Wednesday, October 31, 2007


11/1 SNR

So the SCO universe is in a brief holding pattern until November 6th, when all hell is scheduled to break loose. That's when the BK court plans to hear arguments on a stack of motions from both SCO and Novell. The two biggies are SCO's petition to hold the proposed emergency fire sale auction, and Novell's to unstay the SCO v. Novell case and let Kimball sort out the conversion issue. If the BK courts worked like general-purpose courts, I'd expect all the motions to be taken under advisement, with an eventual ruling denying all the motions that might dispose of the matter one way or the other. But as PJ notes here, BK court moves fast. Maybe that's overgeneralizing; some BK cases drag on for years and years with no end in sight, but right now the SCO BK matter appears to be moving much faster than the Novell & IBM cases ever did. It's still possible nobody will come away with a win on the 6th, but it may turn out to be a very critical moment in the SCO saga. If either side gets a win, they win big, and the possible outcomes appear to be mutually exclusive, so the judge can't simply approve all the motions on the table. Either SCO weasels out of the last few years of litigation, or Novell takes a key step toward putting SCO out of business for good, or possibly neither, but definitely not both.

Oh, and there's that delisting hearing on the 8th to worry about right after that. In the event SCO's auction gets the go-ahead on the 6th, I wonder if they'll keep fighting the delisting battle or not. With the Unix biz gone, SCO would be down to the ongoing lawsuits plus a few random odds and ends, and may have no RL presence except for a mailbox at BS&F headquarters. There are plenty of OTC, pink sheet, and grey market companies operating that way, but they don't keep you on the Nasdaq if you don't have any employees anymore.

Meanwhile, the proposed sale is getting a lot of press, understandably. SCO's Unix business may be a sad remnant of what it once was, but a lot of people still care who owns it.

Stories at:

And on comp.unix.sco.misc, not a single word about the proposed sale. You'd think there'd be a little "what does the deal mean for us?" speculation, but no.

I can't find the document now, but one of the recent BK docs mentions that SCO's once-vaunted "DT4" Me Inc./Daytimer app has shuffled off to the Great Bit Bucket in the Sky. The Daytimer company pulled the plug, and SCO's lawyers are considering legal action. Yeah. It'll be just like Project Monterey all over again, and SCO almost made trillions off that one, except for the losing repeatedly in court part. To the moon!!!

Meanwhile, here's a piece about SCO's mysterious litigation in Germany. The article suggests SCO's misrepresenting the case to the BK court, and they're actually trying to silence a critic of theirs over across the pond. All of that would be entirely in character for SCO. I'd like to know more about what's going on here. The redoubtable Al P. mentions the case in his recently filed "Objections of Petrofsky to the Motions of the Debtors".

And for the sake of completeness, the Salt Lake Tribune's piece on SCO's recent layoffs. I actually started a post about it, but it was all schadenfreude and gloating, and writing it felt kind of icky, so I nuked it. So just briefly and for the record, I'm just fine with the court's order sealing the names and personal details of those laid off. It's not that I buy SCO's hysterical hyperbole about ex-employees being harrassed, because I don't see that happening in real life. I just don't see it as very relevant, and the poor chumps have suffered enough already. They drank the Kool-Aid for years on end and followed the Dear Leader all the way into BK court, only to be thrown under the bus when York showed up and started flashing money around. That's got to sting a little. So if anyone's inclined to turn state's evidence, they'll do so without any prompting by well-meaning Linux supporters. It would be interesting to know which departments were affected by the cuts. I'm sure potential bidders would like to know if, for example, the layoffs were all senior Unix dev guys in the New Jersey office, or if they were just fluffy empty-suit jobs like "Community Outreach Coordinator" or "VP of Marketing".

Tuesday, October 23, 2007


10/23 SNR

It's been a couple of weeks since the last SNR post. My pitiful excuses will have to wait until tomorrow, though, because right now we've got some big news to cover. Hell froze over today, and in related news, SCO has an actual "buyout" offer on the table. I put "buyout" in quotes because it's not quite that simple. York Capital doesn't want the whole company, just certain assets. They're buying SCO's business units, but it doesn't look like that's their real angle. Despite all that blather from MOG about SCO "modularizing", York isn't the eager Me Inc. bagholder, er, buyer we were promised. I can't really fault MOG on that for once, though. I think everyone figured that was the one appendage SCO could slice off and sell successfully. I know that's what I expected to see. But no, the tea leaves (i.e. the proposed APA) suggest York wants into the Linux litigation business. Seriously. You're probably going, wait, there is no Linux litigation business. SCO's claims were debunked years ago, SCOSource withered on the vine for lack of customers, even their media shills have abandoned them at this point, and nobody takes them seriously anymore. What on Earth could York possibly be buying? Unix? I can't see them honestly trying to turn the Unix business around, I mean, nobody's that stupid. And Me Inc., a valuable asset? It is to laugh. All SCO has left to offer is a pile of used lottery tickets, none of them winners, and somehow they hooked themselves a buyer. How is this possible?

