decoration decoration
Stories

GROKLAW
When you want to know more...
decoration
For layout only
Home
Archives
Site Map
Search
About Groklaw
Awards
Legal Research
Timelines
ApplevSamsung
ApplevSamsung p.2
ArchiveExplorer
Autozone
Bilski
Cases
Cast: Lawyers
Comes v. MS
Contracts/Documents
Courts
DRM
Gordon v MS
GPL
Grokdoc
HTML How To
IPI v RH
IV v. Google
Legal Docs
Lodsys
MS Litigations
MSvB&N
News Picks
Novell v. MS
Novell-MS Deal
ODF/OOXML
OOXML Appeals
OraclevGoogle
Patents
ProjectMonterey
Psystar
Quote Database
Red Hat v SCO
Salus Book
SCEA v Hotz
SCO Appeals
SCO Bankruptcy
SCO Financials
SCO Overview
SCO v IBM
SCO v Novell
SCO:Soup2Nuts
SCOsource
Sean Daly
Software Patents
Switch to Linux
Transcripts
Unix Books

Gear

Groklaw Gear

Click here to send an email to the editor of this weblog.


You won't find me on Facebook


Donate

Donate Paypal


No Legal Advice

The information on Groklaw is not intended to constitute legal advice. While Mark is a lawyer and he has asked other lawyers and law students to contribute articles, all of these articles are offered to help educate, not to provide specific legal advice. They are not your lawyers.

Here's Groklaw's comments policy.


What's New

STORIES
No new stories

COMMENTS last 48 hrs
No new comments


Sponsors

Hosting:
hosted by ibiblio

On servers donated to ibiblio by AMD.

Webmaster
SCO Comments on Insider Trading
Thursday, August 14 2003 @ 12:18 PM EDT

They have a press release here:
The SCO Group Comments on Insider Transactions

LINDON, Utah, Aug 14, 2003 -- The SCO Group, Inc. (Nasdaq: SCOX) encourages its directors and executive officers to sell the stock held by them through plans designed to qualify for the protections provided by Rule 10b5-1 under the Securities Exchange Act of 1934.

The 10b5-1 plans provide for future sales of stock, at predetermined times and in amounts and under conditions specified in the plans, without subsequent instructions from the participants. These plans have been adopted by the following individuals: Robert Bench, CFO; Jeff Hunsaker, Sr. VP Marketing; Reg Broughton, Sr. VP International Sales; and Michael Olson, VP Finance/Controller. These plans have been implemented primarily for the purpose of providing liquidity to the participants to meet sizable personal tax liabilities resulting from the vesting of restricted stock awards.

During the three months ended July 31, 2003, individuals selling under approved 10b5-1 plans sold 88,000 shares of the Company's common stock. Two other executive officers sold 29,616 shares during the same three-month period in Company approved open trading windows. For the upcoming three-month period to end on October 31, 2003, the above-referenced executive officers may sell up to 141,000 shares of the Company's common stock under current 10b5-1 plans if the conditions of the various plans are met. No other directors or executive officers have implemented a 10b5-1 trading plan to sell shares of the Company's stock during the next three months.

Our directors and executive officers beneficially hold approximately 6,005,000 shares and options to acquire an additional 2,016,000 shares.



Their third-quarter financial results press release:
For the third quarter of fiscal 2003 ended July 31, The SCO Group, Inc. (Nasdaq: SCOX) reported net income of $3.1 million, or $0.19 per diluted share, on revenue of $20.1 million, compared to a net loss of $4.5 million, or $0.35 per diluted share, on revenue of $15.4 million for the comparable quarter of the prior year. Revenue for the third quarter of fiscal 2003 from the Company's operating system platforms was $12.8 million, and revenue from its SCOsource licensing initiative was $7.3 million, both within the range of previous guidance.

For the first nine months of fiscal 2003, the Company reported net income of $6.9 million, or $0.47 per diluted share, on revenue of $55.0 million, compared to a net loss of $22.1 million, or $1.58 per diluted share, on revenue of $48.8 million for the comparable nine-month period of fiscal 2002. The Company's current fiscal year ends October 31, 2003.

"During the quarter ended July 31, 2003, SCOsource, our division for licensing and protecting the Company's UNIX(R) intellectual property, generated $7.3 million in revenue and contributed $5.6 million to gross margin. Our SCOsource initiative continues to gain momentum as we pursue enforcement of the Company's intellectual property rights," said Darl McBride, president and CEO.

