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Linux Business Caldera

Darl McBride Leaving SCO? 126

Posted by CmdrTaco
from the take-the-money-and-run dept.
JoGiles writes "Linux-watch is reporting that while The SCO Group may go on to pursue its plans with a $100 million buyout, it will do so without its longtime CEO Darl McBride. Buried in the proposed MOU (Memorandum of Understanding) between Unix vendor and Linux litigator SCO and SNCP (Stephen Norris & Co. Capital Partners) is the note that "upon the effective date of the Proposed Plan of Reorganization, the existing CEO of the Company, Darl McBride, will resign immediately.""
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Darl McBride Leaving SCO?

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  • Not the real bad guy (Score:5, Interesting)

    by Bruce Perens (3872) * <bruce@perens.com> on Saturday February 16, 2008 @11:50AM (#22445648) Homepage Journal
    I think Darl was just a front, as Ransom Love was for Caldera. Ralph Yarro was the real boss of both. I guess he's out too (not sure), but IMO the new investor is pursuing the same program, and Microsoft is still behind it.
  • by Z00L00K (682162) on Saturday February 16, 2008 @11:51AM (#22445652) Homepage
    THIS is actually the most important point of all.

    And are there any possibility to let the court know what the public opinion on this is? The Chapter 7 [wikipedia.org] should be more appropriate.

    At least SCO weren't eligible to file for Chapter 12 [wikipedia.org]. Wonder what would have happened if they also were owning a huge farm in the midwest too...

  • Smoking Bacon (Score:1, Interesting)

    by Anonymous Coward on Saturday February 16, 2008 @11:52AM (#22445656)

    SCO receives money from Stephen Norris, who is connected with Prince Waleed Bin Talal Bin Abdulaziz Al Saud [google.com], who can be seen here [blogger.com] with Bill Gates?

  • by Anonymous Coward on Saturday February 16, 2008 @12:01PM (#22445718)
    IMO the new investor is pursuing the same program, and Microsoft is still behind it.

    Bruce, now that Vista has bombed at the Corporate offices, you think Microsoft will still have an incentive to pursue Linux in court?
  • by HangingChad (677530) on Saturday February 16, 2008 @12:03PM (#22445724) Homepage

    This plan has a better chance than the York debacle, but IBM and Novell will certainly want to see the money. If Norris Capital Partners has to front the 100 million in escrow this could get interesting.

    For Microsoft this has to be like being caught in an endless corporate version of Fatal Attraction. Backing the SCO litigation probably looked good when the Vista release was delayed but now SCO has them by the short curlies. MS has to keep coming up with cash for their demanding paramour. And it's getting harder to design deniable sources for that cash. Hard to say what SCO has on them, maybe they keep threating to go state's evidence on the anti-trust behavior. Maybe MS thinks it's worth a couple hundred million to keep the litigation cloud intact. I'm leaning toward the former. This can't be worth it from a business strategy perspective. It's expensive and it's not working. If anything it's backfiring. It's the kind of advertising that Linux can't normally afford.

    It's really hard to tell if this is calculated malfeasance or serial incompetence. With Microsoft it's sometimes hard to tell the difference.

    Most definitely this doesn't have anything to do with McBride, other than I'm sure they'll want to keep him quiet. Which means making sure he's happy, which will likely involve a large sum of cash when he leaves.

    This whole thing is such a loser. If MS would put that time and money into developing an operating system and other software that provides value to the user, they could forget all this stupidity with SCO. It's tacky, pathetic and...should be...beneath the dignity of a world class company.

  • Re:so long... (Score:5, Interesting)

    by gnasher719 (869701) on Saturday February 16, 2008 @12:16PM (#22445800)

    I doubt he will, he'll be awarded a massive payout "in recognition for hiw work over the last years" and to "compensate him for future earnings", etc etc.
    Actually, I wouldn't be surprised if he got sued by Novell rather soon (not that this would have to do anything with him leaving, they will sue him anyway). Darl McBride got a huge bonus for making the company profitable - however, the only profits that the company made is money that according to Novell was actually theirs. That will be decided in the courts in April or so. I am quite sure that if the court decides for Novell, and Novell cannot get all their money from SCO, and the bonus paid to McBride turns out be incorrect, then Novell will go for his own money.

