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| Darl's "Dear Fellow Shareholder" Letter, July 2002 |
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Friday, October 21 2005 @ 07:37 AM EDT
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I found a Dear Fellow Shareholder letter [PDF], written by SCO CEO Darl McBride, dated July 31, 2002, about a month after he joined Caldera. He mentioned this letter in a ZDNET interview back in August of 2002, but this is the first time I've seen the letter. I learned some interesting things from it. First, Darl bought shares in Caldera in 2000, around the time of the IPO in March. Second, the letter already mentions the intention to aggressively protect the company's Unix IP assets, as he views them. He asserts that "Caldera owns the technology and other key intellectual property rights to UNIX..." That is a matter of opinion, as Novell begs to differ, claiming in its litigation with SCO that it retained all copyrights. It's interesting to think about the dates.
In Novell's Answer and Counterclaims, it states: 27. By and during early 2003, SCO repeatedly asked Novell to transfer the UNIX Copyrights to SCO. In doing so, SCO conceded that title to the UNIX Copyrights remains exclusively with Novell. Novell rejected all of SCO's requests....
38. In late 2002, SCO repeatedly contacted Novell in connection with SCO's soon-to-be- announced SCOsource campaign. SCO requested copies of certain documentation concerning rights to UNIX, including the agreement between Novell and Santa Cruz. SCO also expressed its interest in a campaign to assert UNIX infringement claims against users of Linux. SCO asked Novell to assist SCO in a Linux licensing program, under which SCO contemplated extracting a license fee from Linux end users to use the UNIX intellectual property purportedly contained in Linux. Novell refused to participate.
39. In aid of its scheme, SCO requested that Novell transfer its UNIX Copyrights to SCO and thereby acknowledged that it did not own the UNIX Copyrights. SCO contacted Novell on multiple occasions by and during early 2003. For example, SCO's CEO, Darl McBride, repeatedly contacted Novell and asked Novell to amend the Novell-Santa Cruz agreement to give SCO the UNIX Copyrights. Novell rejected all of these requests. That raises the obvious question, at what point, if Novell's story is accurate, did SCO doubt it had the copyrights? SCO, of course, tells it somewhat differently: 38. Admits that in late 2002, as part of the review of its intellectual property, SCO contacted Novell to confirm SCO's understanding that the UNIX and Unixware copyrights had been transferred under the APA and to ask if Novell had documents concerning the APA; admits that Novell counsel and other employees repeatedly and successively asked SCO to call again at a later time after Novell had had the opportunity to research the matter; admits that in early 2003, Novell counsel agreed to sign a letter stating that the APA transferred all right, title, and interest in and to the copyrights associated with the AT&T SVRX software agreements; admits that SCO sent Novell counsel a draft of that letter but Novell responded that it was no longer interested in UNIX and would not sign; admits that Novell did not sign the letter and ceased communications with SCO; further admits that during the aforementioned conversations Novell never asserted its purported, or challenged SCO's, ownership of the UNIX and Unixware copyrights; but denies each and every other allegation of ¶38.
39. Admits that (at Novell's request, as described in ¶38 above) SCO contacted Novell on multiple occasions in early 2003; but denies each and every other allegation of ¶39. So at some point between this July 2002 letter and "late 2002", SCO seems to have decided it needed to get some paperwork to make its position clear. Either that or the letter wasn't entirely forthcoming, I don't think. If I were a shareholder who either purchased or held on to my investment based on the assertions in this letter, which were repeated to the public through media statements, I guess the question I'd want answered would be, when did SCO realize they needed to contact Novell and get clarity on the copyright issue? If Novell prevails on the copyright ownership issue, the next question is likely to be what did Darl know and when did he know it? Actually, it isn't only Novell. IBM has recently stated its intent to challenge SCO's ownership claims. In a recent Memorandum it told the court: "IBM reserves the right to challenge SCO's ownership claims over any and all UNIX assets, however, including the copyrights at issue in the Novell litigation." Note IBM says it is talking about challenging SCO's ownership claims over "any and all UNIX assets," not just the copyrights.
And third, look at all the branch offices this company had when Darl took over. No more. Finally, the tone of the letter is incredibly positive about the company's prospects. Look at point 8 in the letter: 8. Caldera annual revenues will be around $60 million this fiscal year. With just one quarter to go, we are on track with our annual revenue plan. This solid revenue base gives us a good platform to layer in a new growth strategy. Solid revenue base? On track? I thought he told us the company was going down the drain, that revenues went from $200 million in 1999 to $60 million in 2003 "due primarily to the onslaught of Linux in the marketplace." Anyway, our SCO saga history project isn't complete without shareholder letters, so if any of you SCO shareholders have any more like this, please let me know. *************************
July 31, 2002
Dear Fellow Shareholder,
On June 27, 2002, I joined Caldera International as President and CEO. During this first month, I have spent a good
amount of time talking to employees, customers and partners. I have been focusing on assets that we can leverage in
the marketplace to gain maximum impact. My initial findings are very encouraging and I wanted to share them with
you in this letter.
