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Caldera The Almighty Buck

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.
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BayStar Interviewed Regarding SCO Investment

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  • I don't get it. (Score:5, Interesting)

    by Anonymous Coward on Thursday April 22, 2004 @10:59AM (#8938923)

    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)

      by avkillick ( 698274 ) <avkillick.yahoo@com> on Thursday April 22, 2004 @11:05AM (#8938983) Homepage
      Actually good news for SCO. THe first indication that Baystar may actually back off on it's threat/request in exchange for for changes in the way SCO does business.
      • Re:I don't get it. (Score:4, Insightful)

        by antirename ( 556799 ) on Thursday April 22, 2004 @11:13AM (#8939099)
        Their biggest investor is saying (in the Cnet article) "your products are crap, just stick to suing people". This is good news for SCO?
        • by mdfst13 ( 664665 ) on Thursday April 22, 2004 @12:55PM (#8940323)
          Since it has been known for a while that their products are crap, it doesn't make much difference if someone says it. However, if Baystar sticks to the money back demand, it bankrupts SCO, making the stock worthless.

          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)

            by Panoramix ( 31263 )

            At least some people still believe in their lawsuits.

            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:3, Interesting)

        by gcaseye6677 ( 694805 )
        When the BayStar financing deal was first announced, I recall a lot of people saying this was "death spiral financing". They described how this was done with .coms that were running out of cash and that the financing institution typically provided money in exchange for a large portion of the corporation (or preferred shares). Apparently, the financing organization benefits from a reduction in stock price since they can acquire more of the company, or some other benefit like that. These financers would somet
    • join the risk! (Score:3, Interesting)

      "For his part, Mr. Goldfarb said that with reforms in
      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)

      by vondo ( 303621 ) * on Thursday April 22, 2004 @11:07AM (#8939021)
      Not really. All the article says is that Baystar is unhappy with how SCO has been acting in public. And we all *know* how they've been acting in public. This could be a sigh of relief. Investor's might have been worried that Baystar concluded SCO's case had no merit. That would have been bad for their investors.

      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)

        by vidarh ( 309115 )
        SCO's market cap has NOTHING to do with whether or not they would have the cash on hand to redeem Baystar - the only thing that affects that is SCO's assets. They could make SCO's shares tank as much as they want, and it wouldn't change SCO's cash holdings.
    • Re:I don't get it. (Score:4, Insightful)

      by OglinTatas ( 710589 ) on Thursday April 22, 2004 @11:08AM (#8939026)
      SCO did just name a new financial officer, and the market may also be anticipating more change in leadership following Baystar's request. Darl says he won't quit though. But he's been talking out of his ass for a while now.

      IANA stock analyst. The only bath I ever took was in the market.
      • Mod Parent Up... (Score:2, Insightful)

        by agilen ( 410830 )
        The reason for the increase today is because they named a new CFO yesterday. Look for it to continue its downward trend next week.
    • Re:I don't get it. (Score:5, Interesting)

      by Zocalo ( 252965 ) on Thursday April 22, 2004 @11:11AM (#8939074) Homepage
      Relax, this is just a rally on an overall downward trend - they are still doomed. What happens is that investors think the worst is over following bad news and buy back-in; they'll dump again on the next set of bad news - SCOX has another financial coming up, and there are show and tell dates in the IBM case looming too. Then there are people who need to buy stock to cover shorts; the higher the stock goes the less they make. There's lots more insight into this kind of thing from Melanie Hollands of IT Manager's Journal right here [itmanagersjournal.com] if you are interested.
      • Heh. Look closely at the NYT article again.. Every major company has a hyperlink to their stock market index except for SCO. I'm not sure if it's automatically done by the back end, but it's a funny oversight.
        -B
    • Re:I don't get it. (Score:5, Informative)

      by ch-chuck ( 9622 ) on Thursday April 22, 2004 @11:18AM (#8939150) Homepage
      fell 38 cents yesterday to $6.80 ... but now it's at 7.96

      I think that's what professional investors call a Dead cat bounce [wordspy.com].
    • Quite simple... (Score:5, Informative)

      by Kjella ( 173770 ) on Thursday April 22, 2004 @11:28AM (#8939259) Homepage
      ...there's the long-term investors. They go by the percieved real value increase. The real value doesn't change significally over short periods of time. These typically look for underpriced / overpriced stock and measure investments in years.

