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More Bankruptcy Filings and SCO Predicts a Bright Future for Itself
Monday, August 18 2008 @ 09:05 AM EDT

More bankruptcy filings. And there are upbeat chirpings in the air in Utah, with SCO proclaiming its own future brighter than they thought it would be, and you can read all about it in Tom Harvey's article in the Salt Lake Tribune, which calls SCO "the comeback kids". No bias there.

It might be a tad early for that title, methinks. IBM still looms on SCO's horizon, after all. Novell was a sideline. The main event has yet to occur.

SCO doesn't need as much money as they thought they would to give to Novell, so maybe Darl McBride can stay on as CEO after all, we learn. There's a new business plan that sounds like it has to do with calendars online and messaging, and ... well, read about FC Mobile Life, its project with FranklinCovey, for yourselves:

That type of transaction is essentially what happens with the FranklinCovey product FC Mobile Life, which provides near-instant communication for scheduling, delegating tasks and sending text, photos and audio, said Jeff Hunsaker, SCO president and COO.

"Our focus here is on collaboration, and it's real time. It's real-time collaboration with people you trust, with a group. We've kind of brought it all together. That's the value we bring here."

FC Mobile Life can work on BlackBerries and phones running Windows Mobile, with iPhone compatibility under development. The system interacts and updates information on a Web browser and smart phone. SCO also is working to integrate Microsoft's Outlook e-mail and calendar into the system.

So that's the plan. The new one. Real time collaboration with people you trust. Hmm. Trust ... People you trust. Hmm. Remember when they used to call Darl McBride "the Linux Killer"? Methinks that's still the real business plan. In his dreams.

It reminds me of what someone once wrote about an earlier business plan tried by FranklinCovey once before, when McBride worked there. Perhaps it's the right time now for that vision to succeed. Personally, I hope they sell so much they decide litigation is a waste of time and move on. They call it FC Mobile Life, but when they announced in April they'd be working together with FranklinCovey, SCO said it was about Me Inc, which they released in February of 2006, but announced in 2005. More from Harvey on what the future holds, according to McBride:

Just as SCO has found some breathing room, McBride's own future is more secure, if still unsettled.

Asked whether he will remain as CEO, McBride said, "As we move forward, at some point we'll have to answer that question. What I can say is I'm very committed to SCO stakeholders . . . to finish off this battle that we started five years ago. We believe it is time now to go in and get things finished off."

"Finished off." Well, this doesn't happen every day or even every year, but Mr. McBride and I agree. Enough already of SCO's litigious ways. We may not agree on what should be finished off, I guess. And I doubt it will be any time soon. They themselves plan to appeal to try again to get their yearned-for jury trial, and IBM won't be over in a hurry, and then there's AutoZone and Red Hat. So I don't know which "things" he has in mind to finish off, but I doubt it's going to happen any time soon. As I've told you consistently, this saga is far from over.

In the bankruptcy, Berger Singerman filed their quarterly application covering April through June, for a total of $125,885 and $3,622.77 in expenses. The two big categories of billable time were the reorganization plan/disclosure statement and "asset disposition/preservation".

I'd say 'disposition' has been humming along better than 'preservation'. The bankruptcy bills alone are staggering, mostly for reorganization plans that will never happen. Exhibit A says the firm:

"...researched and conducted multiple conferences with the Debtors with respect to merger and acquisition issues and structuring plan alternatives. The Firm worked on various revisions to the Memorandum of Understanding ("MOU") in line with the new proposed structure for purchase of the company. In addition, the Firm worked with the Debtors on developing a business plan.

It took 63.80 hours to do that, in that one month alone, and of course the MOU will now, I gather, need to be scrapped or revised, since SCO is now saying they might not need to be bought after all.

According to SCO, they've invested millions in their mobile business in the last four years:

"The truth is the substantial amount of investment we've put into this mobile business in the past four years - it's in the tens of millions of dollars - is now ready to go into harvest mode."