1. Caldera owns the technology and other key intellectual property rights to UNIX, one of the world’s
largest, most popular computing platforms. Brands that you may have heard of that derive from our UNIX
intellectual property include UNIX SVRx, UnixWare and SCO Open Server. We can and will be much more
aggressive in marketing and protecting these valuable assets.
2. Caldera has an incredible customer base. Seven of the top ten retailers in the US and six of the top ten in
the world run their businesses on our SCO UNIX. The next time you are in a Sears, Kroger, K-Mart, Target,
JC Penny, Safeway or Costco, thank them for using our point of sale operating system. Other large clients
include McDonalds, NASDAQ, BMW and Radio Shack.
3. Caldera has a worldwide sales and distribution channel. We have over 200 sales and support staff as well
as 16,000 resellers who sell our products. We now have 12 offices selling into 82 countries. Many technology
companies now want to work with us to get their products to our customers. This is a new, interesting growth
prospect that we will more fully leverage in the future.
4. Caldera has a market cap of around $10 million; Red Hat, our number one competitor in the Linux
market, has a market cap of nearly $800 million. Even with similar revenue and operating margins, Red
Hat has a market value that is 80 times higher than ours. It is my belief that Caldera is currently undervalued.
5. Caldera is one of four major participants in UnitedLinux. Linux is the fastest growing computing
platform, and we believe UnitedLinux will be the future standard of choice for business Linux. During the last
ten years, Linux as a business platform has matured and is now, because of UnitedLinux, becoming an
economically viable opportunity for Caldera and its partners. Combined, the participants in UnitedLinux--
Caldera, SuSE, TurboLinux and Conectiva--have a larger revenue base, customer base and geographical
coverage than all other Linux distributors in the world.
6. Caldera is debt free and is moving aggressively towards profitability. This is a big deal for us. We have
moved aggressively to lower our operating expenses. Since acquiring SCO UNIX technology last year, we
have reduced our operating expenses by almost $10 million per quarter.
7. Caldera completed and announced a stock repurchase of 4,304,000 shares on July 22, 2002. Companies
buy back their own stock when they think their future prospects are good. We are bullish on our opportunities
in the marketplace and in our future stock price. By buying back almost a third of our outstanding shares, we
also removed the market overhang on our stock which freed us to invite in a set of new, strategic investors that
will help drive up the value of the Company.
8. Caldera annual revenues will be around $60 million this fiscal year. With just one quarter to go, we are on
track with our annual revenue plan. This solid revenue base gives us a good platform to layer in a new growth
strategy.
9. Caldera has its products installed on 2,000,000 servers that are running businesses today. Unlike many
technology companies that are currently struggling for new business, we have a huge base of customers that
run our software. Every time a large retail customer opens a new branch outlet, we get a new software sale.
This summarizes my findings so far. My conclusion? I am even more optimistic about our future than I was when I
joined the Company last month. I became a shareholder of Caldera, along with many of you, at the time of their IPO
in March 2000. My goal over the next few years is to make a profit on my initial investment in Caldera.
Thanks for your support and feel free to drop me an email if you have any questions or would like to give input on
adding value to the Company. I also invite you to visit our website at http://www.caldera.com.
Best Regards,
Darl C. McBride
President and CEO
Caldera International, Inc.
1
Excerpts from Recent Caldera Press Releases:
June 27, 2002
Caldera International announced the appointment of Darl McBride as the company’s new president and CEO.
McBride, a technology industry veteran, brings 18 years of executive management and leadership experience to
Caldera. Most recently, McBride was the president of Franklin Covey’s online planning business. Prior to that,
McBride was the CEO of PointServe, a workforce optimization software company and the founder, chairman, and
CEO of SBI and Company, a professional services company. From 1988 to 1996, he worked at networking leader
Novell where he was responsible for growing Novell Japan to more than $100 million in revenue. He concluded his
tenure at Novell as vice president and general manager of Novell’s Embedded Systems Division (NEST).
June 27, 2002
Caldera International, Inc. announced that it has completed the purchase of the shares of its common stock held by
Tarantella, Inc. and MTI Technology Corporation. Caldera acquired 4,304,000 shares or 31 percent of its issued and
outstanding common stock for an aggregate purchase price of $4,029,000, or $0.94 per share. The repurchase of these
shares has reduced the number of issued and outstanding shares of the Company to 9,487,000, of which 5,318,000 are
held by The Canopy Group, Inc., and the remaining 4,169,000 are held by non-affiliates.
