Leaked Memo Says Microsoft Raised $86 million for SCO 1279
badzilla and numerous others wrote in with this: "Eric S. Raymond's Open Source site has a new Halloween memo. The Halloween X memo, which ESR says he received by email from an anonymous whistleblower inside SCO, appears to confirm Microsoft's alleged funding of SCO's anti-Linux initiative. And the actual dollar amounts are much larger than previously rumored!" The consultant is discussing his fee for bringing in this business, in the first few lines of the email.
"Rich" (Score:5, Informative)
To head off the inevitable /.ing (Score:0, Informative)
From: Mike Anderer
Sent: Sunday, October 12, 2003
To: csontag@sco.com
CC: Bob Bench
Subject: Conversation Friday
Chris Sontag, the recipient of this mail, is Vice-President and general manager of the SCOsource, responsible for (as his company page puts it) overseeing the development and licensing of SCO's immense intellectual property holdings..
Chris:
I know you were going totalk to Bob later Friday, but I figured I would
outline the issues.
Bob Bench is is the Chief Financial Officer of the SCO group. He is in the Cc line.
Mike Anderer is a consultant with an outfit called S2 that bills itself as a Strategic Consulting firm, in their M&A group. His name is in SCO's SEC filings.
1) Baystar is easy as they were just a Microsoft referral and would be 2%
Baystar Capital is a venture-capital firm. In 2003 SCO got about fifty million dollars from them in a deal that was rumored to have Microsoft's hand behind it. This confirms the rumor.
2) Any licensing deal would be at 5%
3) Much of the other work would go from 2% to 3% as I have engaged in
direct, but this would require according to Bob either Darl or you
signing off on the fact that this ane was not a referral.
4) On the patent side for IPX, where foes that fit it. I am working
with the lawyers to get these moved from provisional to more complete in
the next week. I think it will spawn at least 3 patents. Ed and I are
the inventors on these. What do we fo here
This is mysterious. IPX is a network stack developed by Novell. The implication is that Mike Anderer thinks SCO might be able to get a patent lock on it, so they were looking for IP leverage against Novell.
5) The RedHat, Acrylis examiniation, there is no upside here is this
billable seperatly. I bought a PC and loaded up RedHat and will take
that over and work through it with the Lawfirm. What do we do here?
Acrylis is a company that Caldera (which became SCO) partnered with in 2001. The ongoing lawsuit between Red Hat and SCO is documented here.
I realize the last negotiations are not as much fun, but Microsoft will
have brough in $86 million for us including Baystar. The next deal we
should be able to get from $16-20, but it will be brutial as it is for
go to makerket work and some licences. I know we can do this , if
everyone stays on board and still wants to do a deal. I just want to
get this deal and move away from corp dev and out into the marketing
andfield dollars....In this market we can get $3-5 million in
incremental deals and not have to go through the gauntlet which will get
tougher next week with the SR VP's.
This is the smoking gun. We now know that Microsoft raised at least $86 million for SCO, but according to the SCO conference call this morning (03 Mar 2004) their cash reserves were $68.5 million. If not for Microsoft, SCO would be at least $15 million in debt today.
The "$16 to $20" is almost certainly $16 to $20 million, and since this memo is five months old that deal is almost certainly completed by now. This means it's possible SCO has burned through as much as $30 million in just a year of barratry.
The part that starts I just want is interesting, too. It looks as though Anderer is talking about shopping for a wealthier patron group within Microsoft's corporate hierarchy; SCO has been taking money from Microsoft corp dev (probably corporate development) but the gauntlet of Microsoft's senior vice-presidents is about to make that more difficult. He thinks they can get more money from marketing and field dollars, whatever that is (later paragraphs suggest it's a different group within Microsoft).
We should line up some small acquisitions here to jump start this if we
do it. We shoudl also do this ASAP. Microsoft also indicated there was
a lot more money out there and they would clearly rather use Baystar
"like" entities to
Re:How much would it cost? (Score:3, Informative)
Re:What does "fo" refer to? (Score:3, Informative)
SCO Roundup (Score:3, Informative)
Re:How much would it cost? (Score:3, Informative)
rather easy to tell (Score:3, Informative)
SCO's history isn't the real story... (Score:3, Informative)
Re:Welcome to the real world folks. (Score:5, Informative)
lol, you make them sound so fluffy
IBM's founder spent time in prison for his string arm dealings in the cash register business (smashing up stuff, dumping, threatening).
