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Caldera The Almighty Buck

Royal Bank of Canada Cashes Out of SCO; SCO Begins Layoffs 585

Posted by michael
from the so-long-and-thanks-for-all-the-lawsuits dept.
jbell99999 is the first one to submit news that the Royal Bank of Canada is divesting itself of SCO stock. They're selling part of their preferred stock to Baystar, which has already indicated that they want to redeem their shares, and converting the rest to regular stock, which they can presumably sell on the open market. In other SCO news, Versicherung writes "The Santa Cruz Sentinel is reporting, SCO is laying off 10 percent of its worldwide workforce. The cuts come less than a month after the company brought on a new chief financial officer and just before the company ended its second fiscal quarter April 30." See also stories at Eweek and Linuxinsider.com.
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Royal Bank of Canada Cashes Out of SCO; SCO Begins Layoffs

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  • Where have you been? (Score:5, Informative)

    by Anonymous Coward on Friday May 07, 2004 @04:33PM (#9088720)
    "Begins layoffs"? Where have you been, SCO has been laying off staff for months now.

    In Santa Cruz, for example, they sliced their tech staff by like 80% or something.
  • by jcrash (516507) * on Friday May 07, 2004 @04:35PM (#9088763)
    Ouch - currently, 50% [yahoo.com] of the total float of SCOX (the SCO Stock) is shorted.

    So, for every person betting it is going to go up, there is someone betting it will go down.

  • by Anonymous Coward on Friday May 07, 2004 @04:40PM (#9088825)
    "The Series A-1 stock was purchased at a price of $1,000 per share, and will be converted to common stock based on a conversion price of $13.50 per share." Now.. I'm a stock market clod.. SCOX is currently trading at 6.. It's already lost 58ish percent. At least BayStar knows that the loss is covered.
  • Bert Young (Score:5, Informative)

    by Jonboy X (319895) <.jonathan.oexner. .at. .alum.wpi.edu.> on Friday May 07, 2004 @04:42PM (#9088850) Journal
    Just so ya know, Bert Young has a experience in helping companies that are basically dead in the water keep up the illusion of growth right up to the moment of reckoning. The GL has a story on it here [groklaw.net].
  • 10% is nothing... (Score:5, Informative)

    by taped2thedesk (614051) * on Friday May 07, 2004 @04:44PM (#9088883)
    ...compared to the past year:

    From SCO.com:
    Q. How many people does The SCO Group employ? A. As of April 30, 2003, 339 employees.

    From the article:
    Stowell said the cuts totaled less than 10 percent of the company's total worldwide work force of 275. There were cuts, however, earlier in the quarter as well. In March the company reported 305 employees, including 73 in Santa Cruz.

    339 - 275 = 64 positions gone from April 2003 to May 2004, not including these layoffs. Jeez.

  • by leoxx (992) on Friday May 07, 2004 @04:47PM (#9088908) Homepage Journal
    They already have [cpilive.net].
  • by Jonboy X (319895) <.jonathan.oexner. .at. .alum.wpi.edu.> on Friday May 07, 2004 @04:52PM (#9088957) Journal
    The scary thing about that statistic is the idea of a short squeeze [investorwords.com]. Basically, that means that if the price rises a bit, maybe some people are forced to buy back the stock, 'cuz they don't have enough money in their margin account to cover the stock's value anymore. This buy bumps the price some more, and now the next guy has to cover. It's hardly ever an issue, but 50% short interest is pretty much unheard of.

    Of course, for this to happen, the stock price would actually have to go *up* first...
  • Well... (Score:5, Informative)

    by QuasiCoLtd (727325) on Friday May 07, 2004 @04:52PM (#9088967)
    According to Zdnet [com.com] those being laid off are mostly in the engineering, marketing, and sales depatments. This is very telling for a so-called "tech" company to lay-off those responsible for creating and selling your core product. Of course we all know that SCO is a litigation company and has no need for engineers to improve a product, no marketers to hype the non-existant product, and no salesmen to.... well you get the idea.
  • by DaHat (247651) on Friday May 07, 2004 @04:55PM (#9089006) Homepage
    and who might not have anywhere else to go -- the economy sucks

    You make it sound so easy. Regardless of how much ones job may suck, finding another one is rarely easy these days. By your statement, I do not think you have much experience in the real world as what you said is far easier said then done.
  • by jjo (62046) on Friday May 07, 2004 @04:57PM (#9089029) Homepage
    Not only that, but the short ratio is almost 14 days. That means that if everyone else stopped buying, and all the shorts started buying to cover their positions, it would take two weeks of normal trading volume to cover them all. We still may see someone try a short squeeze.

