BayStar Interviewed Regarding SCO Investment 277
Gonzo_Warrior writes "BayStar's managing partner explains what led him to 'ask' SCO for their money back. In this article, Lawrence Goldfarb describes '...the wayward corporate behavior on SCO's part' that led him to reevaluate BayStar's position. In a letter to SCO last week, BayStar claimed that '...SCO's behavior violated provisions of the investment agreement and that BayStar's convertible preferred stock be redeemed.' The article notes that since its founding in 1998, BayStar has never before asked a company for its money back." CNet has a story based on talking to a BayStar spokesdrone.
I don't get it. (Score:5, Interesting)
SCO's stock price, which fell 38 cents yesterday to $6.80 a share, has dropped 30 percent since last Thursday, the day BayStar sent its redemption letter.
.. but now it's at 7.96 [yahoo.com]. That's why I'm a geek and not a Wall Street suit, I can't see any logic in the stock market. Isn't this NYTimes article more bad news for SCO?
Re:I don't get it. (Score:4, Interesting)
Re:I don't get it. (Score:4, Insightful)
Already discounted information (Score:5, Interesting)
Some people still believe that there is a possibility that the lawsuits may bring in money. A bankruptcy precludes that (even if the lawsuits continue under a new owner, the money won't go to the stockholders). Thus, Baystar not forcing them into bankruptcy is good for SCO stock.
Which should we find more convincing: where Baystar put their money (if they remove the money back demand, they are indicating that they think they will get more money if they wait, i.e. that SCO will be more valuable after the lawsuits); or what they say (that SCO has crappy products).
Yes, we have now gotten to the point where the comment, "your products are crap, just stick to suing people," actually is a rosy view of SCO's future. No one believes in their products. At least some people still believe in their lawsuits. SCO is no longer a tech company. They are just a bundle of lawsuits hoping that one will carry through to a big reward from the deep pockets of IBM, Daimler Chrysler, or AutoZone.
This is fantastic (Score:3, Insightful)
Great! With Baystar withdrawing their money, SCO was instantly bankrupt (RBC would certainly do the same, to avoid investor liability). No warning shot, no nothing, immediate bankruptcy. That would have been the worst outcome of the whole saga, for us, because then IBM, RedHat, and Novell (and perhaps Chrysler and Autozone) would not have the chance to obliterate SCO in court, clearing away the FUD around Linux in the process.
Now, if Baystar is sat
Re:I don't get it. (Score:4, Insightful)
SCO's public behaviour is increasingly becoming an embarassment for them both in the courtroom and as far as the credibility of their FUD. That means Baystar/Microsoft is no longer getting what they paid for, so they're rattling SCO's chain.
Re:I don't get it. (Score:3, Interesting)
join the risk! (Score:3, Interesting)
management practices to address BayStar's complaints,
it might keep its funds in SCO."
This is troubling. Baystar thinks they have a chance.They are saying get rid of some yooboos and stop living off our cash and we'll still play with you. I think SCO has done it already with the CTO leaving. Thie question is if that is enough good faith. The stock is up. Someone might think so.
Re:I don't get it. (Score:5, Interesting)
On the other hand, Baystar doesn't have their money yet, and if they came out and said "SCO's case has no merit" the stock might tank to the point where they couldn't get it. (SCO's market cap is ~$100M, Baystar is asking for 20% of that back in cash.)
Re:I don't get it. (Score:3, Informative)
Re:I don't get it. (Score:4, Insightful)
IANA stock analyst. The only bath I ever took was in the market.
Mod Parent Up... (Score:2, Insightful)
Re:I don't get it. (Score:5, Interesting)
Re:I don't get it. (Score:3, Funny)
-B
Re:I don't get it. (Score:5, Informative)
I think that's what professional investors call a Dead cat bounce [wordspy.com].
Quite simple... (Score:5, Informative)
The rest are all trying to second-guess what others will want. The mid-term traders try to predict the long-terms, the short-terms the mid-terms and the daytraders the short-terms.
This typically result in "waves" in the stock price even where the real change is slim and none. Think of it as a bullwhip where the realinvestors give a nudge, and it comes out as a snap. Even if the original nudge is purely downward, the whip will go both up and down until it resettles.
This whole picture is even more clouded by derivates such as options and futures, which can act both as accelerators and brakes to such a process. You have e.g. the short squeeze and the dead cat jump, caused by options coming to a close.
The stock market has its logic. But it is definately that of its own, where expectations drive almost everything. Witness the 1929 stock crash or even the dotcom wave to see that. Eventually reality will catch up and ask "Yes, but do we make any money in the real world?" but it takes literally years.