May 30, 2002
Linux Industry leaders Caldera International, Inc. (Nasdaq: CALD), Conectiva S.A., SuSE Linux AG, and Turbolinux,
Inc., today announced the organization of UnitedLinux, a new initiative that will streamline Linux development and
certification around a global, uniform distribution of Linux designed for business. UnitedLinux addresses enterprise
customers’ need for a standard, business-focused Linux distribution that is certified to work across hardware and
software platforms, accelerating the adoption of Linux in the enterprise.
CALDERA INTERNATIONAL, INC.
Worldwide Locations
Corporate Headquarters
[address, phone]
Caldera Taiwan/Hong Kong
Taipei, TAIWAN
Caldera India
New Delhi INDIA
Santa Cruz Office
Santa Cruz, CA
Caldera Systems SARL
FRANCE
Caldera Israel
Keffar-Sava ISRAEL
New Jersey Office
Murray Hill, NJ
Caldera Deutschland GmbH
Frankfurt, GERMANY
Caldera Spain
Madris, SPAIN
Caldera Canada
Ontario, CANADA
Caldera Europe Limited
Watford, UNITED KINGDOM
Caldera-Benelux
Amsterdam, The NETHERLANDS
Caldera KK
Tokyo, JAPAN
Caldera Systems Italia
Cassina de Pecchi, ITALY
Caldera South Africa
Gauteng. SOUTH AFRICA
Caldera International Korea
Seoul, KOREA
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| Authored by: Anonymous on Friday, October 21 2005 @ 07:45 AM EDT |
| Ha Ha Ha. [ Reply to This | # ]
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- Ho Ho Ho - Authored by: Anonymous on Friday, October 21 2005 @ 08:57 AM EDT
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| Authored by: jm493 on Friday, October 21 2005 @ 07:50 AM EDT |
Brands that you may have heard of that derive from our UNIX
intellectual property include UNIX SVRx, UnixWare and SCO Open Server.
No mention of AIX nor Linux being derived from their UNIX
intellectual property :-)[ Reply to This | # ]
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| Authored by: Nick_UK on Friday, October 21 2005 @ 08:05 AM EDT |
" The next time you are in a Sears, Kroger, K-Mart,
Target, JC Penny,
Safeway or Costco, thank them for using
our point of sale operating system.
Other large clients
include McDonalds, NASDAQ, BMW and Radio
Shack."
I bet the above Companies took a few
deep 'gulps' over the
last few years...
Nick [ Reply to This | # ]
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| Authored by: Griffin3 on Friday, October 21 2005 @ 08:11 AM EDT |
I beseech thee, as the thought blowest through thy head as the idle wind, unto
posterity record it, and the world shall be thy audience.[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 08:12 AM EDT |
Darl cites Sears, Kroger, K-Mart, Target, JC Penny [sic], Safeway, Costco,
McDonalds, NASDAQ, BMW and Radio Shack as Caldera customers. Does anyone know
if they remain Caldera customers?
Phil[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 08:12 AM EDT |
They have claimed that IBM "illegal" contributions to Linux have
destroyed the value of SVR5 and Unix, yet point 5 of his letter serves to boast
about their participation on UnitedLinux and the great business opportunity it
represents to them. Darl can't seem to get his story straight.[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 08:32 AM EDT |
First, this one...
Caldera is one of four major participants in
UnitedLinux
And then...
During the last ten
years, Linux as a business platform has matured and is
now, because of
UnitedLinux, becoming an economically viable
opportunity for Caldera and
its partners. (Emphasis added)
And another
one...
UnitedLinux addresses enterprise customers’ need for a
standard, business-focused Linux distribution that is certified to
work
across hardware and software platforms, accelerating the adoption
of Linux
in the enterprise. (Emphasis added)
[ Reply to This | # ]
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| Authored by: clark_kent on Friday, October 21 2005 @ 09:24 AM EDT |
If it weren't for Groklaw, PJ, SCO might have had a Unix monopoly by now. Darl
was thinking he was going to be the next Bill Gates. Too bad Groklaw wasn't
around back then. But then the power of the internet caught us all off guard,
including Bill Gates himself.
Now Microsoft can't take over the MP3 player
market because someone ratted on them and would have put them in jepoardy with
the DOJ. And I got a chance to read about it because of the
internet.
Microsoft recants exclusive music
deals
As a reminder, please support your local retailer
using a Linux-based POS system, such as...
