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Caldera The Almighty Buck

SCO Stock In Danger of Delisting, Again 188

Posted by kdawson
from the pennies dept.
hweimer writes "In 2005, SCO got into delisting trouble because they failed to file their annual 10-K report in a timely manner. SCO seems to be headed the same way again for a different reason: the stock price is too low to meet Nasdaq's requirements. Quoting: '[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean.'"
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SCO Stock In Danger of Delisting, Again

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  • boosting share price (Score:5, Interesting)

    by TheSHAD0W (258774) on Friday April 13, 2007 @10:52AM (#18718441) Homepage
    Many companies buy back their own shares, both to boost share price and to give stockholders a return not based on dividends. I don't know if SCO has the cash to do it any more, but...
    • by WrongSizeGlass (838941) on Friday April 13, 2007 @11:05AM (#18718621)
      I guess SCO could buy back their own shares ...

      ... if they were out of toilet paper or maybe had some other serious paper related dilemma ;-)


      warning: The above content may test positive for sarcasm and/or could be a failed attempt at humor and as such should be taken with a pound of salt.
      • Re: (Score:3, Informative)

        So, did anyone else notice that hweimer who submitted this is the same Hendrick Weimer who runs, gosh darn it, the blog that is linked! And look, it's chock full of Google Ads!

        ... profit!

        • Re: (Score:3, Insightful)

          by morcego (260031)
          I fail to see your point here.
          So he has a blog, and tries to make some money with it. Then he writes something he think is worth sharing and, not only that, slashdot editors agree it is worth sharing.
          Then you add the fact that many of us use Firefox and NoScript and/or Adblock.

          What is exactly your problem again ? Do you, per chance, have a blog and no one visits ?

          I just visited the link, and saw absolutely no ads of any kind.
          • by Anonymous Coward on Friday April 13, 2007 @12:38PM (#18720007)
            I think his issue is that the poster didn't disclose that it was his own content, and even said "Quoting:" which at least implicitly infers that he just happened across the content, not that he'd written it. Disclosure = a fairly good rule of ethics for "journalists" (although the "blogosphere" (gack) is pretty good at being selective about when they want to categorize themselves as journalists).
            • by garcia (6573)
              Then he's just hurting his own revenue stream by having Slashdot traffic come to his site. Slashdotters are notoriously anti-advertisement and are more likely to use ad blocking software or just totally ignore the ads even though they are displayed.

              Because Google pays you only for ads that are clicked as a ratio of those that are displayed, people driving a fuckload of clickless traffic to their sites are just making their possibility of revenue plummet. He'd be better off touting his post to a non-nerd c
          • Re: (Score:3, Insightful)

            Perhaps its a good rule of thumb to actually tell people you wrote TFA, y'know, that whole bias and integrity thing?

            I never claimed the article was unworthy.

            And, though offtopic, I know exactly why noone visits my blog - it gets an entry a good two to three times a year.

        • * Wait for someone to sue someone else
          * Wait for it to go badly
          * Post to your blog about them needing a new business model
          * Post to /. and wait for the /.'ers to follow your link
          * Profit!

          Maybe Señor Blogger needs a new business model too.


          warning: The above content may test positive for sarcasm and/or could be a failed attempt at humor and as such should be taken with a pound of salt.
        • Re: (Score:3, Funny)

          by jaymzter (452402)
          I use Mozilla. What are these "ads" that you and others refer to?
        • by Ant P. (974313)
          I didn't notice the first time, but then I've already blocked ads because of people like these.
        • NEWSFLASH (Score:4, Funny)

          by p3d0 (42270) on Friday April 13, 2007 @01:14PM (#18720627)
          People post stories to Slashdot hoping to draw readers to their site. Shocking!
        • ...it did come from the "pennies" department.
    • Re: (Score:3, Informative)

      by richg74 (650636)
      Unfortunately for them, SCO is in no position to do this, since (at least the last time I looked) their legal expenses were eating away at their cash reserves, even though their lawyers have essentially taken an equity position in their lawsuits. So, unless one of their "secret admirers" ponies up again, they have a real problem. Their ostensible business (the part that isn't frivolous lawsuits) isn't making any money.