      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
    • The upward swing in the stock may be from too many people shorting it. Short sales are a bet that the stock will go down, but they involve a stock purchase, which is reflected in an increase in the stock price.
    • Re:I don't get it. (Score:3, Interesting)

      by Spoing ( 152917 )
      1. [SCOX stock price].. but now it's at 7.96. 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?

      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)

      by tverbeek ( 457094 )
      I can't see any logic in the stock market.

      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.

  • by mccalli ( 323026 ) on Thursday April 22, 2004 @11:01AM (#8938940) Homepage
    The article notes that since its founding in 1998, BayStar has never before asked a company for its money back.

    All the way back to 1998, a whole six years ago. Now there's history for you. Almost dynastic in its scope..

    Cheers,
    Ian

    • Maybe they need to lose a few bucks then they'll learn how to ask for their money back a little faster.
      • A better lesson. (Score:3, Insightful)

        by khasim ( 1285 )
        Don't invest your money in some other company's war.

        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)

          yeah. That is REAL money. Just think what that could have been used for: funding a great new product, trying to dampen a social ill somewhere, anything really.

          In the end what a shame.
    • Re:Since 1998 eh? (Score:5, Informative)

      by pete-classic ( 75983 ) <hutnick@gmail.com> on Thursday April 22, 2004 @11:11AM (#8939076) Homepage Journal
      Perhaps you've never read a newspaper before? This is a common journalistic method of inserting a fact without dedicating a whole sentence to it.

      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
    • Before 1998 there wasn't Google, MySql, iMac, Seti@Home, Microsoft Access and well... Microsoft Windows 98. :)
      Look here for more [computerhope.com].
    • Ahhh (Score:3, Interesting)

      by mfh ( 56 )
      Sarcasm never seems to lose it's edge. However, there are some interesting revelations to this statement:
      > 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
  • by avkillick ( 698274 ) <avkillick.yahoo@com> on Thursday April 22, 2004 @11:01AM (#8938944) Homepage
    It sounds to me that Baystar is unhappy with the way SCO has been doing things and will likely come to an agreement that allows SCO to keep the money (for the moment) in exchange for some management changes - perhaps.
  • by burgburgburg ( 574866 ) <splisken06.email@com> on Thursday April 22, 2004 @11:02AM (#8938950)
    over the years, SCO is the first [com.com] that they've asked for the money back from. If that isn't a tell, I don't know what is.
    • SCO's management, he said, was traveling too much and spending too much when it should have been concentrating its efforts and resources on its legal strategy"

      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!!

  • by WormholeFiend ( 674934 ) on Thursday April 22, 2004 @11:05AM (#8938979)
    "SCO's management, he said, was traveling too much and spending too much when it should have been concentrating its efforts and resources on its legal strategy."

    nice. money for nothin, but does he get the chicks for free?
  • by Ars-Fartsica ( 166957 ) on Thursday April 22, 2004 @11:05AM (#8938990)
    The endgame for SCO only has two results, and they aren't approaching either with vigor according to BayStar:

    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.

    • What would happen if SCO won?

      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

    • by OmniGeek ( 72743 ) on Thursday April 22, 2004 @11:20AM (#8939172)
      BayStar doesn't see the SCO UNIX business as viable (no surprise there), and wants SCO to become an IP lawsuit mill. Wazzup with that? There's *no chance* SCO can survive that way, 'cause they don't HAVE the IP to win their current cases, let alone any new ones. So either:

      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.
  • by curtisk ( 191737 ) on Thursday April 22, 2004 @11:05AM (#8938991) Homepage Journal
    The public statements from Darl McBride, SCO's chief executive, were too frequent and too grand for BayStar's liking.