Kjella
Re:I don't get it. (Score:2)
Re:I don't get it. (Score:3, Interesting)
I'm in total agreement on this with you; it makes no friggen sense. For example, this time last year, it was well below 1/2 of the current price ($8.15 a few moments ago, $3.00 last year). [yahoo.com]
I can predict 3-18 months into the future what the trends will be for some stocks...and I'm 100% wrong within that time frame. The
Re:I don't get it. (Score:3, Insightful)
I'd be worried if you did. There is none. The stock market is an irrational system, loaded with confidence schemes, accounting tricks, high-stakes gambling, and "wealth" created from and vanishing into thin air. Despite which it is treated as the cornerstone and bellweather of our economic system, and presented by pundits as the ideal way to "invest" our resources for the future.
Re:I don't get it. (Score:5, Interesting)
It could well be that SCO has dropped far enough that a lot of these people are buying - taking the profit on their short sells. That would produce an upward trend.
But then IANAStockmarketGuy. All I know about this sort of stuff I learned from SCO :-)
Re:I don't get it. (Score:3, Interesting)
Re:I don't get it. (Score:5, Informative)
For some of 'em, yes: but I gather this sort of deal comes with a time limit. Sooner or later you have to pay back the stock you borrowed - could be that a lot of people are in that position. Many others might have standing orders - 'buy back if this stock drops below 80% of what I paid for it', for instance.
I'd agree with what the other (probably better informed) posters are saying - SCO will drift up and down, but their overall trend is heading rapidly towards a Schwarzschild radius of their own making ;-)
Re:I don't get it. (Score:4, Informative)
Not neccessarily a time limit, but it does come with interest. You essentially borrow the stock from guy 1, then sell it to guy 2 at the price you bought it for. Now you have a lot of money in your pocket, but you owe guy 1 all that stock (currently the value of your money). He charges you interest on that, If you wait too long and the price doesn't drop enough, even if it does drop, you could loose money to interest.
Diminishing Return (Score:3, Insightful)
In addition to everything others have said... there's also diminishing return at work. If you shorted stock at $10 and its $2 now, a further fall of your maximim gain possible from this point on is pretty small. Not counting broker fees, interest etc., if you'd shorted $1000 of stock, you'd now make $800 in profit. Assuming its value falls away comp
Since 1998 eh? (Score:5, Funny)
All the way back to 1998, a whole six years ago. Now there's history for you. Almost dynastic in its scope..
Cheers,
Ian
a learning process (Score:2)
A better lesson. (Score:3, Insightful)
Baystar will be out $20 million because their people were persuaded by Microsoft's people to fund SCO's attack on Linux.
Some Baystar people need to be fired for that one.
real money (Score:3, Insightful)
In the end what a shame.
Re:Since 1998 eh? (Score:5, Informative)
It also states that in over 400 investments they have never done this before. So while the history isn't exactly epic there is enough to show that, to date, they have resorted to this sort of action in fewer than one quarter of one percent (.25%) of cases. This strikes me as fairly significant.
-Peter
Re:Since 1998 eh? (Score:5, Interesting)
And me also, but for different reasons. I've been in the financial services industry since before this company was founded, and I've never heard of a comparable case. The moral to me is to distrust Baystar as a potential investment partner.
Cheers,
Ian
Re:Since 1998 eh? (Score:5, Funny)
You needed more reasons than their investment in SCO?
Re:Since 1998 eh? (Score:5, Insightful)
Re:Since 1998 eh? (Score:3, Insightful)
define: sarcasm [google.com]
Indeed (Score:2, Funny)
Look here for more [computerhope.com].
Ahhh (Score:3, Interesting)
> All the way back to 1998, a whole six years ago.
BayStar formed as fate itself would begin to turn on the dot-bombs. BayStar, and the rest of the world, witnessed the plethora of cunning weasels around the world die of financial mass-suicide; but why invest in SCO to begin with? I find it hard to believe that BayStar would forget about the dot-bombs long enough to jump into SCO stock, with both fe
Baystar just looking for changes (Score:5, Insightful)
CTO left today (Score:3, Interesting)
Hopefully they'll keep wasting investor cash. That is the quickest way of halting this strange saga.
Re:Baystar just looking for changes (Score:3, Informative)
Of the 400 companies they've invested in ... (Score:5, Informative)
Even more telling... (Score:2, Informative)
I think it's even more telling of BayStar that they believe SCO should be investing more in thier legal team, as opposed to, I don't know, DEVELOPING GOOD PRODUCTS AND IMPROVING RELATIONSHIPS WITH THEIR CUSTOMERS!!