      LinuxWatch has an article by Steven Vaughn-Nichols about the March 2007 SCO conference

      • by InvalidError (771317) on Friday April 13, 2007 @01:37PM (#18721017)
        Back in the post-Y2K .com bubble burst, I have seen many stocks going through reverse 5:1 or even 20:1 splits... and in the vast majority of cases, the stocks simply crashed back down immediately after the split. Doing a reverse 20:1 to get your stock from $0.50 to $10 only to have it trade back down to about $2 by the end of the week is pretty bad.

        Almost all anti-delisting reverse splits I have seen back then ended up as suicides... and even today, they still translate into extended near-death experiences often followed by bankruptcy.
        • by badasscat (563442) <basscadet75NO@SPAMyahoo.com> on Friday April 13, 2007 @04:22PM (#18723905)
          Almost all anti-delisting reverse splits I have seen back then ended up as suicides... and even today, they still translate into extended near-death experiences often followed by bankruptcy.

          I think you're confusing the issue a little bit.

          The reason reverse splits rarely work is that they don't solve the underlying problem that's causing the dropping stock price to begin with. They treat the symptoms, not the disease. Which means there's nothing "suicidal" about the reverse split, it's just that they don't really accomplish anything other than keeping the company on the market for a bit longer.

          It's kind of like taking an aspirin for the pain being caused by a brain tumor. You'll eventually die anyway, but it's not because of the aspirin, it's because of the brain tumor. Taking aspirin isn't "suicidal" and in fact has no bearing whatsoever on your health, it just doesn't solve the real problem.

          Lots of people think about stock prices as if they're somehow disconnected from company performance. That's a real dot-com era way of thinking, but we should all be back to reality by now. A reverse split *can* work, but only if it's combined with measures to make the company profitable again. But certainly, if I were a company shareholder, I would want any company that I thought had a good plan for a real turnaround to do a reverse split to keep themselves on the market until their plan started to bear fruit.

          Of course, this *is* SCO we're talking about, so I can't imagine a reverse split would do anything but delay the inevitable.
          • Re: (Score:3, Insightful)

            by InvalidError (771317)
            I say suicidal because many of these stocks stayed stable at low values for weeks and simply crashed back down to their pre-reverse-split levels immediately after the reverse-split... basically, traders perceived the companies' share as having a roughly constant worth regardless of how few of them there were - this essentially says the company is considered as a lost cause by investors.

            Examples of successful reverse splits are few and far between and the dot-com era had very few if any of these.

            Successful r
    • by Jonny do good (1002498) on Friday April 13, 2007 @12:06PM (#18719503) Journal

      Many companies buy back their own shares, both to boost share price and to give stockholders a return not based on dividends. I don't know if SCO has the cash to do it any more, but...

      SCO is not in the position to buy back their shares but they do have a very simple option, a reverse split. Although it isn't common and often has a negative effect on the market capitalization of a firm because it is a sign of weakness in the market it will have the needed results. It is quite simple to do, legal, and only requires the board of directors to execute. Shareholders don't even have to agree, although most would if it means the difference between being listed or going the way of an OTC stock.

      Share repurchase programs usually don't have a significant effect on price by themselves. The number of shares needed to repurchase, and the cash needed to execute a significant repurchase program often doesn't make it feasible to significantly fix the stock price. Share repurchase programs are usually designed to server one of two puposes: to signify that management thinks the company is undervalued, or to consolidate ownership. The second option is only used when a company has piles of cash and it accounts for more than 10-15% of the market cap. Smaller programs tend to be used to accumulate treasury stock while the price is low, then re-sell that stock as the price gets at or above where management thinks it should be in order to raise capital without issuing more debt.

      • by timeOday (582209)

        SCO is not in the position to buy back their shares but they do have a very simple option, a reverse split.
        They can't, I own an odd number of shares!
        • by ari_j (90255)

          They can't, I own an odd number of shares!

          What, one? Any odd number greater than 1 would be foolish investing at best. :P

      • by Intron (870560)
        Share price isn't the only requirement for listing. There is also a minimum market cap, which I think is $5M. Not sure what's holding SCO's value above that now.
        • by theonetruekeebler (60888) on Friday April 13, 2007 @01:09PM (#18720551) Homepage Journal
          Their market cap is about $20m (at $0.94/share).