I hate to be a wet blanket, but I wonder if the SCO SEC filings reflect that figure? Just asking. At first I thought that maybe they meant the Vultus development time and money, which the press release about Me Inc seemed to indicate:

Me Inc. has been a multi-year development effort by SCO and builds on technologies that the company gained through a Web Services technology acquisition in 2003.

But by saying "the last four years" I'd say he can only mean actual money for R&D by SCO after the Vultus acquisition.

The Salt Lake Tribune account gets the story a little bit simplified:

Shortly after that, SCO filed for bankruptcy and proposed a reorganization plan that included an investment of up to $100 million from a private-equity fund that would have taken control of the company. The fund, Stephen Norris Capital Partners, said McBride would not continue as CEO if the plan were approved by the bankruptcy court.

But in July, Kimball ruled that SCO owed Novell only $2.5 million, a figure that greatly reduced SCO's need for outside capital. That verdict also put SCO in a better position to appeal the case, with the company's leadership confident in its chances of overturning Kimball's 2007 ruling and getting the case returned to Utah for trial.

SCO was confident they'd win in the Utah District Court too, IIRC. All they wanted was their day in court. They got it. They lost. Now they want their day in appeals court, followed by *another* day in court. But they remain confident. So they say.

The simplification is this: the Norris reorganization plan was not the first. There was the reorganization plan filed and then withdrawn involving York. That one got dropped, because they weren't quite able to file all the necessary documents prior to the set deadline, because they said, they needed to determine what it was they were selling. Like stuff SCO didn't own, the UNIX copyrights that didn't pass to SCO under the 1995 deal with Novell. Oops. So that didn't work out.

*Then* came Stephen Norris. SCO announced that reorganization plan to the media and then filed a plan, a Memorandum of Understanding, with some issues raised about that, and a disclosure statement. Here's what SCO said about the MOU in an SEC filing:

On February 13, 2008, the Company entered into a Memorandum of Understanding (the “MOU”) with Stephen Norris Capital Partners, LLC, a Delaware limited liability company (“SNCP”), whereby, SNCP agreed to provide financing to fund the Company’s plan of reorganization filed on February 29, 2008 in the Company’s Chapter 11 bankruptcy case. ...The Company on the same day filed its disclosure statement in connection with the plan of reorganization, under the terms contemplated by the MOU.

The MOU is not a definitive agreement. It is a non-binding summary of the intentions of the parties and is subject to change.

And nonbinding it proved to be, with SCO's attorneys announcing at the next hearing, after numerous objections were filed to the plan, that they were working on another deal with Norris, a better one, which would involve a buy out, not a loan. Now, they're talking about just financing again, if I've understood the article correctly. If it was Stephen Norris who wanted Darl gone as a condition of the deal, and now Darl says he might be able to stay on, is SCO telling us that the deal with Norris is history? Or that they are looking for merely a loan once again, instead of selling themselves off, so Norris can't dictate those terms? It's hard to keep up.

Getting back to the filings, there are some certificates of no objection to earlier bills, and I can't help but notice on Berger Singerman's quarterly bill that the expenses include, on page 5, a category "Out of Southern District of Florida Travel", but there is no airfare listed. The entire $3,172.09 expense was for "Taxi, Airport Transfers, travel meals." Hmm. Do they travel from Florida to Baltimore by taxi? Just asking. My best guess is that they put the number in the wrong box.

SCO's accountants, Tanner, have filed a quarterly, which means we've seen the billings before in their monthly bills, which are attached as exhibits, for a grand total for the quarter of $78,646 for their work from April 1 through the end of June, and $837.28 in expenses it wants reimbursed. It's now August, of course, so this isn't all Tanner would like from SCO. On page 2 of its filing, it lists a fee of an additional $14,450 for July, and that's a slow month for Tanner. June saw fees of $53,613. Mainly it's SEC filings and taxes, but there was a lot of work done regarding 401(k), which you can see in Exhibit C, page 6 of the PDF.