    Aside from that, it seems that the only reason that people are still holding SCOX is to get some more money out of whoever has been manipulating the stock price for the past year. That's the only explanation I can see for SCOX not being the penny stock it was (and will be again).
  • All I can say is... (Score:3, Informative)

    by Penguinshit (591885) on Friday May 07, 2004 @05:05PM (#9089132) Homepage Journal

    ...ouch... [yahoo.com]

  • Re:Bert Young (Score:5, Informative)

    by Zocalo (252965) on Friday May 07, 2004 @05:06PM (#9089136) Homepage
    That old Groklaw stuff is nothing, trust me. Check out Mr. Young's track record before marchFirst for even more revelations in this post [yahoo.com] at the Yahoo Finance board. Connections to MLM schemes, the mob, Adnan Kashoggi of Iran-Contra fame... Oh Boy!
  • by SoSueMe (263478) on Friday May 07, 2004 @05:09PM (#9089160)
    Screw it. I can't mod this thread anymore so, I might as well post the latest issue of "Darl Spins Bad News"

    "The SCO Group Receives From Royal Bank of Canada Notice of Conversion and Transfer of Shares of Series A-1 Convertible Preferred Stock
    Friday May 7, 2:00 pm ET

    LINDON, Utah, May 7 /PRNewswire-FirstCall/ -- The SCO Group, Inc. ("SCO") (Nasdaq: SCOX - News), a leading provider of UNIX-based solutions and the owner of the UNIX operating system, received on May 5, 2004 notice that Royal Bank of Canada has elected to convert 10,000 shares of SCO's Series A-1 Convertible Preferred Stock it currently holds into a total of 740,740 shares of SCO's common stock. The conversion will occur as permitted under SCO's Certificate of Designation, Preferences and Rights relating to the Series A-1 stock. The Series A-1 stock was purchased at a price of $1,000 per share, and will be converted to common stock based on a conversion price of $13.50 per share.

    Additionally, Royal Bank of Canada informed SCO that it has sold 20,000 shares of Series A-1 stock to BayStar Capital II, L.P., which currently also holds shares of Series A-1 stock. After completion of the conversion, Royal Bank of Canada will have no equity interest in SCO other than the shares of common stock it receives from the conversion, and BayStar Capital II, L.P. will be the sole remaining holder of outstanding shares of Series A-1 stock.

    About SCO

    The SCO Group (Nasdaq: SCOX - News) helps millions of customers in more than 82 countries to grow their businesses with UNIX business solutions. Headquartered in Lindon, Utah, SCO has a worldwide network of more than 11,000 resellers and 4,000 developers. SCO Global Services provides reliable localized support and services to all partners and customers. For more information on SCO products and services visit http://www.sco.com.

    SCO and the associated SCO logo are trademarks or registered trademarks of The SCO Group, Inc. in the U.S. and other countries. UNIX is a registered trademark of The Open Group in the United States and other countries. All other brand or product names are or may be trademarks of their respective owners.

    Source: The SCO Group"

    Emphasis mine.

    Now, if this doesn't have all the characteristics of an open forum press flood, I don't know what does. Thank you, YaHoo Finance! You bought it!
  • by Saeed al-Sahaf (665390) on Friday May 07, 2004 @05:11PM (#9089180) Homepage
    Good Lord. RBC is not divesting itself of SCO stock. They are converting preferred to common. Whole different thing.
  • by Da Fokka (94074) on Friday May 07, 2004 @05:17PM (#9089232) Homepage
    This is why the germans invented the term 'schadenfreude'.
  • by Anonymous Coward on Friday May 07, 2004 @05:29PM (#9089337)
    You gotta love this.

    http://finance.yahoo.com/q/bc?s=SCOX&t=6m&l=on&z =m &q=l&c=

    Time for Darl get a box and pack up the office.
  • by MyHair (589485) on Friday May 07, 2004 @06:03PM (#9089629) Journal
    They are converting 1/3 of their preferred stock at an enormous loss (13.50 vs. curent price 5.94) and selling 2/3.

    The prevailing presumption is that they sold the 2/3 at a loss and will strategically dump the common stock. Keeping the common stock after a move like this wouldn't seem to make sense, but there is probably more going on than any of us know.

    So they divested 2/3 of their stock for unknown terms, lost some benefits of the PIPE deal and are holding 1/3 of their original investment at >50% loss over 7 months. They presumably had the option to force redemption like Baystar, and being the majority investor would get their slice of the pie first. Instead they wait to weeks and pull this. Sounds like they're cutting their losses and splitting to me.

    But admittedly that's not certain yet.

    My best guess is that RBC prefered cutting losses and dropping SCOX rather than fighting about redemption, while Baystar has committed to redemption or bullying, and doubling their stock holdings for presumably a nice discount increases their leverage against SCO management and increases their redemption penalty should they win.