Invest more? Baystar wants them to stop (Score:5, Interesting)
have investor money, will travel (Score:3, Funny)
nice. money for nothin, but does he get the chicks for free?
They're looking at the endgame (Score:5, Insightful)
1. Concentrate on and press the legal issues and win. Results for BayStar are obvious.
2. If the court cases are to be lost/abandoned etc then SCO needs to have some public goodwill in order to attract new customers.
It isn't doing (1), all we are seeing is grandstanding and namecalling.
It surely isn't doing (2) - SCO is the most hated company in tech.
Darl fancies himself a scrapper who can take the heat, but he's sacrificing SCO and all of the shareholder equity to buttress his ego. A CEO should put shareholders first.
Re:They're looking at the endgame (Score:3, Insightful)
The wierdness of there case:-
IBM wote JFS for its own UNIX system therefore its UNIX and we own it would set a precedent which could lead to even more bizzare cases.
e.g. FreeBSD Your operating system uses an amended version of our TCP/IP stack therefore we own it, -, all you Windows users belong us
BayStar *wants* SCO to be a lawsuit mill... (Score:5, Interesting)
1) BayStar got into this "sure thing" by bad judgement, is blowing smoke about their present motivations, and actually want some money out now, quick, before "the plane hits the terrain", or
2) BayStar is shilling for soMeone elSe and doesn't give a soaring adlunar coition about SCO's prospects for survival or monetary return, or
3) they are in some altered reality where they still think SCO *can* win. In that case I don't want any of what they're smoking, it impairs judgement too much.
Re:#2 (Score:3, Insightful)
Wouldn't that be M$?*
no, there are quite a lot of people who choose ms products over others for no other reason than their being ms products and quite a lot of ceo/cto/suits have 'trust' in them as a 'good choice'.
not so for sco.
Can't see the Darl from the cheese (Score:3, Interesting)
Why is this behavior obvious to everyone but SCO, and our courts?
Re:Can't see the Darl from the cheese (Score:3, Insightful)
1. There's nothing illegal or wrong about giving frequent and grand about public statements, at least here in the US of A, where we have the right known as "free speech".
2. SCO is _expected_ to talk smack about their competition. Did you think they were just going to politely assault one of the biggest computer firms out there? No way. They've got to go out with guns blazing if they're going to attract investors.
Let's face it: SCO, so far, has done nothing illegal. They've made total bastards out o
Baystar may want to fire Darl (Score:5, Interesting)
"BayStar Capital Management LLC believes SCO needs to hire executives with more savvy about intellectual property cases and spend less money on its Unix products, BayStar spokesman Bob McGrath said Wednesday."
"SCO's chief executive is Darl McBride, whose cash compensation totaled $986,047 in the company's fiscal year ending last October. That pay package troubled BayStar, McGrath said, given SCO's small size - the company has annual revenue of $79 million and about 300 employees."
Baystar may finally be the one's to shut oldSCO's mouth for us so that IBM can finish the execution cleanly
Re:Baystar may want to fire Darl (Score:5, Funny)
Cleanly? Baystar are offering a clean execution: SCO run out of money and implode. IBM want SCO hanged, drawn and quartered in public, the dismembered remains sent to the four corners of the land and Darl's head on a spike outside the Tower of London.
IBM are soft.
Re:Baystar may want to fire Darl (Score:5, Insightful)
That's a good point to keep in mind. (Score:5, Insightful)
I'm sure that Baystar would leave their money with SCO if Microsoft could find a way to funnel $20 million to Baystar.
SCO wants money.
Baystar wants money.
Darl wants media attention.
Microsoft wants to cripple Linux.
We'll see how this plays out.
Re:Baystar may want to fire Darl (Score:4, Interesting)
"SCO's chief executive is Darl McBride, whose cash compensation totaled $986,047 in the company's fiscal year ending last October. That pay package troubled BayStar, McGrath said, given SCO's small size - the company has annual revenue of $79 million and about 300 employees."
One of the company's employees takes home 1/80th (or so) of the annual take.
Something here is odd... though to be honest, this kind of reeks of Valenti's reasoning behind his comment about how $100,000 "wasn't much to live on" (in reference to independent music artists; for source, see pretty much any sig in the MP3 raid threads).