Here are the filings:

526 - Filed & Entered: 08/14/2008
Application for Compensation
Docket Text: Quarterly Application for Compensation (Third) for Services and Reimbursement of Expenses, as Accountants to the Debtors in Possession for the Period from April 1, 2008 through June 30, 2008 Filed by Tanner LC. Hearing scheduled for 9/16/2008 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 9/3/2008. (Attachments: # (1) Notice # (2) Exhibit A# (3) Exhibit B # (4) Exhibit C # (5) Certificate of Service and Service List - Fee Application# (6) Certificate of Service and Service List - Notice Only) (Makowski, Kathleen)

527 - Filed & Entered: 08/14/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Tenth Interim Application of Berger Singerman, P.A. for Compensation for Services and Reimbursement of Expenses, as Co-Counsel to the Debtors in Possession for the Period from June 1, 2008 through June 30, 2008 (related document(s)[519] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Makowski, Kathleen)

528 - Filed & Entered: 08/14/2008
Application for Compensation
Docket Text: Quarterly Application for Compensation and Reimbursement of Expenses of Berger Singerman, P.A., as Co-Counsel to the Debtors in Possession for the Period from April 1, 2008 through June 30, 2008 Filed by Berger Singerman, P.A.. Hearing scheduled for 9/16/2008 at 10:00 AM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 9/9/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Exhibit B # (4) Exhibit C # (5) Certificate of Service and Service List - Fee Application# (6) Certificate of Service and Service List - Notice Only) (Makowski, Kathleen)

529 - Filed & Entered: 08/15/2008
Certificate of No Objection
Docket Text: Certificate of No Objection (No Order Required) Regarding Seventh Monthly Fee Application of Mesirow Financial Consulting, LLC as Financial Advisors to the Debtors for Compensation and Reimbursement of Expenses for the Period from June 1, 2008 through June 30, 2008 (related document(s)[520] ) Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Makowski, Kathleen)


  


More Bankruptcy Filings and SCO Predicts a Bright Future for Itself | 136 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections Thread
Authored by: Arthur Marsh on Monday, August 18 2008 @ 09:18 AM EDT
Please post corrections to the above article below this message.

---
http://www.unix.org/what_is_unix.html

[ Reply to This | # ]

More Bankruptcy Filings and SCO Predicts a Bright Future for Itself
Authored by: Anonymous on Monday, August 18 2008 @ 09:20 AM EDT
on Berger Singerman's quarterly bill that the expenses include, on page 5, a category "Out of Southern District of Florida Travel", but there is no airfare listed. The entire $3,172.09 expense was for "Taxi, Airport Transfers, travel meals."

You might have noticed there's no hotel either. However, this is not necessarily unusual. I'm a consultant, and I travel fairly frequently on someone else's dime.

Depending on the client, I might be requested to book my airfare and sometimes hotel through the client's corporate travel department. In those cases, the airfare is billed directly to the client by their travel provider. Other expenses that can't easily be arranged in advance, such as meals, taxis, etc., I pay out of pocket and submit for reimbursement.

So it's plausible this is correctly accounted--Berger Singerman is expensing the incidentals, and SCO already paid the big ticket items. Of course, in that case, the total amount spent for this travel is much larger than $3,000--probably on the order of 5 times larger. It's just the rest of that expense is hidden in SCO's internal operating numbers somewhere.

The above all pure speculation. I have no idea how SCO does travel expenses or reimbursement.

[ Reply to This | # ]

Newspicks Thread
Authored by: Arthur Marsh on Monday, August 18 2008 @ 09:21 AM EDT
Please post comments on Newspicks articles here, using the title of the Newspick
article as the subject and if possible make links clickable by using HTML mode.

---
http://www.unix.org/what_is_unix.html

[ Reply to This | # ]

More Bankruptcy Filings and SCO Predicts a Bright Future for Itself
Authored by: Anonymous on Monday, August 18 2008 @ 09:22 AM EDT
Oh great!I can't wait to install some SCOmmy software on my Crackberry...

...and then get sued for it!

Trust!?! HA!!! Trust that they'll stick it to you, that's what you can trust.

