants to get in gear. So... a stay of execution.


  


SCO's NASDAQ Prospects | 149 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections here please
Authored by: Anonymous on Friday, February 25 2005 @ 12:39 PM EST
If any ...

--

MadScientist

[ Reply to This | # ]

8-K: "The hearing is scheduled to take place on March 17, 2005"
Authored by: ak on Friday, February 25 2005 @ 12:43 PM EST
See: FORM 8-K, February 22, 2005

[ Reply to This | # ]

SCO's NASDAQ Prospects
Authored by: Anonymous on Friday, February 25 2005 @ 12:57 PM EST
Except for EV1, my personal opinion is the SCO Source licenses were pretty much
an accounting slight of hand. If you take their actual sale of licenses it
really wasn't that much last year. There is always a risk when launching a
"new" product that sales might not take off the way you expected.

What is significant is the decline in Unix revenues and the expense of the
litigation.

You can try building a business on litigation, and some make it work for a
while. You can also try building a business playing poker.

When you switch from one business model to another business model,there is
always the chance the switch will fail.

It is regretable for SCO stock that the switch was managed so badly. If they
were serious about it, they would have nailed down those copyrights before
starting.

[ Reply to This | # ]

SCO's NASDAQ Prospects
Authored by: Anonymous on Friday, February 25 2005 @ 01:12 PM EST
Instead of the Titanic think of it as a massive insurance scam where someone
with something of questionable value has an accident with it to collect the
insurance.

[ Reply to This | # ]

  • OUCH! Nice burn! - Authored by: Anonymous on Friday, February 25 2005 @ 01:14 PM EST
SCOXE stay of delisting
Authored by: Anonymous on Friday, February 25 2005 @ 01:17 PM EST
http://biz.yahoo.com/e/050225/scoxe8-k.html

[ Reply to This | # ]

Ask MOG re the 10K Filing Fiasco!!!
Authored by: Anonymous on Friday, February 25 2005 @ 01:28 PM EST
Am I understanding this right? We can e-mail MOG and oblige her to reply to what
we send LIVE, on streming video available worldlwide???

That's what this seems to mean (starting in 30 mins)

http://www.sys-con.tv/

(Friday, February 25, 2005) - Today's "Live With Maureen O'Gara Show"
Will Air at 2:00 PM

In Today's Show Maureen Will Recap the Linux Business News Highlights of the
Week and Take Your Questions on the Air at
tv@sys-con.com.

[ Reply to This | # ]

The SCOtanic & the IBMberg
Authored by: Anonymous on Friday, February 25 2005 @ 01:41 PM EST
The comparison to the Titantic is interesting. But the error wasn't steering -
the error was steaming at high speed where you know there are icebergs. By the
time the Titanic sighted the iceberg, it was too late to steer clear. In an
ironic twist of fate, the Titanic is unlikely to have sunk if it had steered
TOWARDS the iceberg. As it was, trying to steer away, they sideswiped it,
tearing open the hull along enough of the length of the ship to seal its doom. A
head-on collision would have destroyed the front of the ship, but might have
ruptured too few compartments to sink the ship.

Also interesting is the reason the ice ripped open the hull so easily - the hull
was particularly brittle, not just from the icey waters, but because there were
poorly understood impurities in the metal. I'm not sure if they would have
called it defective, but it definately was poorly suited for a match against an
IBMberg. Err, I mean ICEberg.

[ Reply to This | # ]

I can already hear the spin...
Authored by: Anonymous on Friday, February 25 2005 @ 02:00 PM EST
SCO, the owners of UNIX, Linux and any other code that at any time existed on
the same planet, today announced they will be appealing the recent delisting of
their stock from NASDAQ.

"SCO is in good shape here." said SCO spokesman Blake Stowell.
"We're doing what we do best; we've requested permission to file an
overlength appeal and we expect that could delay the delisting for several
months. We're confident in our case going forward, we've got millions of lines
of 10k and that's even before discovery."