          Aside from rules compliance, and paying the annual listing fee, NASDAQ has three basic rules about staying listed:

          • Minimum share price of $1
          • at least 750k public shares
          • at least $5m market value.
          If they fall out of compliance for 30 straight days (and they last traded for $1 on March 13), they get a delinquency notice and have 90 days to get it together. Their ticker symbol will probably change from "SCOX" to "SCOXE" while they're under threat of delisting. [Source [investopedia.com]]

          SCO already did a 1:4 split back in 2002; I'm not sure how the exchange will feel about them doing it again, because had they not done that split, their share price would currently be less than a quarter.

          • Two more weeks to go (Score:3, Informative)

            by cloudscout (104011)
            Something that most people seem to be missing is that, according to Investopedia [investopedia.com], the 30-days-below-one-dollar rule means 30 business days and it isn't just the closing price, if the stock trades above $1 in intraday trading, that's enough to satisfy the rule.

            As of market closing today, they've traded below $1 for 21 consecutive business days. That means they have almost two full weeks before they could hit that 30-day trigger. The stock has been climbing slowly the last few days and there's at least some
      • SCO is not in the position to buy back their shares but they do have a very simple option, a reverse split. Although it isn't common and often has a negative effect on the market capitalization of a firm because it is a sign of weakness in the market it will have the needed results. It is quite simple to do, legal, and only requires the board of directors to execute. Shareholders don't even have to agree, although most would if it means the difference between being listed or going the way of an OTC stock.
    • by drix (4602)
      I don't know much about how these things work, but FWIW, they confronted this issue last time with a 1-for-4 reverse split [sco.com]. Maybe the could do that again?
  • No one to sue (Score:5, Insightful)

    by kkelly (69745) on Friday April 13, 2007 @10:52AM (#18718449)
    When your business model depends upon litigation, and you have no one else to sue. What do you expect to happen?
    • by teh_chrizzle (963897) <kill-9.hobbiton@org> on Friday April 13, 2007 @11:25AM (#18718921) Homepage

      When your business model depends upon litigation

      the SCO business model is simply the application of public relations and litigation to a large scale version of the business model employed by that crackhead cousin of yours that shows up at family functions from time to time looking for cash: getting paid to go away.

      the sheer number of crackhead cousins in the united states is evidence that this is a viable business model.

    • When your business model depends upon litigation, and you have no one else to sue. What do you expect to happen?

      Do like the new Coke Zero commercials and sue yourself. I see them suing Canopy and Caldera. Watch the hilarity ensue.

  • Easy fix? (Score:3, Insightful)

    by afidel (530433) on Friday April 13, 2007 @10:52AM (#18718451)
    Do a 2:1 or 3:1 reverse split to bring the price back over the listing requirement. It would keep them in the game but would probably accelerate the collapse of the company.
  • by 140Mandak262Jamuna (970587) on Friday April 13, 2007 @10:53AM (#18718463) Journal
    Urgent message to Uncle Bill and Uncle Steve, Please stop throwing chairs and throw some money for us. Yours SCO
    • by nuzak (959558)
      Dear SCO: you keep pissing our money away. We found a better tactic. Go fish. Love, Steve.
  • Think of all the money in legal fees they have blown in the past decade or so. Imagine what good could have been done if they had invested that money back into their company.
    • I think that's a rather hypothetical question since Baystar that put $50 million into SCOX did it after the lawsuit was launched (lawsuit file in March 2003, BayStar invests in October 2003). It was just an investment into a IP related lawsuit and not into any actual products developed by a severly stagnant company.
  • No longer matters (Score:3, Interesting)

    by WindBourne (631190) on Friday April 13, 2007 @10:56AM (#18718505) Journal
    The reason why it did not delist before is that MS still needed them. Vista is now out and MS has more patents. At this time, I doubt that MS cares. It will delist shortly.
  • Big deal. The way SCO is burning through money, it'll be in bankruptcy by the end of the year anyway. Earlier, if Novell gets its way and gets the Microsoft and Sun licence money put into trust.
  • by rolfwind (528248) on Friday April 13, 2007 @10:59AM (#18718545)
    and you only have a single bucket. How do you stop the ship from sinking?