Lowes Home Improvement
The Burlington Coat
Factory
and
Autozone
(From-the-customer-he
art, word of mouth, not-paid-for advertising and not endorsed by these companies
I mentioned)
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 09:26 AM EDT |
Thanks for your support and feel free to drop me an email if
you have any questions or would like to give input on adding value to the
Company. I also invite you to visit our website at
http://www.caldera.com.
Best Regards,
Darl C.
McBride
President and CEO
Caldera International,
Inc.
When TSG failed to produce emails for McBride
(amongst others) requested for discovery didn't they state Darl McBride doesn't
use email?
The simple explanation for this would be that Darl gets
someone to handle his incoming emails for him, but even still its another case
of the stories told inside and outside of court disagreeing.
See this
article for IBM's Report on SCO's Compliance regarding discovery [ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 09:32 AM EDT |
Caldera completed and announced a stock repurchase of
4,304,000 shares on July 22,
2002.
vs.
June 27, 2002
Caldera
International, Inc. announced that it has completed the purchase of the
shares of its common stock held by Tarantella, Inc. and MTI Technology
Corporation. Caldera acquired 4,304,000 shares
If the June
date is correct, the buyback was .15-.21 (call it a 20% premium) over the street
price.[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 09:49 AM EDT |
8. Caldera annual revenues will be around $60
million this fiscal year. With just one quarter to go, we are on track with our
annual revenue plan. This solid revenue base gives us a good platform to layer
in a new growth strategy.
Solid revenue base? On track? I thought
he told us [...] revenues went from $200 million in 1999 to $60 million
in 2003
Actually, what this says is that they're on track for
the (then) current year's revenue plan. Typically, before the start of
each fiscal year, a company will make revenue projections/goals, and then strive
to meet them. All he's saying is that their projections in, say, September 2001
of their revenues for 2001-2002 were on target. This has nothing to do with the
fact that the projections were lower than they would've expected in
1999.
Granted, he's spinning it as being good news rather than "at
least it wasn't any worse" news; but he's not lying. (Not necessarily, anyway;
I suppose he could've been lying about what the projections had been, or
something.)
Oh, and there is one other possibility: the revenue plan
isn't set in stone; they could've revised it sometime during the year, when they
realized they weren't going to reach it. That would be much more weaselly: he's
still making a true statement, but it means less than it seems to.
--John Stracke [ Reply to This | # ]
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| Authored by: blacklight on Friday, October 21 2005 @ 10:52 AM EDT |
In Darl the Snarl's own words:
First sentence of Point 5:
(1) "Caldera is one of four major participants in UnitedLinux. "
Second sentence of the same Point 5:
(2)"Linux is the fastest growing computing platform, and we believe
UnitedLinux will be the future standard of choice for business Linux. During the
last ten years, Linux as a business platform has matured and is now, because of
UnitedLinux, becoming an economically viable opportunity for Caldera and its
partners."
How can anyone be diligently working to make Linux "the future standard of
choice for business Linux" and make Linux into "an economically viable
opportunity for Caldera and its partners", and yet file a complaint within
months in Federal Court that Linux's popularity is destroying one's UNIX
business?
What we have here is a failure of Darl the Snarl to apply the most elementary
logical consistency to his business decision making: if it is true that Linux
destroyed Caldera's UNIX, then Caldera's own decisions were instrumental in the
outcome.
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 11:32 AM EDT |
I have just one question for The Darl ......
" ...We now have 12 offices selling into 82 countries. ..."
... how on Earth do you get 12 offices in 82 countries?
That works out to 0.146341463 of an office in each country.
One would think that tSOG's employies might get a bit hacked
off at being cut up into such small pieces.
George[ Reply to This | # ]
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| Authored by: TAZ6416 on Friday, October 21 2005 @ 02:39 PM EDT |
Since Darl witters on about all his customers in that letter, just was wondering
how often you see SCO Software out there in the field these days?
Our
local vet uses it (and is very happy with it) for keeping records of animals and
treatment history and I've spotted it in Argos but that's about
it.
Jonathan
Oscar The Grouch Does
America[ Reply to This | # ]
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| Authored by: Tufty on Friday, October 21 2005 @ 03:23 PM EDT |
I am wondering. There were links between Darl and Anders before TSCOG, O'Gara
and Darl and a few others. Darl's link with previous companies sounds very like
the current bleed them dry from the inside method. Can anyone come up with a
link between Yarrow and Anders in the years before? Stats or anyone?
---
There has to be a rabbit down this rabbit hole somewhere!