    RBC folded, Baystar raised, and SCO is "all in".
  • Had to cover shorts (Score:2, Informative)

    by Anonymous Coward on Friday May 07, 2004 @06:20PM (#9089727)
    Remember they said when they first got into this, that they were covering short positions. Anything they shorted above the $13.50 price is now profit.
  • by Anonymous Coward on Friday May 07, 2004 @06:28PM (#9089761)
    sandbender [dictionary.com] n. [IBM] A person involved with silicon lithography and the physical design of chips. Compare ironmonger, polygon pusher.
  • by ElliotLee (713376) on Friday May 07, 2004 @07:33PM (#9090142) Homepage Journal
    Are you saying the deficit is bad? Baloney. That's the media for you - they do anything for a big story.

    On average, the Clinton deficits over the first three years of that administration were much larger than Bush's. The 2004 deficit, adjusted for inflation, is ranked 12th since 1940. The 2004 deficit, as a percent of GDP, is ranked 21st since 1940.

    The media has compared a forecast of surpluses that was calculated while Clinton was president to a forecast of deficits which is being calculated now that Bush is president. However, in the real world, we find that the Bush deficits, when compared in inflation-adjusted terms, are relatively mild. And more importantly, since these deficits are being criticized because of their alleged effect on the overall American economy, when the deficits are presented as a percentage of GDP they are very small. For instance, the projected 2004 deficit as a proportion of GDP is 90% lower than FDR's deficit in the year 1943.

  • by Starrider (73590) on Friday May 07, 2004 @07:43PM (#9090188)
    Deficit has no tangible negative effect on the economy. Keynesian economic models prove deficit spending in a recession stimulates the economy. When the economy recovers, the deficits turn into surpluses. If you had read proven economic history, instead of smoking that John Kerry hash you might know this. John Kerry has no economic plan other than to raise taxes, so he whines about the deficit. (Oh yeah I know he wants a middle class tax cut, but Bill Clinton promised that in 1992 as well...I guess when they say tax "cut", they mean tax "hike").

    Furthermore, a weak US dollar is great for the US economy. A weak US dollar makes our exports cheaper for foreigners and makes imports more expensive for the locals. The result is more American goods are bought as opposed to a strong US dollar.

    One last note, another poster was complaining that consumer debt was at an all time high, including mortgage debt. There is a logical explaination for mortgage debt to be at an all time high -- home ownership is at the highest levels in history!
  • Re:What if....... (Score:3, Informative)

    by mec (14700) <mec@shout.net> on Friday May 07, 2004 @09:00PM (#9090638) Journal
    SCO balance sheet [yahoo.com]

    Have a look at the figures for October 2001 versus October 2002. In October 2002, SCO had $21 million in current assets and $27 million in current liabilities.

    SCO income statement [yahoo.com]

    In the year ended October 2002, SCO had a net loss of $25 million.

    SCO would have died some time in spring or summer 2003 without the massive cash infusion from Microsoft and Sun. All those employees would have been laid off a year ago. These employees kept their jobs for a year longer (and for 75% of them, they still are keeping their jobs) because of this evil, evil lawsuit. (And no, I don't think that makes the lawsuit a good thing).
  • by Big Bob the Finder (714285) on Friday May 07, 2004 @10:27PM (#9091082) Homepage Journal
    For those that might be interested, here is the most recent insider trades from SCO.

    4/07/04 JEFF F HUNSAKER Divisional Officer 5,976 Open Market Sale proceeds of $66,558.83

    4/07/04 THOMAS P RAIMONDI Director 11,841 Proposed Sale (Form 144) estimated proceeds of $126,817.11

    4/07/04 JEFF F HUNSAKER Vice President 5,976 Proposed Sale (Form 144) estimated proceeds of $64,002.95

    4/07/04 THOMAS P RAIMONDI Director 2,363 Exercise of Stock Options at cost of $2,646.55

    4/07/04 THOMAS P RAIMONDI Director 11,481 Open Market Sale proceeds of $128,736.45

    3/03/04 THOMAS P RAIMONDI Director 11,841 Proposed Sale (Form 144) estimated proceeds of $137,237.19

    3/03/04 THOMAS P RAIMONDI Director 11,841 Exercise of Stock Options at cost of $13,261.92

    3/03/04 THOMAS P RAIMONDI Director 11,841 Open Market Sale proceeds of $143,276.10

    2/04/04 THOMAS P RAIMONDI Director 11,841 Exercise of Stock Options at cost of $13,261.92

    2/04/04 THOMAS P RAIMONDI Director 11,841 Open Market Sale proceeds of $170,510.39

  • by franzzup (96552) on Friday May 07, 2004 @11:09PM (#9091281)
    You are seriously confused. :-)
    I am short SCOX and have held a part of my short position for over a year. Indeed, an advantage of taking a short position vs. buying put options is that you can generally hold your short position if the stock takes longer to tank than you anticipated, while options have a fixed expiration date.
    Of course, as has been mentioned, there are no options on SCOX anyway.

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