    The answer? You don't. It's useless to try to stop the inevitable.
    • by LearnToSpell (694184) on Friday April 13, 2007 @11:09AM (#18718705) Homepage
      Tie a bunch of sheets together, making a giant cloth balloon. Attach that to the bucket. Build a fire in the bucket, filling the balloon with hot air. Grab a bottle of champagne to celebrate when the balloon pulls the boat out of the water. Gasp in dismay as you realize you forgot to attach the bucket to the boat.

    • by AKAImBatman (238306) * <akaimbatman.gmail@com> on Friday April 13, 2007 @11:11AM (#18718717) Homepage Journal

      How do you stop the ship from sinking? You don't.

      That's not entirely true. If a company has revenue, there's a possibility that they can trim back to ONLY that revenue. If the revenue coming in is more than the cost to support that revenue stream, then the company can continue on. The problem comes in when your revenue is smaller than the cost of maintaining that revenue. Then you're screwed.

      If I were an SCO investor right now, I'd be getting together with the other investors to stage a coup. Do like Take Two and fire the board and executive staff. Then install someone who will fire SCO's "crack" team of lawyers (drugs aren't good for you anyway) and start sweeping through the company firing anyone who's not related to the few revenue streams that SCO actually has. Normally that would be a sad (and often dangerous) thing for a company, but in SCO's case, I doubt that many tears will be shed.

      Once the company is pared down, then the focus should be on two areas:

      1. Improve the customer relations that SCO has been driving into the ground for so long.

      2. Look for ways to leverage the remaining company to produce new or enhanced products; thus opening up new sources of revenue.

      Normally, I'd say that this is a plan put forward by a wannabe-CEO looking for a Golden Parachute job. As scary as it sounds though, I think it might actually work in SCO's case. *IF* (and this is a big "if") the investors get their tails in gear and flip the company upside down NOW. The longer they wait, the less likely they are to succeed.
      • by timeOday (582209)

        That's not entirely true. If a company has revenue, there's a possibility that they can trim back to ONLY that revenue.
        No way McBride is renting my upstairs bedroom!
    • I hate to inform you, but the Titanic sank quite a while ago.

      If you were on it now you'd be dead. :-)
  • ..so the business model is the lawsuit.

    Didn't the law firm that's running the case basically get handed the store as their legal fee? I'm not exactly sure of the details, and I can't do much checking right now since I'm about to run out, but that was my impression.
    • Re: (Score:2, Insightful)

      You manage a company and your friend is a lawyer. You claim that you have proof that Paris Hilton has stolen you 25 gazillion dollars in ideas and concepts and you sue her. Then Nicole Ritchie gives you some money because she hates Paris. Everybody believes you. You spend all your company's resources on an incredible stupid lawsuit. Your company goes bankruptcy. You split with your friend.

      Delisting is the beginning. Then SCO goes down, and Darl... I think he has to go to jail.
  • reverse split? (Score:2, Informative)

    by Mike1024 (184871)
    "[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean."

    Well, how about a reverse stock split [wikipedia.org]?

    "Reverse stock split [...] a reduction in number of shares and an accompanying increase in the share price. The ratio is also reversed: 1-for-2, or 1-for-3."

    Of course, the company wouldn't become worth any more money, but the share price would go up.
    • by R2P2 (193577)
      They're going to need a better plan than that, or they might end up reverse splitting until there's only one share left.
    • Re: (Score:3, Informative)

      by Gadzinka (256729)

      "[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean."

      Well, how about a reverse stock split? [...]