Now I want its hide.[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 03:45 PM EDT |
Recently, Microsoft has started to claim that Radio Shack (and I think
McDonald's as well), has saved a ton of money by switching from Unix to
Microsoft OS. Personally, I would suspect that this is propaganda. However, it
appears that, being that this was SCO Unix, it might be true after all.
Of course, being that Microsoft paid SCO a large amount of money, I wonder how
much the switch REALLY cost....[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 04:33 PM EDT |
Since this is anonymous, and there is no off track thread, I won't start
one.
You need to keep focused, like a cat watching a
mousehole!
http:
//www.computerworld.com/printthis/2005/0,4814,105614,00.html
[ Reply to This | # ]
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| Authored by: seraph_jeffery on Friday, October 21 2005 @ 06:00 PM EDT |
| Found a story I'm sure you've all read, too, but this one might be worth
following:
Scientigo
Story
[ Reply to This | # ]
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| Authored by: Anonymous on Friday, October 21 2005 @ 09:01 PM EDT |
I became a shareholder of Caldera, along with many of you, at the time of
their IPO in March 2000. My goal over the next few years is to make a profit on
my initial investment in Caldera.
Well there it is in black and
white - as Darl said this whole sordid event was just meant to bump the stock
price. In July 2002 the price was hovering around $2-3, the IPO was at
$14 and between mid 2003 and early 2004 the price was over $14 - so I
guess it sort of panned out - wonder if he actually offloaded his initial
investment and made a profit on it?[ Reply to This | # ]
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| Authored by: gleef on Friday, October 21 2005 @ 10:40 PM EDT |
If it is shown that elements of this letter are deceptive, would that be
sufficient to pierce the corporate veil and go after Darl McBride directly with
criminal charges?[ Reply to This | # ]
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- No. - Authored by: Anonymous on Saturday, October 22 2005 @ 06:07 AM EDT
- He told the truth. :-) - Authored by: Anonymous on Saturday, October 22 2005 @ 07:39 AM EDT
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| Authored by: stats_for_all on Friday, October 21 2005 @ 10:55 PM EDT |
| Darl McBride submitted 2 back to back SEC Form 4 filings in Novemeber 2002
available from US Edgar system. .
second filing
found here
These show the
purchase and total ownership of 5000 shares on Oct. 11,
2002 for
$1.13/share. The second filing shows the purchase of 3000 shares
@
$1.13
on Oct 14, 2002 with a total holding of 5,000, for an inexplicable no
change
in total ownership. I don't see how the October
2002 filings
substantiate.
the earlier stock holding claim. One possibility is the second
filing is a
correction-- McBride added 3,000 shares to a pre-existing 2,000
share
holding, but the error of the earlier filing has never been reported or
explained to my knowledge. [ Reply to This | # ]
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| Authored by: Anonymous on Saturday, October 22 2005 @ 02:54 AM EDT |
| Seven of the top ten retailers in the US and six of the top ten in the world
run their businesses on our SCO UNIX. The next time you are in a Sears, Kroger,
K-Mart, Target, JC Penny, Safeway or Costco, thank them for using our point of
sale operating system. Other large clients include McDonalds, NASDAQ, BMW and
Radio Shack.
That's a useful checklist of companies that maybe need a
sales call from Redhat or Novell.
[ Reply to This | # ]
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| Authored by: Anonymous on Saturday, October 22 2005 @ 08:22 PM EDT |
So, Caldera made $200 Million in 1999? (I don't think it was that much.) Back
then Caldera was the Number 2 Linux company. They made enough to buy the SCO
Unix business outright. Then, they 'concentrated' on Unix, and by 2003 they were
all the way up to $60 Million, this year they expect about what, $20 Million?
Sounds like real quality management there.
Again, relying on old memory, but, the problems for them started when they went
to a per seat licensing plan. This was supposed to be a shortcut to
profitability. Didn't work out that way though. The further they got from the
roots of GPL and Linux, the worse they have done. At this rate, they can't last
much longer. If they could go back, I'm sure their stockholders would heave a
sigh of relief. If they went back about 8 years on thier business plans that'd
be about right. Too bad they burned that bridge. Meanwhile Red Hat, the old #1
(Still #1) in the Linux space has grown to several times what they were worth.
Stock is way up, profitable quarters, money, all the stuff SCO dreams about.
And, they (Red Hat) don't even have to lie to a judge or to the press to do it.
Hmmm... I wonder if they could find a lesson there. Probably not. As Jesus said,
no one is more blind than the man who refuses to see.
The shame is that they are taking so many peoples retirement dreams and life
savings down the tube with them.[ Reply to This | # ]
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- Business Sense - Authored by: Anonymous on Sunday, October 23 2005 @ 02:29 AM EDT
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