Baystar wants the money (Score:4, Interesting)
A strange because it suggests that the business model really was FUD - that they didn't have a leg to stand on - but they could threaten in the hopes of creating an avalanche of copitulation (large firms signing up for licenses) If this had happened prior to court - the case could have been dragged out - while the revenue came in. Clearly MS was willing to lower some of the risk by cost sharing - but from where I sit - they don't have any more of a case than they can make - and there will likely be no more response to identified code - than removing it - and since it is clear now that no-one has acted intentionally - the reality of huge punative awards is unrealistic.
Kudos to OS for dodging the biggest bullet to date - I doubt there are any more of greater significance looming on the horizon - the other legal accomplishment would be to uphold the GPL without frightening the world that OS is similar to the RIAA.
AIK
Re:Baystar wants the money (Score:3, Interesting)
That would be IBM's Countersuit [groklaw.net] in this mess. SCO is the perfect target to go after for GPL violations. This could turn out to be VERRRY good for Linux people.
Re:Baystar wants the money (Score:2)
Truer words have never been spoken. This whole endeavor has been fueled by BS since day one.
Re:Baystar wants the money (Score:2)
Read the article. BayStar wants SCO to spend *more* of its resources on it's intellectual property efforts (read: lawsuits) and less on its Unix business.
jf
Re:Baystar wants the money (Score:4, Insightful)
I'm not saying you're wrong about motives - but what people say are the motives and the motives are disticts. In this case - actions speak volumes, the words mere wallpaper.
AIK
No Confidence. (Score:5, Insightful)
Disappointing, but not surprising (Score:5, Insightful)
An inefficient SCO is scary enough. One that drops the hype and just goes about this quietly could be worse. If nothing else, it would reduce the number of SCO-related articles here on /.
On the other hand, maybe that's a good thing... ;-)
Yahoo Link (Score:5, Interesting)
This one shows the standing orders for buys and sells, which if you do a comparison, shows possible daily trend. More Sell orders can mean declining price. Also look for the variation of prices between the sell and buy sides. A huge descrepancy can mean valuation problems within the market.
Finger pointing (Score:5, Interesting)
What about the statement [eweek.com] from Blake Stowell of SCO that, "Contrary to the speculation of Eric Raymond, Microsoft did not orchestrate or participate in the BayStar transaction."?
Now, who needs a tin-foil hat?
Re:Finger pointing (Score:2)
SCO's new plan (Score:4, Funny)
The Large Button on top of their page is advertising "SCO Forum 2004 *The power of Unix*" On the bottom of the button it says:
Register Early and WIN!
What do you win?
Well, Yeah (Score:2)
What a bunch of morons at Baystar (Score:4, Insightful)
These fools with millions and millions of dollars to spend somehow didn't get the information that the rest of us got for free.
I'm not sorry for them. Not even a little bit.
Re:What a bunch of morons at Baystar (Score:3, Funny)
You got your information for free? Mine cost $699!
Re: What a bunch of morons at Baystar (Score:5, Funny)
> We all know the type. Slick management type, wearing neatly pressed suits. Reads the type of trade publications that feature head shots of middle and upper managements atop articles full of jargon, but devoid of content. Power lunches. Golf trips. Owns a Lexus. Won't give a lowly programmer type the time of day.
We all know the type. Scruffy employee type, wearing wrinkly shirts that have been sitting in the dryer for 4 days. Reads perl programs full of ASCII art that actually compiles and runs, though devoid of meaning to the MBA. Pizza lunches. Beer hikes. Runs linux. Won't give a snooty manager an honest answer to "How long is it going to take?"
These fools with millions and millions of lines of code to give away somehow didn't get the million dollar bonus we got.
SCOX going down (Score:2)
Hmmmmmmmm......
Re:SCOX going down (Score:3, Funny)
Baystar wants SCO to pursue IP full-time (Score:5, Insightful)
I wonder who would benefit most from this (cough Microsoft cough cough....)
ps - I do like the idea of no more Daryl McBride, except for the fact that he probably will help the Linux community more in the end with all his irrational rantings and ravings!
Re:Baystar wants SCO to pursue IP full-time (Score:3, Interesting)
SCO excutives decided to make enemies and maybe an incredible amount of money. SCO products are horrible when compared to m
Re:Baystar wants SCO to pursue IP full-time (Score:3, Insightful)
Step back for a second and think about it from Baystar's point-of-view independent of M$. Baystar is in the business of getting the best return on their investment, and the best return on their investment would be realized in winning a court case. So of course they want SCO to focus on the litigation aspect--Baystar doesn't give a flying whatever about Unix...
