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."

Stock price...

[eggoeater]

Isn't SCOs stock price/equity low enough to where IBM could just buy them outright?
Or at least 51%.

Re:Stock price...

[eggoeater]

Yes, but unlike other low-lifes, SCO does have some
IP (NO I'm not talking about Linux) and other non-lawsuit related
revenue sources that could make it a good buy.

You make a good point though. IBM should wait until there's a judgment against SCO and the stock will plummet.

IBM could make arrangements with some of the larger private (non-employee)
stock holders to buy the stock at a higher price so the upper management doesn't
reap the rewards of a buy out. Once they get 51% they can dissolve the company
and absorb the assets.

What would become of UnixWare and OpenServer?

[Anonymous Coward]

Were SCO to go under, what would become of UnixWare and OpenServer? I would imagine they'd be sold off to the highest bidder in some sort of liquidation proceedings. Hopefully a company like IBM or Sun would buy whatever rights SCO held, and then negotiate with Novell to release the source code to both products, ideally under a liberal open source license (BSD, MIT, zlib/libpng).

While UnixWare and OpenServer are of limited practical use these days, especially with Linux, *BSD and OpenSolaris, there would still be much historical value in their source code. I'm sure that there are a number of people still using older hardware that wouldn't mind using either system, since it actually runs quite well on such systems. There are even still some businesses who use UnixWare and OpenServer for aspects of their daily operation, who would also benefit from source access.

Re:What would become of UnixWare and OpenServer?

[peragrin]

Since 95% of the money MSFT and Sun paid SCO goes back to Novell and Since SCO itself list Unixware and Open Server at values of less than 5 million dollars. Novell will end up with both product lines.

Nope the only thing left will be the fraud trials for Ralph Yarro and Darl Mcbride. Since it is obvious to all that this has been a buyout scam from the beginning. Darl is on record as saying that unless they launched the lawsuits(and got financing from MSFT, Sun and Baystar) SCO would have been bankrupt by now.

Re:Stock price...

[KokorHekkus]

...IBM could make arrangements with some of the larger private (non-employee) stock holders to buy the stock at a higher price so the upper management doesn't reap the rewards of a buy out...

Besides the posion pill plan there are other problems: According Yahoo Finance 44.5% of the shares are held by insiders. I would be very very surprised if at least 6% of the shares is held by some non-insider that is very close and comfy with the insiders. Indirect indications of this is were the keeping up of the share price by somone who bought sizeable chunks (relative to the days trade) of stock near the end of the day.

But here is the real kicker... about riskfactors from their 10Q:

The right of our Board of Directors to authorize additional shares of preferred stock could adversely impact the rights of holders of our common stock. Our Board of Directors currently has the right, with respect to the 5,000,000 shares of our preferred stock, to authorize the issuance of one or more additional series of our preferred stock with such voting, dividend and other rights as our directors determine. The Board of Directors can designate new series of preferred stock without the approval of the holders of our common stock. The rights of holders of our common stock may be adversely affected by the rights of any holders of additional shares of preferred stock that may be issued in the future, including without limitation, further dilution of the equity ownership percentage of our holders of common stock and their voting power if we issue preferred stock with voting rights. Additionally, the issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock.

Now isn't that a nice (in the most cynical manner) way to have pretty much full control over what happens with your stock - 45% is held by insiders... who can choose to dilute the voting power of common stock holders. (Bold emphasis added by me)

Re:How stupid are they, really?

[ebuck]

Technically both HP-UX and Solaris are derivatives of code that SCO somewhat controls. The thing to remember is that they are LICENSED derivatives, which have paid thier royalties and have permission to call themselves UNIXes.

They're probably enhanced versions of System V, but they might have done even better than that. System V has been around the block a few times, and there's a lot of room for enhancement. That means that assuming SCO has some claim of ownership of the System V code, all other UNIXes are derivates. Unfortunately, all other UNIXes are licensed derivatives, and those agreements usually were written to be non-revokable.

Remember when SCO declared that they had revoked IBM's license for AIX? Well, IBM pulled the contract and it stated clearly "non-revokable". SCO is going to die, but it will continue to be a long slow death.

Scox has already won

[walterbyrd]

When Darl was hired as CEO, just before the scam began, about four years ago. Scox's market cap dropped below $6M. Scox was on the brink of delisting and bankruptcy. Now scox's market cap is over $20M.

Kevin McBrid pulled in $885K in the last two years. Darl probably made about $2M since the scam began. Not bad for small time scammers. Scox's law firm, BSF, has made over $30M. And the company that financed the entire scam, MSFT, is getting five years of top quality FUD for a meager $50M.

Scox never expected a victory in court, scox expected either a quick settlement, or scox would just loot as much msft FUD money as possible.

Scox was just given more delay - yet another scox victory.

Re:Let's hope they last long enough...

[rkhalloran]

I agree I'd prefer they not go bankrupt too soon, but I expect that IBM's motions for summary judgment, Novell's claims the copyrights never went to SCOX, Red Hat's Lanham Act claims (false advertising that Linux infringed UNIX) will torpedo them well before anything gets to a jury.

THEN they can go bankrupt, and we can all watch the principal parties doin' the perp walk.

SCOX DELENDA EST!!

Re:Hooray Pamela Jones

[gtall]

In a way, the parent is accurate. When SCO launched this expedition, they also launched it in the media. The media at the time was clearly piqued by the ramifications were SCO to succeed. IBM clammed up because they had a court case to fight. However, SCO used all the media hype to attempt to shake down other companies. Were it not for Groklaw poking public holes in SCO's stories, several companies likely would have paid up. Eventually, the court cases would have been lost by SCO and the gravy train would dry up. However, the precedent would not be good.

The beneficiary of this, and mostly likely the PuppetMaster after the initial benefits were realized, was Uncle Fester and Cousin It (a.k.a. Bill). They (and Sun) managed to funnel a few cool mil to SCO just to keep the game going longer. Groklaw ferreted that connection out in such a way that Uncle Fester and Cousin It probably won't touch SCO now with a ten foot pole.

In addition, Groklaw did some good work in ferreting out the details of the APA agreement and its tortured history into SCO hands. One could argue that Groklaw did more in freeing Linux from the stigma of "stolen" than IBM ever could do.

And Groklaw isn't going away any time soon. Uncle Fester and Cousin It will have Groklaw teasing out their malpractice with a fine tooth comb for a long, long time.

Gerry