      Quoting from TFA:

      Reverse stock split: Instead of ten shares at $0.90, give the investor one share at $9.00. This is allowed under Nasdaq regulations, but has a fishy smell associated with it. There is an interesting article on MSN [msn.com] stating that 75% of stocks trade lower after a reverse split. My favorite quote is "A stock isn't trad

      • by nelsonal (549144)
        That's true in the US and Japan, but in England, shares tend to shoot for a 1-5 GBP range (they split at lower levels) and prices are typically quoted in hundreds of pence. It's interesting how markets reach "favored levels" in the US it's $20-$100, in Japan it's typically tens or hundreds of thousands of yen.
    • Re:reverse split? (Score:5, Informative)

      by KokorHekkus (986906) on Friday April 13, 2007 @11:23AM (#18718883)
      NASDAQ also has a minimum regarding the market value of the company and that is set to $5 million which means that they can't continue doing reverse splits ad infinitum. Current market value of SCOX is just shy of $20 million.
    • You don't do splits like that. You attempt to reverse to match the "real" value of the company or destroy position via a 100/1 1000/1 type split. Trying to get the value to a buck doesn't help you in the long run (as there will be a dip in price after a split so you give a big buffer.)
  • There is a real possibility thet SCO might get wound up. How is it likely that Darl McBride will reap these millions SCO gets wound up? It has been the same story for CEOs.
    • by nuzak (959558)
      Darl's stock would halve just like everyone else's. He could potentially stand to gain from a short squeeze (which might well happen if the floor drops after a reverse split), but only if he unloaded enough to cover the value of what was left, and I can't imagine he's even allowed to do that.

      He was making a pretty decent buck off his scheduled trades; this profit was described by Redhat in its legal complaints with the very words "pump and dump". That's normally a pretty serious accusation, though I doubt
  • by jellomizer (103300) * on Friday April 13, 2007 @11:09AM (#18718687)
    [in Gest]Then who will be the sole owner of Unix and all things Unix, looks like Unix has an X in its name, used by a guy who knows what Unix is...?[/in Gest]
  • What can IBM do? (Score:3, Interesting)

    by 140Mandak262Jamuna (970587) on Friday April 13, 2007 @11:14AM (#18718769) Journal
    If SCO folds can IBM sue anyone to get its legal fees back? The assets of SCO might be slim pickings but it still has a huge liability outstanding. If the judge rules dismisses the suit with prejudice (hope that is the right term, IANAL) and SCO folds, where can IBM go to get its legal costs repaid?
    • Groklaw [groklaw.net] has some legal eagles who can give you better answers than I can.

      My guess is that unless they can "pierce the corporate veil" they'll be stuck in line with other unsecured creditors.

      If they can pierce it then they can go after executives and maybe even the law firms or the individual lawyers. Even if they don't recover much, if the lawyers wind up holding the bag it will send a message to corporate land sharks everywhere: Don't participate in bogus lawsuits.

      If you just want to punish the landshark
  • by rkhalloran (136467) on Friday April 13, 2007 @11:15AM (#18718771) Homepage
    After 30 days of trading below $1., they'll get a warning notice from NASDAQ. Then they have to trade above $1 for ten straight days out of the next 90, or get a second notice, and a second chance to get their stock above $1 for ten straight days.

    What is *more* troublesome for the SCOundrels is that if they're under $1 on May 15, they're likely to be dropped from the Russell Microcap index, which would likely trigger a selloff from funds referencing it.

    As much as this stock is being shorted by people waiting for the death plunge, either case may be enough to finally tip it over. And with the case obviously headed for oblivion, the likelihood of a Black Knight stepping in with bags o' money again is pretty slim.

    SCOX DELENDA EST!!
  • Several news sites are reporting that SCO has filed a lawsuit for $1.5 Billion against NASDAQ for harming their business model. "Our entire operation is predicated off of being able to pump and dump stock," CEO Darl McBride was quoted as saying outside the US Courthouse, "by threatening to delist our stock they are essentially claiming ownership over our business model."

    Technology experts Dan Lyons and Maureen O'Gara were also on hand to bolster SCO's claims. "We've seen all the SCO materials and while its far to secret to disclose, there is no doubt in our minds that NASDAQ is actually a front for Groklaw."

  • Who gives a shit? (Score:3, Insightful)

    by Colin Smith (2679) on Friday April 13, 2007 @11:17AM (#18718797)
    SCO's share price woes are the shareholder's problem. If they're happy with the way the CEO is running the company then bully for them. If not, they can always sell and/or fire the CEO.

     
  • What can a company do to boost its share price?

    For SCO, off the top of my head I'd say fire Darl and turn over every last bit of his correspondence to the SEC. Then stop pursuing baseless lawsuits as a means of revenue. Shareholders are not interested in companies that play the lawyer lottery as a business plan. Finally, make a fucking product and sell it.