(Hey Franklin Covey - there is NO WAY I would EVER use SCO software *of any
sort* after how I have seen them treat their customers and client base. Please
partner with someone else, if you'd like my business. :) )

[ Reply to This | # ]

Off-Topic Thread
Authored by: Arthur Marsh on Monday, August 18 2008 @ 09:23 AM EDT
Please post off-topic threads below this message, including clickable links
where appropriate.

---
http://www.unix.org/what_is_unix.html

[ Reply to This | # ]

FranklinCovey Calendar - More Bankruptcy Filings and SCO Predicts a Bright Future for Itself
Authored by: Anonymous on Monday, August 18 2008 @ 12:21 PM EDT
I know the Franklin planner book is popular so that Franklin Covey can open
stores that sell only calendar products. Who would have thought. But they are
not cheap, which is why it is a viable business model. At least I assume so,
the stores have been around a while. However as far as on line calendaring is
concerned, have you checked out Google Calendar? You can do invitations, make
public, email and pop up reminders, share with specific individuals.

No charge at this time.

I don't know what the SCO product looks like.

[ Reply to This | # ]

Novell sold the Unix OS
Authored by: Anonymous on Monday, August 18 2008 @ 12:23 PM EDT
" In 1995, Novell sold the Unix computer operating system to The Santa Cruz
Operation." according to the bottom line of that article.

[ Reply to This | # ]

Appeals, exiting bankruptcy -More Bankruptcy Filings and SCO Predicts a Bright Future for Itself
Authored by: Anonymous on Monday, August 18 2008 @ 12:50 PM EDT
Lets see. The whole idea behind finishing up the Novell trial was to determine
exactly what SCO had in the way of real assets. They couldn't plan on going
forward until that item was nailed down.

However Novell said, as of July 30th:

"Novell has informed SCO that it believes entry of Final Judgment is
inappropriate given the pendency of claims subject to an arbitration-related
stay and given the Bankruptcy Court's reservation of issues pertaining to the
entry of a constructive trues."

I think that should have been trust, not trues.

In any case, if I remember correctly, there were some things about the Novell vs
SCO case that were stayed pending the results of Arbitration. That is still out
there. If Arbitration didn't resolve the issue, then it was to be in Judge
Kimball's court. So either somebody petitions the bankruptcy court to let the
Arbitration go to completion, or Judge Kimball sides with SCO and makes the
judgment final or SCO and Novell come to an agreement where arbitration is not
needed, or arbitration and appeal wait until SCO exits bankruptcy.

Now to exit bankruptcy before the appeal, someone will need to do some gambling
on SCO's chances on both arbitration and the appeal.

Presumably the legal fees for the appeal were all paid before bankruptcy was
filed, with the Boise cap.

As far as I can see, right now they are appealing for a Jury trial if I
understand PJ correctly. Even if legal fees with the lawyer are capped, what
about the expense of all the export testimony, etc. assuming they get a jury
trial. How would they be able to get those expenses past the bankruptcy court,
assuming the bankruptcy court allowed the Jury trial to go forward. A jury
trial would bring back into play the Novell counter claims would it not? Maybe
a Jury would consider all the Sun and MS licensing fees as SVRX and award them
to Novell. Did SCO think of that possibility?

With the IBM trial stayed, any awards to IBM will be post bankruptcy awards, and
I assume not protected by the bankruptcy. If it is considered pre-bankruptcy
money, then the smartest thing they can do is drop all the suits, and any legal
fee claims by IBM etc, would be parsed out at pico-pennies on the dollar.

[ Reply to This | # ]

  • the Boise cap - Authored by: kh on Monday, August 18 2008 @ 05:42 PM EDT
    • the Boies cap - Authored by: PJ on Monday, August 18 2008 @ 05:46 PM EDT
      • the Boies cap - Authored by: Anonymous on Monday, August 18 2008 @ 09:08 PM EDT
Well-known Analyst Switches to Standup
Authored by: Anonymous on Monday, August 18 2008 @ 01:22 PM EDT
It's nice to see Enderle giving up on analysis and just going for laughs
instead.