    Why is this behavior obvious to everyone but SCO, and our courts?

    • Because:
      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
  • by jaymzter ( 452402 ) on Thursday April 22, 2004 @11:06AM (#8939004) Homepage
    More on this at Groklaw [groklaw.net] and the Mercury News [mercurynews.com]

    "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
    • by meringuoid ( 568297 ) on Thursday April 22, 2004 @11:21AM (#8939178)
      Baystar may finally be the one's to shut old SCO's mouth for us so that IBM can finish the execution cleanly

      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.

    • by drinkypoo ( 153816 ) <martin.espinoza@gmail.com> on Thursday April 22, 2004 @11:27AM (#8939250) Homepage Journal
      Read what you C&P'd again. Baystar thinks that they need to spend less money on Unix and more money on executives with more savvy about IP cases. In other words, they want to get rid of Darl, and hire someone who can actually win cases to cripple Linux. (Not that such an outcome is likely or even reasonably possible.) Baystar is not our friend, unless they successfully take money away from SCO which will stop their operations rapidly.
    • by shadowcabbit ( 466253 ) <cx@NoSPAM.thefurryone.net> on Thursday April 22, 2004 @11:42AM (#8939420) Journal
      Wait wait wait:

      "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).
  • by AmericanInKiev ( 453362 ) on Thursday April 22, 2004 @11:07AM (#8939013) Homepage
    Since BS is essentially bankrolling a luxurious experiment by a few well paid lawyers - it seems that for its part - it would rather have the money back than continue to invest in the salaried of attorneys - which can only mean that it doesn't think the risk/reward ratio is positive any longer.

    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
    • the other legal accomplishment would be to uphold the GPL without frightening the world that OS is similar to the RIAA.

      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.

    • Since BS is essentially bankrolling a luxurious experiment by a few well paid lawyers...

      Truer words have never been spoken. This whole endeavor has been fueled by BS since day one.
    • Since BS is essentially bankrolling a luxurious experiment by a few well paid lawyers - it seems that for its part - it would rather have the money back than continue to invest in the salaried of attorneys - which can only mean that it doesn't think the risk/reward ratio is positive any longer.

      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
      • by AmericanInKiev ( 453362 ) on Thursday April 22, 2004 @11:50AM (#8939515) Homepage
        When you want out of a deal - you rarely say "I want out because I found a prettier women to spend my time with." You generally say - you've stopped doing your part of the deal - so I want out, and pray like hell nobodyy figures out the real reason.

        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)

    by Flashpot ( 773365 ) on Thursday April 22, 2004 @11:07AM (#8939015)
    Regardless of the language, to me it looks like a no-confidence vote.
  • by mmurphy000 ( 556983 ) on Thursday April 22, 2004 @11:07AM (#8939017)
    The net is not that BayStar is having second thoughts about pursuing claims against IBM and Linux, but that BayStar thinks SCO management is wasting time and money by going about it inefficiently.

    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)

    by Archangel Michael ( 180766 ) on Thursday April 22, 2004 @11:07AM (#8939018) Journal
    http://finance.yahoo.com/q/ecn?s=SCOX

    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)

    by Lord Grey ( 463613 ) * on Thursday April 22, 2004 @11:08AM (#8939030)
    From the article:
    Microsoft initially recommended that BayStar take a look at SCO. But there is nothing unusual about that, Mr. Goldfarb [managing partner of BayStar] said. BayStar often talks to the investment and venture arms of major technology companies like Microsoft, Intel and Cisco. "It was evident that Microsoft had an agenda," Mr. Goldfarb said.
    Does anyone remember the leaked memo that pointed to Microsoft's interest [slashdot.org] in the BayStar investment? Many people in that thread guessed that perhaps Paul Allen arranged the deal on the golf course or over the weekend or something. Apparently, that point is moot. BayStar and SCO both knew who was behind it.