    It is not something that companies would normally do, but in this case there are exceptional circumstances.
  • by burnin1965 (535071) on Saturday February 16, 2008 @12:16PM (#22445806) Homepage

    Assuming all of this stuff is approved by the bankruptcy courts for starters.


    Good point. The quick headlines that were generated for stories are highly inaccurate, i.e. its not a $100 million buy out and it looks to be only $5 million at first glance.

    It could turn out after a full review of the facts that this is just another attempt to perpetrate additional theft of Novell's cash through the bankruptcy court as was the last attempt to sell Novell's assets [groklaw.net].

    We'll have to wait and see how Novell and IBM respond in the bankruptcy court.

  • by toxic666 (529648) on Saturday February 16, 2008 @12:17PM (#22445808)
    And the interest rate is LIBOR + 1,700 Basis Points. That translates to 20% - 22.5% annual interest (using LIBOR rates over the past 1 year) which must be paid MONTHLY. SCO has lost money every single quarter of its existence, except for its blockbuster one in which it sold licenses to Sun and MS (which the court found to be improperly converted in its preliminary summary judgments). And now they have to pay credit card rates for financing?

    Hello conspiracy theorists! This "deal" is nothing more than a cover to take the company private in an attempt to protect it from investigation into the PIPE fairies who funded its litigation from the word go. And you can bet (based upon the failed York deal they tried to shove down the BK court's throat in November) it was cooked up by people more powerful and "financially creative" than the existing SCO management.

    Don't be surprised if an attempt to limit his liability is Darl's Golden Parachute.
  • Re:Luck for SCO. (Score:3, Interesting)

    by Zeinfeld (263942) on Saturday February 16, 2008 @12:32PM (#22445894) Homepage
    Luckily Darl McBride took most of the spotlight for SCO's action. SCO still has a fare amount of "Good Will" (In accounting it is not how nice or moral the company is "Good Will" is name recognition)

    Nope, not close.

    Good will appears on the balance sheet as an asset when a company buys another and pays more than the value of the fixed assets. So if company A buys company B for $100 million and company B has $10 mill worth of equipment (machines, desks, etc) the $10 mil is added to capital and the $90 is credited as goodwill.

    It is a real asset as the goodwill can be used to offset profits for tax purposes.

    In SCO's case I would have a really hard time believing that the goodwill should still be counted as an asset. SCO has no real ongoing business except litigation. Bankruptcy pretty much destroys any claim they could make for business continuity. So they should probably report the goodwill as a loss.

  • by penix1 (722987) on Saturday February 16, 2008 @01:35PM (#22446250) Homepage
    I suspect that if it is a real offer the judge will approve it for two reasons. First, there are clauses that cover owed expenses in the event of loss(es) at trial(s) and second it gets this out of his court. it will be awfully hard for a creditor, even one that has so much at stake as Novell, to complain when SCO is floated this "loan" to have an objection if it will get them paid. That is, after all, why we are in the bankruptcy court in the first place.

    The objection to the first sale was because there was no clause covering losses of the cases. Also, they were trying to sell property in dispute. That isn't the case with this offer. This is a hostile takeover plain and simple.

    I predict the judge will allow it *IF* there is some up front money involved such as a trust or some such to cover a fall through. I don't think the agreement on its face will carry the day. In short, money talks.
  • Re:Smoking Bacon (Score:3, Interesting)

    by daniel23 (605413) on Saturday February 16, 2008 @01:49PM (#22446342)
    Mr. Norris was a co-founder of the Carlyle Group (and ironically the current head of that group is the ex-CEO of IBM ;).

    This is nothing but speculation, spy vs. spy, but...

    doesn't IBM have a strong interest in SCOg's existence right until the day of the judgement? They invested a lot of time, reputation and money into this defence and may want to harvest a judgement that settles a number of questions once and for all.
    They could have saved themselves a lot if they had bought SCO earlier but this would have encouraged other litigators to try forced buyouts on them, and IBM apparently didn't want the allegations to stop but wanted a ruling declaring them false and void.
    MS got plenty FUD out of the story but since SCOg lost almost all of its case (if they ever had any) there is no good reason for MS to continue covered funding.
    SCO bleeds money just to make sure Novell won't get what they owe them, and approaches death. At the same time threatens to spoil the trial by going bankcrupt.
    IBM might want to secretly tunnel some money into the corpse to make sure a zombie SCOg has just enough strength left to take all the beating IBM has prepared for them.
  • by TheLinuxSRC (683475) * <slashdot@pagCOWewash.com minus herbivore> on Saturday February 16, 2008 @02:24PM (#22446556) Homepage
    I would think that whatever subsequent cases happen, judges and defense will be informed by this case.