CEO Darl McBride added that "Some people out there are saying we're
through, but if you could see the Employee Equity Compensation Plan we've got,
you'd see why I'm pretty happy about things. We'd love to show the 10k to the
world, but because the pesky SEC gets all picky about things, our auditors are
telling we can't do that yet. But believe me, its a good one."

McBride also pointed out that SCO stock was up, and asked "Is that a sign
of a dying company?"

The press conference was briefly interrupted by a loud grinding sound
accompanied by an abrupt drop in temperature, however resumed shortly, as Darl
explained they were having some minor technical problems with an iceberg, but
that everything was under control.

As the reporters were leaving they were treated to an impromptu performance of
both of the SCO UNIX developers singing "Nearer my God to thee".

[ Reply to This | # ]

I believe
Authored by: Anonymous on Friday, February 25 2005 @ 02:29 PM EST
"I believe sometimes you have to wreck the truck to get the insurance money
to make the truck payment."

Larry the cable guy

I believe you have to wreck the company to game the legal system to make money
on stock options.

Lary the able guy

[ Reply to This | # ]

Preperation for a retreat?
Authored by: gotan on Friday, February 25 2005 @ 02:37 PM EST
is it possible that this is the beginning of a retrograde manouvre. That their
best interests, or at least IBM and our worst interests, would be best served by
SCO going under while the case is unresolved. And hence no preceidents set or
fud dispelled for the GPL and linux's heratage.

[ Reply to This | # ]

SCO's NASDAQ Prospects
Authored by: ExcludedMiddle on Friday, February 25 2005 @ 02:39 PM EST
Wow. The Salt Lake Tribune article has something from Ms. DiDio that shows some doubt about SCOXE's future:
The continuing 10-K delay, added to the delisting procedure and now overdue first quarter report, all concern Laura DiDio, an analyst with the Boston-based Yankee Group.

"The fact that SCO is late in filing both [earnings reports] augurs badly for all concerned: SCO, its customers and investors," she said. "The questions surrounding SCO's fiscal solvency can only undermine the confidence of customers and prospective customers and make investors extremely nervous."

There's only one thing I don't understand about what she said: What prospective customers and investors is she talking about?

Actually, much as I'd like to praise Ms. DiDio for showing concern, this statement is also missing the point. The issue is not related to their financial solvency. The issue is that they haven't released their financial statement, and that, most likely, their auditor won't sign off on it, hence delaying the filing. While this MIGHT have something to do with their solvency, and it may be that we will be talking about solvency issues in short order, we haven't really begun talking about that topic. SCOXE is not yet in bankruptcy, and according to their last call, they do have money for this year for their lawyers and immediate expenses. No, what investors want to know right now is where the money from last year was made and spent, which they owe the exchange that they belong to as well as the investing public.

At this point, I'd be willing to bet money that they had some accounting treatments that are core to their filing that the auditors won't sign. I'd bet that they're scrambling for other treatments, as well as begging their auditors for some compromise. In today's environment, auditors don't take chances. It will be SCO that eventually bends. Their 10k should be quite interesting, should they muster one!

[ Reply to This | # ]

SCO's NASDAQ Prospects
Authored by: Anonymous on Friday, February 25 2005 @ 02:42 PM EST
I think maybe SCO was just shooting for a big settlement early on, and now its
become one of those situations where if they drop the lawsuit, they look like
idiots, and if they keep going, they look like idiots. So like any good
corporation, they keep going, and the longer they do, the less likely it is they
can back out with any chance of saving face.

[ Reply to This | # ]

Did you know ...
Authored by: Rudisaurus on Friday, February 25 2005 @ 02:43 PM EST
... that when a company misses a NASDAQ filing deadline, it tends to undermine
investor confidence in the company?

Yep, it's true!

This stunningly perceptive insight is straight from a well-known Yankee Group
analyst!

[ Reply to This | # ]

OT - Groklaw News
Authored by: maco on Friday, February 25 2005 @ 03:17 PM EST
Outstanding!

congrats to the idea and to the maintainers!

