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Thread: SCO to lose financial banking for legal fight?

  1. #1
    Just a Virtualized Geek MrLinus's Avatar
    Join Date
    Sep 2001
    Redondo Beach, CA

    SCO to lose financial banking for legal fight?

    I was kinda surprised to see RBC there (their my bank!!) but then again, they are one of the largest banks in the world making disgusting amounts in profits they need to put it somewhere I suppose.

    Source: CNN

    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.

    McGrath said the misgivings about SCO's management and direction prompted Larkspur, California-based BayStar to demand repayment of a $20 million loan that's helping the company pay its mounting bills as it sues several major users of Linux, alleging the operating system infringes on its Unix license.

    BayStar notified Lindon, Utah-based SCO that it wanted the money back in a terse notice delivered last week, but the investment firm hadn't publicly discussed the reasons underlying its action until Wednesday. The firm aired its grievances on the same day SCO announced the hiring of a new chief financial officer, with Bert Young replacing Bob Bench.

    Without providing specifics, McGrath said BayStar wants to see more extensive management changes.

    Although BayStar has formally requested its money back, "we remain open to alternative resolutions that are done in the best interests of all shareholders," McGrath said. "We continue to see strong value in [SCO's] intellectual property."

    An SCO official said BayStar still hasn't responded to the company's repeated efforts to discuss the falling out. "We are certainly interested in working out our differences," SCO spokesman Blake Stowell said.

    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.

    Losing BayStar's money would be a major blow to SCO, whose Linux lawsuits target several deep-pocketed giants, including IBM Corp., DaimlerChrysler AG and AutoZone Inc.

    SCO's market value has plunged by 30 percent, or about $40 million, since BayStar asked for its money back. SCO's shares fell 38 cents Wednesday to close at $6.80 on the Nasdaq Stock Market.

    BayStar, which specializes in making private investments in publicly held companies, arranged a $50 million infusion for SCO last fall. The Royal Bank of Canada contributed $30 million of the financing. The Royal Bank hasn't revealed what it will do if BayStar abandons SCO.

    The financing raised eyebrows in the high-tech community after BayStar and SCO confirmed they had been introduced to each other by software giant Microsoft Corp., which has been losing some customers to Linux. Microsoft says it has no financial ties to BayStar.

    The investment firm didn't consult with Microsoft before its showdown with SCO, McGrath said.

    The public strife is unusual for BayStar, a low-profile investment firm founded in 1998 by former bankers Lawrence Goldfarb and Steven Lamar. Since its inception, BayStar has invested $745 million in about 160 companies, including XM Satellite Radio Inc. and Roxio Inc.

    The SCO deal represents the first time that BayStar has demanded its money back, McGrath said.
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  2. #2
    Senior Member
    Join Date
    Aug 2001
    I suppose it would be too much to hope that the bank execs realized that a significant portion of their back-end was chugging allong on internally developed flavors of Linux and that by funding SCO's lawsuits they harboured the risk of losing their ability to edit the source...

    Atleast they weren't investing in derelict sewer systems in the UK, all for the sake of a tax write-off. I mean, atleast investing in SCO could seem like a good idea, and unfortunately is more ethical than working the tax code to get close to 8 billion in their tax return...

    Ok, sorry, almost spun off into a violent rant.

    For once, a short post...

    [next goal: a post without an ellipsis]

    The owl of Minerva spreads its wings only with the falling of dusk. -Hegel

  3. #3
    AO Curmudgeon rcgreen's Avatar
    Join Date
    Nov 2001
    SCO needs to hire executives with more savvy about intellectual property cases and spend less money on its Unix products
    Heaven forbid that a software company should waste its time on software
    when there's so much to be made on lawsuits. It's this kind of advice that got them into trouble in the first place.
    I came in to the world with nothing. I still have most of it.

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