McBride continued, "This is our second consecutive quarter with net income and positive cash generated from operations. These results have strengthened our balance sheet and overall financial position. We intend to use this capital to continue our intellectual property protection and licensing initiative as well as for launching SCOx, our Web services strategy."

"We expect that revenue for our fourth quarter, ending October 31, 2003, will be in the range of $22 to 25 million. The magnitude of our SCOsource licensing opportunities and our confidence in the SCOsource revenue pipeline is growing each quarter, said McBride.

Conference Call

As previously announced, the Company will host a conference call at 9 a.m. MDT today, August 14, 2003, to discuss third-quarter fiscal 2003 results. To participate in the teleconference, please call 800-811-0667 or 913-981-4901, code: 452322, approximately five minutes prior to the time stated above. You may also join the call in listen-only mode via Web cast at http://ir.sco.com/medialist.cfm. There will be a subsequent replay of the teleconference available on the SCO IR Web site 48 hours after the conference call.

Forward Looking Statements

The statements set forth above include forward-looking statements that involve risks and uncertainties. The Company wishes to advise readers that a number of important factors could cause actual results to differ materially from those projected in the forward-looking statements. The Company has only realized revenue from its SCOsource licensing initiative during the last two quarters and the intellectual property rights that it is asserting in seeking to enter into licensing agreements are subject to pending litigation, making it difficult to predict the extent of future revenues from this source. Other factors that may affect the forward looking statements include the ability of the Company to successfully roll out its new services and solutions to service providers in its existing channels; the acceptance of such offerings by existing service providers and customers; the ability of the Company to successfully meet its revenue projections, which are based on the ability of the Company to enter into new licensing agreements and the continued acceptance in the marketplace of historical products; the Company's ability to compete effectively with other solutions providers; new and changing technologies and customer acceptance of those technologies; and claims of infringement of third-party intellectual property rights. These and other factors, which could cause actual results to differ materially, are discussed in more detail in the Company's filings with the Securities and Exchange Commission.

Their webcast requires either RealPlayer or Windows Media Player. I don't use either. Evidently GNU/Linux and Apple folks are not invited.


  


SCO Comments on Insider Trading | 18 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 09:41 AM EDT
There is a Linux version of RealPlayer ;)
tamarian

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 10:09 AM EDT
"Our SCOsource initiative continues to gain momentum..."

Right down the hill.


Nick

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 10:12 AM EDT
Hmm ...

The objective of the 10b5-1 provision is, clearly, to allow corporate insiders to sell stock in a kind of "hands off" fashion, and there is clearly a legitimate need for this kind of provision. (Insiders need to buy groceries and pay the rent, too.)

I guess it's just a funny coincidence that these plans happened to get started right after the lawsuit was announced. Right.


Rich Gibbs

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 10:25 AM EDT
They have been anything but hands off. Infact they seem to sprout new hands and faces daily and want to put thier fingers in everyones pies.
Supa

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 11:27 AM EDT
Since the IBM use of Darl's words in interviews, press conferences and PR Darl seems to have been a LOT quieter.

Did anyone note a less belligerent, fewer in-your-face-claims during this conference call?


Sanjeev

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 11:28 AM EDT
PFFFFfffft... trying again

Did anyone note a less belligerent TONE, fewer in-your-face-claims during this conference call?


Sanjeev

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 02:40 PM EDT
He turned his verbal guns on the Wall Street Journal guy.

Yes Darl, that will encourage him not to write any more articles ridiculing your claims.


quatermass

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 03:31 PM EDT
Does the figure of 6M shares sound right to everyone else. http://finance.yahoo.com/q?s=SCOX&d =b quotes a market cap of $137M and price per share at close of $10.55 which by my calculation makes 13M shares in issue. That would mean nearly half the company is owned by the directors. I have a suspicion that they are including Canopy's chunk in this figure, as I thought Canopy owned nearly 50% and otherwise there would be virtually no shares held outside Canopy and the directors.

Also worth Noting that Micheal Olsen sold another 5000 shares on Monday according to http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001 102542&owner=include but these haven't yet shown up on Yahoo. According to PJs analysis Darl only holds 15,003 shares, 7,003 of which he only got a month ago so no huge surprise that he hasn't sold them.


Adam Baker

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 03:56 PM EDT
And now I see the figures in their last annual report, year ended Oct 2002 (http://www.sec.gov/Archives/edgar/data/1102542/000104746903007344/a2 104670z10-ka.htm)

5.3M of those shares are held by Canopy group and justify inclusion because the Canopy directors are also directors of SCO. Darl held no shares at that time.