He was awarded Nazi Germany's highest honour for a foriegner for leasing Holleriths and programmers to the Third Riech (they didn't run 10million+ slave workers with pencil & paper).
The story [ibmandtheholocaust.com] is an interesting read. Especially with regard to personal data & the unseen hand.
I wonder what a happened in this lawsuit [wired.com].
Please mod down! (Score:5, Informative)
The site is not slashdotted. The text you copied is annotated with ESRs remarks in green. But the green tags were lost when you copied the text into this reply. So your text is complete gibberish! The original mail and ESRs comments are mixed up.
Please mod down!
Re:This is a forgery. (Score:5, Informative)
Re:Wow (Score:4, Informative)
Details of SCO claim against AutoZone Authored by: inode_buddha on Wednesday, March 03 2004 @ 10:32 PM EST Right... I would *love* to see them try "All your algorithm are belong to us". Regarding the merit of the actual cases vs public opinion, I would like to remind SCO that your words both in and out of court are and will be compared to your actions. Questions of good faith vs bad faith, and corporate ethics are fair game when one acts and speaks publicly. As an individual I take pains to ensure that my actions and words correspond in such a way that my integrity is difficult to question; people are often shocked to discover that I was telling the truth. As a fictitious person in the form of a corporation, companies including SCO should do likewise. IMHO this is a poor reflection on our society, that truthfulness is not automatically given nor assumed. I take at face value and I give at face value. I expect all my relationships, both business and personal to be likewise, else those relationships are terminated with extreme prejudice. To apply that concept to computing and legal disputes, I've never met a computer that you can BS. It will have bugs and give errors if you try it. Groklaw exists in order to debug the legal system If anyone wants to accuse groklaw of shady dealings or duplicity at any time, please refer them to this post and quote me on it. --- "Truly, if Te is strong in one, all one needs to do is sit on one's ass, and the corpse of one's enemy shall be carried past shortly." (seen on USENET)
Newsome broke this last night about midnight EST on #groklaw, about the new Halloween doc and I had serious doubts whether it should be posted at all until it was verified.
Re:Welcome to the real world folks. (Score:2, Informative)
While IBM has done some other bad things since World War II, I think that for the past few years they've done a good job of behaving themselves. So I will trust them until they give me reason not to.
Mike Anderer (Score:1, Informative)
He also has a small stake in a group called AirClic which has IP around barcodes and looking them up in a database.
this is a clasic move by Mike Anderer and Darl.
Don't work just threaten to sue and sue!
Don't bother building anything just go after those that do.
What a nice place
Re:HAH! (Score:2, Informative)
As for accounting, I don't think you'd have to get too creative. Baystar Capital Partners is an investment firm. If MS gives them money, it just looks like money they're investing. Any strings that might be attached to that money wouldn't have to show up in the balance sheet.
That's NOT what it says... (Score:3, Informative)
"I realize the last negotiations are not as much fun, but Microsoft will
have brough in $86 million for us including Baystar."
Having been involved, personally, with the finances of a few startups, I can assure you that there are a myriad of legitimate (as in 'morally acceptable') reasons why that quote could exist in that memo.
Now, of course, M$ may be dirty; however, I prefer that we take the high road and I'd like to hear Microsoft's explanation.
Re:Welcome to the real world folks. (Score:5, Informative)
Thirty NCR executives were found guilty in that decision, which was subsequently overturned. See this Fortune article [fortune.com] for an overview. As far as I can tell, T.J. Watson never served a day.
Oh, and while T.J. arguably founded the modern IBM, the company had existed for years before T.J. got there as the "Computer Tabulating Recording Company". CTR was itself a derivative of Herman Hollerith's Tabulating Machine Company, founded in 1896.
Re:Just like they bailed out Apple (Score:1, Informative)
SCO's money is all under the table and through third parties. Why would MS go to this trouble just for PR reasons? No, this is legally gray at the very least.