    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?

    • 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."? What did you expect from a man whose initials are "BS"?
  • by SteakandcheeseUm ( 191173 ) on Thursday April 22, 2004 @11:09AM (#8939045) Homepage
    The SCO website [thescogroup.com] is planning a different legal strategy.

    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?
    ...A court hearing most likely.
  • 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.

    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.

    • These fools with millions and millions of dollars to spend somehow didn't get the information that the rest of us got for free.

      You got your information for free? Mine cost $699!

    • by Black Parrot ( 19622 ) on Thursday April 22, 2004 @11:59AM (#8939614)


      > 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.

  • I was graced with an ad proclaiming I could buy SCOX for $4 a share through sharebuilder.com while looking up the currents...

    Hmmmmmmmm......
  • by Extra Ketchup ( 696009 ) on Thursday April 22, 2004 @11:10AM (#8939067) Homepage
    I found it interesting that Baystar wants SCO to give up on UNIX to pursue the "intellectual property process." In other words, Baystar wants SCO to give up the only service it offers and pursue legal action against Linux (and Linux users) even more than it is now! In fact, if they do this (and a few other things), then Baystar might change their mind about recalling their stocks..

    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!
      1. I found it interesting that Baystar wants SCO to give up on UNIX to pursue the "intellectual property process." In other words, Baystar wants SCO to give up the only service it offers and pursue legal action against Linux (and Linux users) even more than it is now! In fact, if they do this (and a few other things), then Baystar might change their mind about recalling their stocks..

      SCO excutives decided to make enemies and maybe an incredible amount of money. SCO products are horrible when compared to m

    • I wonder who would benefit most from this (cough Microsoft cough cough....)

      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...

  • by adamofgreyskull ( 640712 ) on Thursday April 22, 2004 @11:12AM (#8939083)
    BayStar, he said, then did a lengthy assessment of SCO's intellectual property claims and whether, if the dispute ever came to a jury trial, the lawyer SCO has hired, David Boies, one of the nation's top litigators, could win.
    STEVE LOHR!! Of the New York Times. Kudos, Steve Lohr!
  • by Pisco ( 697235 ) on Thursday April 22, 2004 @11:12AM (#8939084)
    Offtopic but.... Link on SCO's home page: "Why SCO could Win: Week Two. -- eWeek.com." However, if you actually click on it the article title on eweek is "Why SCO Thinks It Can Win"??
  • by Excelsior ( 164338 ) on Thursday April 22, 2004 @11:13AM (#8939109)
    More interesting is the article over at ZDNet [com.com]. In that article, Baystar contends that Darl should step down, and that SCO is wasting it's time with the Unix business. Baystar suggests that SCO make litigation its only business.
    • litigating is seen as (or in this case, REALLY IS) more profitable than actually creating or servicing a product. If this isn't a case of rich people trying to get richer without any effort (and I don't know about you, but I don't consider hiring a team of legal sharks to do dirty work effort), than I don't know what is. Go ahead and flame me, but this is everything that is wrong with capitalism as currently being practiced in this country. Reminds me of an old "Wizard of ID" cartoon. "Don't you know what t
  • by S3D ( 745318 ) on Thursday April 22, 2004 @11:14AM (#8939116)
    letters SCO has sent "were designed to educate the marketplace, and we will continue to try to educate the marketplace,"
    in the glorious tradition of the reeducation camps...
  • by Anonymous Coward
    I would like to thank the submitter for using the google partner link to the NYT article.
  • by Dareth ( 47614 ) on Thursday April 22, 2004 @11:17AM (#8939146)
    Baystar's problem is not with SCO's position on the issues, but their handling of the issues. Some quotes from BayStar spokesman Bob McGrath in the article make this clear.

