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SCO Responds to BayStar: We're Keeping Your Money and Our Business
Sunday, April 25 2004 @ 10:48 AM EDT

Bob Mims got some interviews, and here is the SCO reply to BayStar (so far): They don't have to give the money back and they intend to stay in the UNIX business. They believe they can return the company to its glory days. And the Utah investigative body that handles stock frauds says it has gotten complaints but they didn't think any of them were worth investigating. The fact that they are asked to give such a statement tells you plenty.

Here is a snip from that part of the article:

"Blake Stowell allows that BayStar's demands, and the publicity sparked by them, 'has caused market uncertainty and pushed the stock price down. [That] has been disappointing to any investor in our company.'

"Stowell took some comfort in a Thursday-Friday rebound of 15.4 percent as shares ended the week at $7.85. While still a long way from SCO's $20.50 per share high water mark of October 2003, given April's woes the rally was welcome. 'There obviously were a lot of shares that were purchased by investors who thought we were at an attractive price,' he said.

"Such fluctuations in SCO's trading, however, also have generated speculation in the pro-Linux 'open source' community -- a global network of programmers dedicated to keeping Linux a freely distributed operating system -- about purported stock manipulation.   Several calls have been fielded by the Utah Division of Securities about SCO, but none were deemed worthy of formal investigation at the state level. 'We sent those [inquiries] on to the U.S. Securities and Exchange Commission office here in Salt Lake City,' said Michael Hines, Utah's director of securities enforcement. 'But we are not aware of any state violations at this time.'

"Kenneth Israel, district administrator for the SEC in Utah, is aware of the 'buzz on the Internet' about SCO's stock. Policy prohibits him, however, from confirming or denying whether investigations are ongoing.     SCO's Stowell flatly dismisses the allegations, saying he knew of no contacts from either state or federal securities regulators."

On investors thinking SCO is a good buy, some SCO insiders seem poised to benefit from that huge dip caused by BayStar. Here is a list of April's SEC filings on insider activity:

The new CFO, Bert Young, was granted 150,000 shares at $7.18 on April 20, 2004 "under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a four-year period commencing from the Option date."

Duff Thompson picked up 15,000 also at 7.18 on the same day. His Explanation statement:"Grant to a Reporting Person of a Non-Qualified stock option to buy shares of Common Stock under the Company's 2004 Omnibus Stock Incentive Plan. The option vests over a two-year period commencing from grant date and represents an option received subsequent to Stockholder approval and election of each Board Member to serve on the Company's Board for the 2004 fiscal year."

Fred K. Stousen picked up 15,000 at 7.18 as well.

Ditto Ralph Yarro. Ditto Dott Marcy. Ditto Daniel Campbell. Ditto Edward Iacobucci.

The $7.18 price is noticeable, because as far as I can determine, it seems to be the lowest price on the stock since June of 2003 (when the stock closed at $6.60) up until April 20, 2004. Are these guys lucky, or what? Did Bert Young not happen to hop on board on the exactly perfect day?

Here is a list of the closing price for the last 30 days. I notice that April 20, the day everybody got their options listed with the SEC, was the magic number, the stock closing at $7.18. That would indicate that instead of using the 30-day DMA, the stock was priced at the single day rate:

  •  04/22/04 -  8.250  
  • 04/21/04 -   6.800  
  • 04/20/04 -   7.180
  •  04/19/04 -   7.770  
  • 04/16/04 -  8.370
  •  04/15/04 -  9.660  
  • 04/14/04 -  10.000  
  • 04/13/04 -   10.030  
  • 04/12/04 -  10.400
  •  04/08/04 -  10.550
  •  04/07/04 -  10.710  
  • 04/06/04 -  11.450
  •  04/05/04 -   10.720  
  • 04/02/04 -   9.500  
  • 04/01/04 -   9.000  
  • 03/31/04 -   8.590  
  • 03/30/04 -   8.570  
  • 03/29/04 -   8.490  
  • 03/26/04 -   8.820  
  • 03/25/04 -   7.890
  •  03/24/04 -   7.800  
  • 03/23/04 -   7.770  
  • 03/22/04 -   8.330  
  • 03/19/04 -   8.710  
  • 03/18/04 -   8.750  
  • 03/17/04 -   8.860  
  • 03/16/04 -   8.800  
  • 03/15/04 -   8.990  
  • 03/12/04 -   9.530  
  • 03/11/04 -   9.250  
  • 03/10/04 -   9.510  
  • 03/09/04 -   10.250  
  • 03/08/04 -   11.280

SCO put out its press release about BayStar wanting its money back on Friday, April 16. On April 22, BayStar said that they'd maybe keep their money in SCO if reforms ensued.

I'm no expert, but I just look at the list. The stock tanked, predictably, on Monday, Tuesday and Wednesday and then went back up on the 22nd. During the huge dip, $7.18 was chosen as the price for Mr. Young and all the rest. There may be a perfectly logical explanation for all this all you high-finance brainiacs see. You could argue it's a coincidence, I suppose. But it looks kind of peculiar to my novice eyes. Am I missing something? I may be, but I present the research so others who do understand these things better than I do will have the data handy to add to their own.

Melanie Hollands has her Part 2 on SCO stock's ups and downs here.

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