I thought the Register's reporting was rather nice, they regurgitated the PR with minor scepticism and then in the last paragraph gave this link as a "Must Read" http://www.computerworld.com/managementtopics/management/story/0,108 01,83452,00.html


Adam Baker

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 05:08 PM EDT
As much as I hate SCO (I'm currently starting a small business that's entirely based on Linux) I've got to say that the whole "insider trading" thing doesn't impress me too much. I certainly keep an eye on it, because it could get ugly, but so far they've sold less than one percent of the market cap of the company, and those who've sold the most shares also have the most shares left - Michael Olsen still has more than fifty thousand shares. Broughton still has one hundred and twenty thousand. Bench has more than two hundred thousand.

I can't blame them for selling some of their holdings when the share price went up tenfold. I'd probably have sold something at that point too.


Alex Roston

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 05:16 PM EDT
"For the third quarter of fiscal 2003 ended July 31, The SCO Group, Inc. (Nasdaq: SCOX) reported net income of $3.1 million, or $0.19 per diluted share, on revenue of $20.1 million, compared to a net loss of $4.5 million, or $0.35 per diluted share, on revenue of $15.4 million for the comparable quarter of the prior year."

I read somewhere (I forget where now) that Microsoft paid $20M for their Unix license. Isn't it funny how SCO is reporting a gross revenue of $20.1M? I guess the other $100K was from the one company to purchase their Linux License.


J.F.

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 06:21 PM EDT
Got to looking at the earnings picture and the ownership picture, specifically at the Canopy Group web site. I note that one of the Canopy Group's companies is Linux Networx, a company that sells clustered Linux systems. I wonder if SCO will hit them up for Linux licenses...
Steve Martin

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 07:23 PM EDT
The thing about insider trading is, usually it involves people *buying* stock just before it goes up, or *selling* it just before it goes down. Selling a whole bunch of stock after your company's stock price goes through the roof is just called "cashing in". If they'd suddenly given a whole bunch of shares to themselves just before the IBM announcement that would be another story. If anything, those scheduled sale thingies provide a glimpse to the market of what might might be cooking at a company.

What happens when SCO starts sliding down the other end of their rainbow will be another story. And, of course, the Canopy umbrella itself covers a host of interesting public and non-traded companies, all mixed together in a very entertaining way.


raindog

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 09:05 PM EDT
"those who've sold the most shares also have the most shares left" I must admit I really dont know much about stocks but isnt the above statement somewhat misleading? I mean lets take for example I own 50 million shares of Bre-X which is valued at 0.01 a share. I make a claim that a new 'huge' diamond deposit really has been found (and I make people sign a NDA so they cant independently verify the claim). The stock investors believe me and pump the stock to $10 a share. I then sell 1 million shares of my stock giving me a quick $10,000,000. Isnt it a smoke screen to claim "Hey, I still have 49,000,000 shares left" ??????
JohnC

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 09:20 PM EDT
JohnC,

That's a question for the SEC to answer, when they are picking through the rubble of SCOG after they have imploded...


D.

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Thursday, August 14 2003 @ 09:55 PM EDT
If SCO execs were making anywhere near that 10,000,000 dollars, I'd agree with you, but a look at PJ's listing shows that most of them have made no more than a couple hundred thousand. Most have made less than that.

In other words, it's not real money.

That being said, don't misunderstand me. If McBride & Co. go to the big house on a securities fraud conviction, I'll still have a party, but I just don't think it's gonna happen.

Alex


Alex Roston

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Friday, August 15 2003 @ 07:05 AM EDT
> In other words, it's not real money.

Well it is real money compared to most of their salaries.

Canopy/Vultus/Wall could also be real money.

There also seems to be some confusion over the issues.

Look at the allegations about Martha, which as I understand it are:-

1. She is alleged to have traded stock on undisclosed information about ImClone. i.e. classical illegal "insider trading"

2. She is alleged to have manipulated the stock price in her own company, by giving false information to shareholders

If you look at what IBM and Red Hat allege, then decide which of these it's closer to.


quatermass

[ Reply to This | # ]

radiocomment
Authored by: Anonymous on Friday, August 15 2003 @ 07:06 AM EDT
"If you look at what IBM and Red Hat allege, then decide which of these it's closer to."

should be

If you look at what IBM and Red Hat allege, then decide which of these scenarios, their allegations are closer to.


quatermass

[ Reply to This | # ]

Groklaw © Copyright 2003-2013 Pamela Jones.
All trademarks and copyrights on this page are owned by their respective owners.
Comments are owned by the individual posters.

PJ's articles are licensed under a Creative Commons License. ( Details )