SCO Admits They Might Just Not Win - Maybe

inetsee writes "According to Groklaw, SCO has admitted in a 10K filing that if the court grants any or all of IBM's six motions for summary judgement, 'We can not guarantee whether our claims against IBM or Novell will be heard by a jury.' The site goes through a statement by statement run-down of SCO's filing, noting things like the absence of employee numbers (a piece of information they told investors they would disclose). Elsewhere in the document, it is revealed that SCO's stock is in danger of being delisted from NASDAQ, they may come under further litigation from an unrelated legal matter, and SCO is now claiming that OSes like HP-UX and Solaris are derivatives of code that they 'own'. Despite the dire pronouncements throughout the filing, if everything else runs according to plan their 10K indicates they could keep fighting the good fight for another 12 months."

Nothing New

[Anonymous Coward]

ALL public companies say things like this in 10k filings. They ALWAYS state the possibility of failure. This is another "non-story".

Not that easy (even if they wanted to)

[overnight_failure]

SCO did some procedural jiggling to make sure they're not 'undervalued' during any procedure (i.e. the directors get more money than they're worth).

Take a look at this Groklaw article for a bit more detail. [groklaw.net]

Re:Stock price...

[ZorbaTHut]

Another issue is that, if IBM buys them, they probably end up having to deal with SCO's various madcap lawsuits. It's quite possible SCO is worth literally less than nothing right now, considering all the reverse lawsuits they're liable for.

Re:Stock price...

[KokorHekkus]

Short answer: No

First: The board of SCOX has adopted a poison pill plan which pretty much allows them to set any price regardless of what the company is worth on the stockmarket, should anyone be as daft as want to buy it. If you buy a company you also buy their liabilities. (And remember that some 45% of the shares is still held by insiders in the company) Darl McBride said in 2004:

In an apparent response to industry rumors that SCO may become the target of a hostile takeover bid, SCO's Board of Directors has implemented a "shareholders rights plan" designed to deter unsolicited takeover attempts, McBride said. "We believe that this will basically keep any outside offers or potential takeovers that are not in the best interest of the shareholders at bay," he said. The plan, which was adopted by the board on Aug. 10, gives SCO's board the right to determine the "fair value" of the company in the event of a takeover attempt, McBride said.

And that fits pretty well with the suspicion that their original plan was to force a buyout from IBM (Source http://www.infoworld.com/article/04/08/31/HNscocap s_1.html [infoworld.com])

Second: as many others have pointed out - give in to extortion tacticts and they will just keep coming again and again and again.

Re:1000 times par value, still.

[Otter]

Par value is a non-zero value that the stock needs for regulatory reasons. It's as meaningless as, well, cautionary statements made in a 10K filing. It has nothing to do with how much profit any stockholder has made.

Re:1000 times par value, still.

[tessaiga]

Not sure who modded you insightful, but in today's regulated markets, par value for stocks is essentially a meaningless concept. Companies can basically set it at whatever value they like, and it has no relation to the IPO value or any other meaningful quantity. From the Motley Fool glossary [fool.com]:

Par value (stock)

An arbitrary dollar value that a company assigns to its shares. Par value has no economic significance. The legal significance of par value is, roughly, that if shares are issued below par value, the holders of those shares might be assessed the difference between par value and the issue price. Most stock certificates state that the shares are fully paid and nonassessable to indicate that holders are not on the hook for additional contributions because the shares were issued at a price greater than par value. Companies usually assign a very low par value to common stock.

Not to mention, most CxOs and other highly-placed insiders make their money from option grants, whose strike price the company's board can set to guarantee a profit for the recipients no matter where the current stock price is.

From 09 June *2003*

[NZheretic]

Read this posting from back in 09 June 2003 What evidence of origin,ownership,copyright + GPL [slashdot.org] - Caldera/The SCO Group were F**ked from the beginning.

In other words ( from Wednesday, March 10, 2004 A plea for relief from Microsoft's escalating anti-competitive tactics. [blogspot.com] ):

The SCO Group has entered into a series of essentially inherently flawed lawsuits and fraudulent license claims against users of the Linux operating system. Since 1994, Caldera International and the Santa Cruz Operation have been accepting, profiting from and distributing software developed by hundreds of independent developers under the terms of the GPL and LGPL license. The SCO Group has failed to put forward any sustainable legal theory why it should not abide by the terms of the GPL license. Detailed investigation into other facts and evidence which regularly conflict with the SCO Group's various legal claims, filing, press and public statements, raises serous questions which can no longer be explained away by a lack of competence in either the SCO Group's CEOs or the SCO Group's legal representation.

Re:How stupid are they, really?

[StormReaver]

"Technically both HP-UX and Solaris are derivatives of code that SCO somewhat controls."

Both IBM and SUN bought out their royalty obligations years ago, and neither owes royalties to anyone. SCO has no control over either (even if we accept SCO's fantasy-land theory that it bought UNIX).

Re:Stock price...

[MrNiceguy_KS]

Check out a great movie called "The Mouse That Roared" starring Peter Sellers (in several roles). It's a very funny movie based on this premise. I stumbled on it in my local library back in college.

A tiny European country with a failing economy declares war on the U.S. planning to lose and then collect millions in post-war aid. Unfortunately they win.

Re:1000 times par value, still.

[sconeu]

Not quite. SCOX has closed below $1.00 a few times. My understanding (IANASB -- I am not a stock broker) is that you have to be below $1.00 for an extended period of time (30 days?) before you're in serious danger of delisting.