Re:Wow (Score:3, Informative)
Hopefully not, but GM once sued Ford's customers [sinteur.com] for buying Model Ts. OK, it wasn't actually GM yet, but some of the manufacturers in 1903 Seldon consortium [uh.edu] later became GM.
Re:Wow (Score:4, Informative)
Microsoft themselves confirmed the authenticity of at least the first halloween memo.
Re:Wow (Score:5, Informative)
This is generally true, Microsoft does appear to contribute more to Replublicans [commoncause.org], but that has shifted over time:
Of the nearly $1.2 million in PAC and soft money contributions Microsoft contributed between 1995 and 1998, 72 percent went to Republicans. But during the first 18 months of the 2000 election cycle, Microsoft, aware of the closeness of congressional races this fall, has upped its giving to Democrats. Of the $2.3 million Microsoft has given in PAC and soft money this election cycle, 55 percent has gone to Republicans
Microsoft spokesman Rick Miller told Roll Call that the company largely follows a "very basic business strategy to giving and that's a 60/40 approach - 60 percent to the party in the majority and 40 percent to the minority." Miller added, however, that while two years ago, Republicans were Microsoft's defenders, now the company is also seeing a number of Democrats take up its cause.
Re:Wow (Score:3, Informative)
Re:What's wrong - not a troll (Score:3, Informative)
Nothing at all. As long as the funding is done for legal reasons.
Funding another company to sue/defame one (or more) of your competitors and/or groups not using your product is illegal. It's racketering, restraint of trade, etc.
The hard part, of course, is proving it. This memo, even if found to be factual and true in SCO's email system, is insufficient evidence. You would have to find correlating memos from Microsoft, both internally and to Baystar, and from Baystar to SCO. I'm willing to bet that, even if this is all true, that those memos never existed. If you're going to pull this kind of stunt, particularly after being found guilty of being an illegal monopoly, then you ensure there's no paper trail by doing things verbally.
Re:ESR better watch out (Score:5, Informative)
Not that I'm saying the memo is real; I have no idea. I'm just considering your point.
Re:Wow (Score:4, Informative)
I'm no fan of the Bush Administration, but they are right here. Outsourcing hurts the folks that get outsourced, but the rest of us win. The people that can do the job the cheapest get the job, the basic goods and services we use get cheaper, our standard of living goes up, etc. etc. Again, the person who loses a job is hurt, but it's often temporary. Because we all benefit from the individuals loss, we should support temporary benefits while that person changes careers.
From the Economist, Feb 19th 2004 (the India issue):
EARLIER this month, President George Bush's chief economic adviser, Gregory Mankiw, once Harvard's youngest tenured professor, attracted a storm of abuse. He told Congress that if a thing or a service could be produced more cheaply abroad, then Americans were better off importing it than producing it at home. As an example, Mr Mankiw uses the case of radiologists in India analysing the X-rays, sent via the internet, of American patients.
Mr Mankiw's proposition, in essence, is the law of comparative advantage, first postulated by David Ricardo two centuries ago and demonstrated to astonishing effect since. Yet the Republican speaker of the House of Representatives, Dennis Hastert, joined Democrats in their rebuke of Mr Mankiw for approving of jobs going overseas; another Republican called for his resignation. The White House gave Mr Mankiw only lukewarm support -- unsurprisingly, since Mr Bush recently signed a bill forbidding the outsourcing of federal contracts overseas. And the Democratic presidential contenders? Mr Mankiw had just written their attack ads.
She uses the example of cheaper IT hardware, one of the main aspects of globalisation in the 1990s. Most of the drop in prices for PCs, mainframes and so on was caused by the relentless advance of technology; but she still thinks that trade and globalised production -- all those Dell Computer factories in China, for instance -- was responsible for 10-30% of the fall in hardware prices. These lower prices led to higher American productivity growth and added $230 billion of extra GDP between 1995 and 2002, equivalent to an extra 0.3 percentage points of growth a year.
These days, software spending is increasing at twice the rate of hardware spending, as businesses struggle to make their new computers work better. The manufacturing sector is where such integration has gone furthest. In many other parts of the American economy, the process has barely begun -- particularly among smaller- and medium-sized businesses. Mr Mankiw's example of the Indian radiologist shows how the internet could help lower costs and raise productivity in health care. Who would object to that?