The first thing to realize is that investment firms see the world differently than humans do. If you're a fund manager, paying $16M for something that almost certainly doesn't exist may actually seem like a good deal. Fund managers are gamblers by nature, and if you dangle a cheap lottery ticket in front of enough of them, you're bound to get a few bites. It worked on Baystar, and RBC, and Renaissance, and all the others. The difference is that York isn't content to let SCO play the Linux lottery on their behalf. They'd like the right to do it themselves, via a newly constituted entity. I suspect said entity ("NewNewSCO") will operate as a "pure play" IP troll, once they've laid off SCO's remaining engineers, sales & marketing people, and other nonessential staff. Meanwhile, "OldNewSCO", now asset-free, finally becomes the publicly traded lawsuit Baystar wanted them to become several years ago. So instead of one pack of litigious bastards, there'll be two. And I suppose when they're on the brink of losing in court, they'll declare bankruptcy again and undergo another mitosis, and there'll be four, and so on.

Speaking of multiple entities: If I'm reading the deal right, only the York entity will get to call itself SCO (assuming it wants to), since the proposed APA includes trademarks. I wonder if any of the $16M is earmarked for the name, or Darl's tossing it in as a freebie? If York gets all the trademarks, I suppose they could call the new firm Caldera instead, or maybe Vultus, names that are nowhere near as sullied as SCO's, at least not yet. I kind of hope they go with "Vultus", because it's a truly stupid name.

Back in the Baystar era SCO refused to hollow itself out and become a pure lawsuit factory, but now they're all hot for it, and they're proposing an "emergency" fire sale schedule, with an auction to be held December 5th. I think they're betting there won't be any other bidders on this dubious bill of goods. And if anyone else bids, and York loses the auction, they get a nice fat check for at least $780k. This might be a good time to point out that'd be $780k of Novell's money, just so it's clear what's going on here.

So the deal goes on about how each company will share in the other's good fortune if either hits the jackpot, and York proposes to extend a $10M line of credit to SCO. And exchange for that line of credit, York gets to muscle its way to the front of SCO's long line of creditors. Cozy! Naturally SCO, as the distressed party in the deal, has certain unfavorable terms to swallow. First, York doesn't want to buy the Novell and IBM suits. And really, why would they? I certainly wouldn't. Likewise the ongoing Caldera IPO litigation, the "former Indian distributor" case, and all other non-Linux cases still belong to SCO. If I'm reading things right, York gets the AutoZone and possibly the Red Hat cases, and the right to file additional frivolous Linux lawsuits, and (I think) the right to sue over Me Inc. too. My guess is that the last bit is what York really wants. Mobile phone companies have deep pockets and seemingly prefer to pay up instead of fight, so it just might pay to go around filing groundless lawsuits against them. Besides, of all those lottery tickets York wants to buy, Me Inc. is the only one SCO hasn't scratched yet.

This would all make a lot more sense if York was a newly minted bagholder with no prior history with SCO. But as the ever-relentless Panglozz points out, they've had money in SCO since 2004, and even had dealings with Rich Emerson, the M$ guy who arranged the Baystar deal. I'm not saying I see the black hand of Redmond behind the York deal, not yet anyway, but I do think it all looks a bit odd.

Speculating about who's really writing the checks may be a moot point. I just can't see the deal going through as it's currently worded. First, SCO wants to sell the Unix biz, with York I suppose becoming Novell's new agent, for the same 5% cut of the take, all without Novell's consent. Meanwhile, Novell gets to continue suing the eviscerated, asset-stripped husk of SCO. I have this funny feeling they won't accept that sort of arrangement. SCO also proposes to sell the right to file new Linux lawsuits. There's no way for any potential bidder to know what this "asset" is worth at present. I don't see how they could reasonably auction it until certain PSJ's in the IBM case are sorted out. If we're lucky, IBM might "helpfully" point this out and talk the court into unstaying, say, CC10 for example. All in the interest of expediting the BK proceedings, of course.

So in the end, this proposed deal just might turn out to be a good thing. Just not for SCO. The deal's weird enough that I'm going to have to stare at it a while and try to imagine what loopholes and sneaky tricks they've hidden inside of it. And I hope people who actually understand this stuff will do the same. It's a hell of a strange way to carve a turkey, that's all I can say.

Thursday, October 04, 2007


10/4 SNR

Another busy week in Delaware, and once again I've fallen behind in my chronicling duties, as it's also been another busy week in my humble cubicle. So here are the thrilling highlights of this last week in the ongoing SCO soap opera...

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