Comments such as "SCO possesses skills similar to those that helped Apple
develop the iPhone" and "They actually have a decent pedigree with
regard to their technical skills" had me nearly falling of my chair!

[ Reply to This | # ]

IBM's Legal Fees
Authored by: Anonymous on Monday, August 18 2008 @ 01:36 PM EDT
Something I'm curious about:

Looking ahead, and assuming that IBM prevails due to SCO having no basis with
which to sue them, is there some way for IBM to recover it's enormous legal
fees?

Does a mechanism exist?

[ Reply to This | # ]

Novell is the Litigation King
Authored by: Anonymous on Monday, August 18 2008 @ 01:57 PM EDT
Although I may not agree with the SCO method of business and its Linux
litigation, I think it is unfair to brand them as the litigation kinds -
especially if you know Novell, which I do. I spent a long time there and they
sue everything and everyone. They have more outstanding lawsuits than almmost
any other major software company. Some of them are pretty ludicrus. Ie.,
Novell vs. Microsoft over the WordPerfect product line. Novell held on to that
for 18 months and now wants hundreds of millions from Microsoft 15 years later.
Give me a break. Novell is the king of killing companies and products they
acquire and the king of litigation. Now that they are struggling financially
and have a dying product in NetWare they've adopted SCO's methodology - sue.

[ Reply to This | # ]

SCO's mobile stuff
Authored by: Anonymous on Monday, August 18 2008 @ 03:11 PM EDT
I have to say, they do have some neat stuff going on. If they'd just stop this
litigation, they might actually make some money.

[ Reply to This | # ]

"but I wonder if the SCO SEC filings reflect that figure?"
Authored by: Anonymous on Monday, August 18 2008 @ 03:42 PM EDT
They do, actually.

The 2007 10-K lists the following R&D figures...

2007: $6,077,000
2006: $7,666,000
2005: $7,948,000

That totals 20 million. I didn't bother to look up the 2008 figures.

Incidentally, they spent 9.68, 12.04, and 11.68 millions on Sales and Marketing
in the respective years. One wonders what they were selling and to whom? :-)

[ Reply to This | # ]

So, when are they "dead", when is it CH7?
Authored by: Anonymous on Monday, August 18 2008 @ 04:07 PM EDT
I'm getting sick of this... isn't CH11 only supposed to be 12 months grace to
get things turned round and a business plan sorted? They still haven't got a
business plan yet, so they should be put out of their misery.

[ Reply to This | # ]

What Wall Street thinks of the great new plan
Authored by: Anonymous on Monday, August 18 2008 @ 04:26 PM EDT

there are upbeat chirpings in the air in Utah, with SCO proclaiming its own future brighter than they thought it would be, and you can read all about it in Tom Harvey's article in the Salt Lake Tribune, which calls SCO "the comeback kids".

Yet despite all the puffery in the Salt Lake Tribune, the company's stock, SCOXQ.PK, fell by 22% in trading today! Of course, 22% is not as impressive as it sounds when a stock is only trading at 29 cents per share; it's only a drop of 7 cents. But still, you do get the impression that maybe the Salt Lake Trib doesn't cut much ice with investors.

[ Reply to This | # ]

Where's the directors?
Authored by: Anonymous on Monday, August 18 2008 @ 04:31 PM EDT
Asked whether he will remain as CEO, McBride said, "As we move forward, at some point we'll have to answer that question. What I can say is I'm very committed to SCO stakeholders . . . to finish off this battle that we started five years ago. We believe it is time now to go in and get things finished off."
Here's a man who burned through tens of millions of dollars with nothing to show for it, destroyed SCO's reputation so that few IT managers in the world want anything to do with it, bankrupted his company, and got his company delisted from the stock exchanged...

And he's still CEO?

If I'm ever CEO of a public company, I want a board of directors like SCO's. My own mother would have voted to fire me after a performance like that.

[ Reply to This | # ]

Darl reminds me of Ike Clanton
Authored by: Anonymous on Monday, August 18 2008 @ 10:07 PM EDT

He does the talking while others do the real fighting.

[ Reply to This | # ]

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