    I think this is probably the most important point you make with regard to future lawsuits.

    The courts in the SCO cases have given SCO every opportunity to produce evidence to back their case. SCO has spent millions trying to find that evidence and by the time they realized it did not exist they had already dug themselves in way too deep and could not back out.

    Also, as a result of the SCO cases, the BSD lawsuit agreement [groklaw.net] was brought out in to the public. What is interesting here is the amount of Unix code that is now licensed under a BSD license. It is my understanding that BSD licensed code can be included in the Linux kernel and released under the GPLv2 along with the rest of the Linux kernel.

    Being that there is no Unix code illegally included in Linux, it would seem this avenue of attack is no longer open (or at minimum, not feasible). What worries me more is the next logical vector of attack, patents. I agree with a statement you made earlier, "I think Darl was just a front, as Ransom Love was for Caldera. Ralph Yarro was the real boss of both. I guess he's out too (not sure), but IMO the new investor is pursuing the same program, and Microsoft is still behind it.".

    Microsoft themselves could never sue a Linux company directly for a couple of reasons. First of all MS does not need the bad publicity it would bring. They currently have the perfect scapegoat, why not continue using it? Secondly, Microsoft has anti-trust issues to concern themselves with that their scapegoat does not have.

    The only solace that I find in the fact that the next war will be based around patents is that the courts have become better educated in technology and that Linux has been virtually exonerated of any copyright issues. Quite frankly, patents scare me.

  • by poetmatt (793785) on Saturday February 16, 2008 @04:06PM (#22447294) Journal
    It's not truly a buyout. However, it is not uncommon in bankruptcy for a company to take out a new loan that is used to pay off all the old ones (aka consolidate loans). In this situation its kinda shady how they're doing it, because they're trying to save Darl from being responsible for everything...that is the bigger kicker here if this actually goes through, not just the money infusion.
  • by thomas.galvin (551471) <slashdot@[ ]mas- ... m ['tho' in gap]> on Saturday February 16, 2008 @04:42PM (#22447568) Homepage

    Of course, that quasi-journalistic slut, MOG, projects that McBride's leaving was a goal of the Groklaw audience, when in fact, it never was.
    Of course not. Getting covered in honey and dropped onto a nest of fire ants, sure, but leaving SCO? Nah.
  • MSsco exit strategy (Score:3, Interesting)

    by harvey the nerd (582806) on Saturday February 16, 2008 @06:11PM (#22448236)
    If one takes the "dirty, deep pockets connnection - cost minimization exit strategy" hypothesis seriously, this deal makes a lot of sense - starting with a "separate (extricate) the point man from his crimes" strategy". That way, being "safely away" from the scene of final SCO act or implosion, this may enable some diffusion of hard earned hostility to SCO, muddle and bury evidence, and the (ex)CEO is much less likely to have to rat out the significant others, especially if everything "settles" for a few cents on the dollar and fades away with the normal "defend" clauses to previous bad management. Of course society has been the big economic loser all along here, and the moral justice is a farce on the way to a 3rd world, corporate run tyranny.
  • by Anonymous Coward on Saturday February 16, 2008 @11:32PM (#22450004)
    Maybe they wanted to dump Darl cuz he wuz a croooook! Which he certainly is! He and his ilk stole my money by takin part in a years long stock swindle that still is ongoing today, and under our immoral laissez-faire capitalist system he and his cabalistas did not even have to use a pistola, just our crooked laws for corporations. Wonder how long Darl will live after he is no longer useful to microsoft and all its politico sock puppets. The history of discarded strawmen shows not much kindness for them. About six months and he will be found in a hotel rooom or missing from his car or just plain drop out of sight...never to be seen or heard from again.
    For he is a man who truly knows too much, and has nothing more to lose. That makes powerful men scared of him. It is dangerous to be a feared little fish among such great evil as microsoft these days.

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