[ Reply to This | # ]

SCO's NASDAQ Prospects
Authored by: Anonymous on Friday, February 25 2005 @ 03:35 PM EST
I do wonder if SCO is positioning itself so that they can self destruct right
before any decisions on things like the 10th CC get handed down.

I would seem that SCO would want to spread as much FUD as possible for as long
as possible, but implode just short of the courts finding that IBM has clean
hands.

The others can take up the FUD banner, and keep spreading it.

[ Reply to This | # ]

scOde to Darl McBride
Authored by: jbb on Friday, February 25 2005 @ 04:24 PM EST
Darl's face is now red
SCO stockholders are blue
None of our Linux are belong to you

---
SCO cannot violate the covenants that led to and underlie Linux without
forfeiting the benefits those covenants confer.

[ Reply to This | # ]

I really like the ending, "The captain went down with his ship!"
Authored by: kawabago on Friday, February 25 2005 @ 04:40 PM EST
Hey Darl,

Your ship is sinking! Here's an anchor!



---
Life is funnier from the far end.

[ Reply to This | # ]

Even the hometown paper is piling on
Authored by: bitmason on Friday, February 25 2005 @ 05:35 PM EST
Not quite hometown I know (Salt Lake), but close enough:

http://www.sltrib.com/business/ci_2584155

[ Reply to This | # ]

  • Clicky Link - Authored by: Anonymous on Friday, February 25 2005 @ 06:35 PM EST
up on short covering?
Authored by: dbc on Friday, February 25 2005 @ 05:41 PM EST
I see by quote.com that the most recent monthly report of short interest in SCOX
is 43.86% of float, down 10% from the previous reporting period. The shorts have
been covering... perhaps the rising price we are seeing is a short squeeze as
the shorts try to close out their positions. With over 40% of the float shorted
it seems like a stock ripe for a short squeeze.

Question: Are pink sheet stock margninable securities? If so, and SCOX moves
from NASDAQ listing to the pink sheets, what happens to short positions? Are
holders required to cover?

[ Reply to This | # ]

SCO's Poor prognosis
Authored by: garbage on Friday, February 25 2005 @ 06:34 PM EST
Even the most ardent SCO supporter would have to smell the stench wafting
from Lindon, Utah.

When your auditors won't sign a routine 10k, it's a really bad sign.

I don't see this as intentional, more a sign of the truth slowly coming to
light.

In my opinion, these clowns have been indulging in amateur theatrics & ham
fisted corporate shenanaghans for far too long.

In my country, Australia, they would not have lasted 5 minutes. In our legal
system, you make a claim to a court without supporting evidence & you're out

the door, back on the street with the other 'pan handlers' in a flash.

I respect the American people to choose their own system, but from the
outside it seems indulgent in the extreme.

[ Reply to This | # ]

Avoiding a train wreck
Authored by: garbage on Friday, February 25 2005 @ 06:48 PM EST
It seems to me that this whole trin wreck could have been averted if Judge
Wells had simply said to the SCO attorney's :

"You have twice failed to act on a court order to show evidence for your
complaint. Do you have any evidence? No?

OK, complaint dismissed costs awarded to the defendant
<bags gavel> NEXT CASE!"

Why do the judges entertain frivoulous & vexatious litigants in the US?

[ Reply to This | # ]

"Captain McBride and the SCO Titanic"
Authored by: Toon Moene on Saturday, February 26 2005 @ 07:18 AM EST
The punch line of that article is:

"Of course, Captain Smith went down with the Titanic."

---
Toon Moene (A GNU Fortran maintainer and physicist at large)

[ Reply to This | # ]

OED Word of the Day
Authored by: Anonymous on Monday, February 28 2005 @ 10:38 AM EST
I get a daily mail from the Oxford English Dictionary with a word of the day. Today (2/28), the word of the day is:

Delisting - The removal of a security from the official register of those dealt with by a particular exchange, esp. on account of financial irregularity.

:-)

[ Reply to This | # ]

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