I'd add more, but the Economist doesn't have a free online site. If you don't mind paying $2.95, you can read the whole article [economist.com]. Or, you can find someone who doesn't mind putting the whole article on the web [cfo.com].
A great book for learning basic economics is Naked Economics: Undressing the Dismal Science [amazon.com] by Charles Wheelan. And, of course, a subscription to the Economist can't hurt.
It's painful to see outsourcing move from the manufacturing sector to the service sector, but we're better off because of it. Keep your skills up-to-date folks, and think about those management jobs.
Re:Why not buy SCO then? (Score:5, Informative)
This is a no compromise situation. If $86 million is a lot of money to you in this situation, then how do you feel about $5 BILLION? For that is what MS expended on Internet Explorer, not to make it best of breed, but just to make it good enough, so that with all their other shady dealings, they could drive Netscape out of the market. And they never even once considered selling IE. Those $5 billion were a drop in the ocean to them.
Get a grip!
Re:Mike Anderer (Score:2, Informative)
http://spar.research.sc.edu/pdf/USCRF_Board_Membe
Strangely there is only this google link. Well, there will certainly be more now..
Re:HAH! (Score:3, Informative)
If you're MS, you wouldn't even have to give the VC guys the full amount, just enough to make it an attractive investment for them. A VC firm might look at a $50M investment in SCO and say 'this is too risky', but if MS says to them: 'We'll give you $25M to make that $50M investment', then their
risk/reward calculation changes a great deal.
BTW, We're talking about 0.2% of their cash, not 2%.
Re:Smoking gun? What smoking gun? (Score:2, Informative)
"I realize the last negotiations are not as much fun, but Microsoft will
have brough in $86 million for us including Baystar. The next deal we
should be able to get from $16-20, but it will be brutial as it is for
go to makerket work and some licences. I know we can do this , if
everyone stays on board and still wants to do a deal. I just want to
get this deal and move away from corp dev and out into the marketing
andfield dollars....In this market we can get $3-5 million in
incremental deals and not have to go through the gauntlet which will get
tougher next week with the SR VP's."
and even more:
"We should line up some small acquisitions here to jump start this if we
do it. We shoudl also do this ASAP. Microsoft also indicated there was
a lot more money out there and they would clearly rather use Baystar
"like" entities to help us get signifigantly more money if we want to
grow further or do acquisitions"
Re:Uh, this DOJ is pretty effective. (Score:4, Informative)
Re:Wow (Score:3, Informative)
Venture Capitalism for Lawsuits? (Score:2, Informative)
I did some googling and came up with this interesting piece [findlaw.com].
-- Confidence is the feeling you have before you understand the situation.
Re:SEC/Audit Disclosure Requirement (Score:2, Informative)
There is a requirement for full, fair and plain disclosure.
There is a requirement to disclose the substance of the transaction, not just its form.
I won't refer you to specific regs - depends on the facts - but the following, [wustl.edu] provides much of the relevant case law, etc.
The reason that I believe there was a lack of disclosure has to do with the failure to disclose the "substance" of the transactions, not the "form", and failure to disclose that the business is dependent upon the goodwill of MS etc.
With all due respect, IF this email is true and factual, the disclosure made to date IMHO is not sufficient to allow investors to understand the nature of SCO's business relationship with MS. The disclosure provided just wouldn't cut it.
Re:Wow (Score:5, Informative)
Re:interesting (Score:1, Informative)
Well, let's see...
AutoZone...
Wincor Nixdorf customers:
MS used Financing arm to take over Corel too (Score:5, Informative)
This is how it worked:
Just like in the SCO case, MS was using their Financing arm to do anti-competitive business transactions. Manipulating enemies through innocent-looking cash movements and investments while supplying cash, information and most importantly *connections* to henchmen willing to do the dirty deeds (Vector, Baystar...). IIRC there was indeed a MS connection to BayStar as well. Paul Allen as an investor?
Microsoft won't stop this sort of anti-competitive clandestine operations until authorities have thoroughly investigated what is going on within their shadowy Corporate Development and Strategy (incl. Rich Emerson and Robert Uhlaner) unit and how favors and sensitive business information gets passed around within the infamous Microsoft Old Boys' Alumni network.