    • by AJWM (19027)
      For SCO, off the top of my head I'd say fire Darl [...] Finally, make a fucking product and sell it.

      It's probably a couple of years too late for that anyway. But if SCO-Caldera had continued with their OpenLinux distro (which in its day actually wasn't too bad, it was one of, if not the, first easily-installable distros) they'd be a lot better off. Who knows, Novell might have bought them instead of SuSE.
  • by SQLz (564901) on Friday April 13, 2007 @11:18AM (#18718809) Homepage Journal
    "According to our experts, Microsoft has stolen our code and put it into Windows. I have proof right here in my magical breifcase"
  • by Grashnak (1003791) on Friday April 13, 2007 @11:36AM (#18719089)

    '[W]hat can a company do to boost its share price? Besides stopping to burn money and come up with a working business model, I mean.'"


    I suggest sending out 400 million anonymous emails: SCO has announced priority production of devices based on its proprietary technology. Analysts indicate that there is "almost limitless demand for this revolutionary technology". XYZI is rated an immediate and "STRONG BUY".
  • Simple. Pump out a billion of "cheap penny stocks NOW" spam mails.

    This time even without the dreaded pump'n'dump.
  • by rfunches (800928) <thefunch&gmail,com> on Friday April 13, 2007 @12:02PM (#18719475) Homepage

    There are still enough shares outstanding in the public float for a few more reverse splits. 2:1 reverse would take price to $1.88 leaving approximately 7.8 million public shares; 3:1 reverse to $2.82 and 5.6 million pubilc shares; 4:1 reverse to $3.76 and 3.9 million shares. For the requirements listed on page 14 of listing requirements (http://www.nasdaq.com/about/nasdaq_listing_req_fe es.pdf - PDF warning) the first is only being met with stockholder's equity (which is about $8 million). The second and third (publicly-held shares and market value of said shares) are in no danger of dropping below listing requirements. SCOX shouldn't be in danger of being delisted but their only option may be a reverse split since a buyback would not only drain cash reserves but also lower shareholder equity, which must be at a minimum of $2.5 million or else the stock gets a delisting notice yet again.

  • This is a problem faced by many company. The solution is a reverse split. This is just a stock split in reverse.

    In a stock split, your 1 share becomes maybe 10 shares. That share which was selling for $100 is now 10 shares each selling for $10 (note: I didn't say worth, when it comes to stocks price and worth are two different things).

    In a reverse split, your 10 shares become 1 share. That share which was selling for $1.00 is now 1/10 of a share selling for $10.00.

    BTW, given the importance of corporations a
  • All this guy's blog says is that SCO *could* get delisted if they don't keep their stock price above $1. SCO hasn't received any Letter of Deficiency from NASDAQ, and once they get one, they have six months to correct it, so none of this is actually threatening to happen anytime extremely soon. All in all, a very content-free post for anyone who's followed the SCO litigation in the slightest.
  • I would like to see SCO bite the big one AFTER they get annihilated in the courts. I don't want anyone to be able to say that the SCO case had merit and "If only they hadn't run out of money before winning."

    I also believe that just crushing SCO the corporation isn't sufficient. There are people who made buckets of money because of the litigation strategy. No one should profit by leading a company down a slimy destructive path. For the sake of stockholders everywhere I hope the people responsible are hel
    • The SCOundrels have three active cases that can sink them: the critical one for them to dodge right now is the Novell case, which would determine whether or not SCOX actually holds the UNIX copyrights they're trying to leverage against IBM. If they lose that, the IBM case effectively becomes moot, since they don't have the standing to bring the suit. Also the trust Novell is seeking against SCOX' current assets for unpaid SysV royalties would gut them at once.

      Losing the Novell case would also make Red Hat
  • Hey everybody, PaRtY at my place!!!!!!!!!1

    Oh, wait.. [bbc.co.uk]

  • One thing I am going to be watching is where McBride goes after SCO eats itself.

    A warning to any company that hires this guy.

    I won't buy your products, if a customer of mine is using your products they won't for very long.

    McBride=Blacklisted from the computer industry.

    If the guy gets a different job in a different industry, more power to him.

    -Hack

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