And the inpenetrable sentence award goes to.... (Score:5, Funny)
Re:And the inpenetrable sentence award goes to.... (Score:2, Funny)
Anyone else notice (Score:5, Funny)
What's more interesting is.... (Score:5, Interesting)
Sad state of affairs when... (Score:3, Interesting)
educate and reeducate (Score:3, Funny)
Thanks for the no-reg NYT link (Score:2, Interesting)
Baystar is not an Ally. (Score:5, Insightful)
"We think there are limited prospects of that business ever generating growing and significant revenue," McGrath said.
"And we believe it is diverting resources from going where they would have the most value--the intellectual property process."
BayStar asserts SCO's Unix products business doesn't hold long-term value for shareholders"
In fact, if SCO would get their act together and focus on just legal issues they would consider continuing support for them.
"We think they need to strengthen the senior team to get people with experience and background in the legal issues," McGrath said.
If SCO addresses BayStar's concerns, McGrath added, the investor is open to reversing its redemption request."
It is bad sign when your investors tell you to stop acting like a technical business and persue your legal intellectual properties as your business model.
SCO buyback? (Score:2, Insightful)
Or was the buyback filing and press release just another attempt to pump up the stock price through FUD? Does anyone else think that the buyback filing and subsequent press release was purely a stock-pumping ploy?
Re:SCO buyback? (Score:5, Informative)
BayStar made a bad investment (Score:4, Insightful)
Why should SCO have to pay them back so quickly? The lawsuit was total BS right from the beginning. First making a false claim, and then raising it to $5B? It's more obvious that they are taking it to any length and not making rational business decisions.
But really, wasn't the lawsuit irresponsible right from the start? They didn't show any actual or empirical evidence of the copyright infringement. If BayStar was stupid enough to think that SCO would win, to invest in them, damn right, they should have to stick with it.
If they win against SCO, though, I won't be complaining. SCO is a dishonest company, and they deserve to be put out of business. It's a shame that a company (well, two companies, actually) that used to be innovative, and a good company to do business with, be run in to the ground by a bunch of litigous bastards.
Bay Star = Leech! (Score:2)
Triumph the Insult Comic Dog... (Score:5, Funny)
Good for me to POOP ON!
Dynamite (Score:4, Interesting)
"It was evident that Microsoft had an agenda," Mr. Goldfarb said.
This from the guy at Baystar who was involved in the deal. Earth calling D.O.J. Earth to D.O.J. come in please.
A shot across the bow (Score:3, Insightful)
Re:A shot across the bow (Score:3, Informative)
Chuck
BayStar wants SCO to focus on its lawsuits (Score:5, Informative)
From this news article [telegram.com] from yesterday:
moral of the story (Score:5, Insightful)
I hope BayStar doesn't get a dime back from SCO--hopefully they'll consider the merits of the issue more carefully next time Microsoft gives them a "hot tip." And hopefully BayStar losing tens of millions to SCO puts a chill through the investment community to beware of Microsoft advice.
Baystar explanation not very convincing (Score:3, Interesting)
The SCO management team is the same one that existed when the deal was made. SCO products are the same. Other than adding litigation as a line of business, they are the same company that existed at the time of the PIPE deal.
Redemption is an extreme action on Baystar's part, and I don't buy their explanation that the only problem is now SCO's senior management and their non-litigation products. Whatever the real reason is, this is NOT it.
I think MSFT is at it again, lobbying Baystar to give SCO a chance to avoid redemption, in exchange for ?????? This whole concept of "Make a few changes and you can keep the money" is 100% bogus.
Re:Baystar explanation not very convincing (Score:3, Insightful)
They aren't trying to shake the SCO management out of the goodness of their heart, to reform the world. They invested in SCO because they believed they had a big-enough shot at their lawsuit to at least raise their valuation significantly. Not it turns out Darl's antics detract from that, so they decided to crack the whip.
They invested in SCO in the first place becaus
"A notification not a legal action" (Score:3, Insightful)
Dr. Evil? (Score:3, Funny)
Quick read summary from Motley Fool (Score:3, Informative)
Re:Another article (Score:4, Informative)
Re:Another article (Score:2, Interesting)
What's really funny about those ads: If you go to their site, they offer to mail you a package with the MS vs. Linux papers and a trial copy of Advanced Server 2003. Now that in itself is not funny. But the fact that the form where you enter your information was broken in every browser I tried besides IE. Nice One! If someone's not using Windows, MS doesn't let them ge
Re:Make your bets! (Score:2, Informative)
Re:Make your bets! (Score:2)