Re:Wow (Score:5, Informative)
electric urban and interurban light rail systems, including
the excellent streetcars that served Los Angeles, converted them
to internal combustion engines, and deliberately managed them into failure.
Before this time, good electric streetcars made an automobile
unneccessary in many urban areas.
See http://www.tompaine.com/feature2.cfm/ID/4518
National City Lines (Score:1, Informative)
Re:Because it's illegal? (Score:4, Informative)
You are falling into an intellectual trap by using the term "Intellectual Property". You are failing to think clearly.
There are four kinds of "Intellectual Property": Patent, trademark, copyright and trade secret. Each kind has its particular rules.
SCO has no patents pertinant to this case. Novell didn't transfer any patents to them.
SCO has no trade secrets. They've dropped the trade secret components.
SCO has no trademarks. Unix and Unixware are trademarks of the Open Group. SCO hasn't made trademark claims.
SCO's only remaining copyright claim against IBM is contributing to distribute AIX after SCO "terminated" their irrevocable linense. Even though SCO can't terminate IBM's license and even though Novell who, acting within their rights in the asset transfer, told SCO to waive any purported violations.
SCO has got nothing left. Their contract claims are not IP claims. Their "derivative works must be kept secret" contract claim will fail. The technologies they are claiming violate their "IP" do not meet Copyright Law's definition of derivative works. AT&T publically said that code licensees add to Unix belongs to them and that estopps SCO from claiming otherwise today. SCO has no rights to the JFS, NUMA and SMP technologies IBM donated to Linux. None.
SCO literally has no case. Every legal theory they've put forth is fundamentally flawed.
Their other suits seems just as flawed, but they haven't yet been analysed in detail as the IBM and Novell cases have. Autozone seems to be a straightforward copyright case except that SCO admitted that there was no SysV code in Linux before Judge Wells. Oops! No more case there.
They are also attempting to assert patent-like use rights on copyright whioch does not reserve "use" to the rightsholder as an exclusive right. Oops! No more case.
Daimler-Chrysler seems to be a complaint that DC hasn't responded to their Unix letter. Gee. I'd hate to be a former SCO customer. Apparently you can never get out of their stupid annual reporting requirement.
Re:Wow (Score:3, Informative)
My company outsourced a bunch of people nine months ago. It hurt. The people who had to leave were hurt. The people who remained were hurt. All trust on upper management has disappeared. So let me get this off my chest right up front: OUTSOURCING SUCKS.
However, out of 1,000 employees, only 20 got outsourced. Think about it. Considering that the current unemployment rate is 5.7% (which is pretty good), the actual impact of outsourcing on the nation seems to be primarily emotional rather than economic.
Confirmed! (Score:5, Informative)
Valididy "Confirmed" (Score:5, Informative)
Re:He's as good as fired. (Score:3, Informative)
If they failed to provide the document when it was covered by a request for discovery, that failure itself is a breach of the law.
eweek story (Score:1, Informative)
Re:Wow (Score:3, Informative)
The last line of Halloween 10 reads:
Also, I doubt anyone at SCO is dumb enough to lie Microsoft funding them. IBM dwarfs SCO in terms of lawyers and resources, but Microsoft dwarfs even IBM.
Re:HA HA HA HA Jokes on you Slashdot.... (Score:1, Informative)
First off this has got to be the stupidest thing I have ever heard of. Secondly did anyone even bother to read the memo before posting this on slashdot?!
Blake Stowell of SCO just confirmed it was real in an eWeek story [eweek.com].
Looks like you're a dumbass, huh?
THIS JUST IN: THE MEMO'S REAL (Score:2, Informative)
That last sentence intrigued me as well when I first read it. "Exit"? Does that mean take your millions and run and hide somewhere tropical?
SCO says: Memo is real (Score:2, Informative)
I doubt their damage control is very credible, as clearly Microsoft is involved:
SCO's blanket dismissal of the leaked memo as the mistaken assumptions of an independent contractor doesn't explain several parts of the letter which seem to indicate knowledge of Microsoft's involvement in SCO's investment search, however.
For example, the memo states that Microsoft apparently wanted to use private investments in public companies to help fund SCO.
Re:Not likely (Score:1, Informative)