    "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)

    by bstone ( 145356 )
    Didn't Darl file for a buyback when the stock was at $10, saying that the company felt that the price was a bargain? By now, since the stock has slipped so much since then, shouldn't SCO be jumping at buying back all those shares at an "even better" bargain?

    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?

  • by Rick and Roll ( 672077 ) on Thursday April 22, 2004 @11:24AM (#8939217)
    Okay, so BayStar made a bad investment. They are adults and they should face the consequences. They knew SCO was in a risky business from the outset. Microsoft giving them the tip did not force them to take it. It was their decision.

    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 is a 'hedge' company, another way of saying they are a leech. They buy companies that are worth more parted out and then call the scrap man. But then again, they DO have that LONG six year legacy to fall back on, don't they?
  • by emtboy9 ( 99534 ) <jeffNO@SPAMjefflane.org> on Thursday April 22, 2004 @11:28AM (#8939260) Homepage
    "We understand (BayStar general partner Larry Goldfarb is) disappointed that the stock price has been going downward lately," Stowell said. "We haven't been real excited about that ourselves. But we believe the long-term prospects of the company are good."

    Good for me to POOP ON!

  • Dynamite (Score:4, Interesting)

    by Performer Guy ( 69820 ) on Thursday April 22, 2004 @11:43AM (#8939439)
    Incriminating stuff on Microsoft's recommendation from the article:

    "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.
  • by ewg ( 158266 ) on Thursday April 22, 2004 @11:56AM (#8939587)
    This is a shot across the bow of SCO management. In other words, a public warning to the management team that their days are numbered unless they focus on what their owners want.
    • Unfortunately, their investers seem to want them to forgo their legitimate business interests and restructure their company around the pursuit of frivolous lawsuits. That kinda sucks.

      Chuck
  • by wotevah ( 620758 ) on Thursday April 22, 2004 @11:59AM (#8939618) Journal
    This is somewhat disconcerting:

    From this news article [telegram.com] from yesterday:

    An investment firm threatening to withdraw its financial support of SCO Group Inc.'s Linux licensing battle wants the company to shake up its management and sharpen its focus on the potentially lucrative legal fight. 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.
  • moral of the story (Score:5, Insightful)

    by Johnny Mnemonic ( 176043 ) <<mdinsmore> <at> <gmail.com>> on Thursday April 22, 2004 @12:22PM (#8939902) Homepage Journal
    The moral of this story: when Microsoft points you to a place that you can spend tens of millions of dollars of your own money, they aren't doing it just because they like your tie. They are doing it for their own reasons, and won't really care if it turns out badly for you.

    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.
  • by dcavanaugh ( 248349 ) on Thursday April 22, 2004 @12:26PM (#8939951) Homepage
    Baystar requests redemption just to shake up SCO management? If they didn't like Darl, why did they give him the money in the first place?

    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.
    • Baystar requests redemption just to shake up SCO management? If they didn't like Darl, why did they give him the money in the first place?

      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
  • by roman_mir ( 125474 ) on Thursday April 22, 2004 @12:32PM (#8940027) Homepage Journal
    "We're unsure what their issues are," Marc Modersitzki, a SCO spokesman, said yesterday. He added that the BayStar letter was "a notification, not a legal action," and that SCO hoped the two sides could settle the matter. - so if someone is not suing you but trying to be civil about things and is just asking you nicely it means you do not have to be civil back, you must always wait for a court date to solve your differences? No wonder USA is known as the most litigious nation in the world.

  • Dr. Evil? (Score:3, Funny)

    by SlowMovingTarget ( 550823 ) on Thursday April 22, 2004 @03:36PM (#8942365) Homepage
    BayStar to SCO: "No, no... Not evil enough..."

Between infinite and short there is a big difference. -- G.H. Gonnet

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