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News Byte on the revival of SCO

howard dyckoff [howarddy3 at att.net]

Tue, 26 Feb 2008 12:48:34 +0000


I prepared a News Byte on the revival [again] of SCO based on info I had in mid-February [prior to the LG submission deadline]. Prior to submitting I had asked Rick and also Ben if they had any content suggestions or sources but they were busy at the time. But Ben did suggest that you, the esteemed Answer Gang, may have additional info that would be good to include.

The News Byte is reproduced below for your comments and insights.


CO may return from the Dead

Like a grave yard scene from an old B-movie, SCO is rising again as one of the UnDead.

A new cash infusion from a new set of partners will keep SCO from becoming moribund. The funds, up to $100 million, are coming from New York-based Stephen Norris Capital Partners and an undisclosed Middle Eastern investor. This gives SCO additional funds for the upcoming trial date but at the cost of privatizing the company and its assets.

This is a better attempt at reorganization than the previous York Group proposal, which was deficient on legal grounds. It also ejects the former CEO Darryl McBride, with a tidy sum and liability protection. Some comments on Slash.Dot and elsewhere have suggested the arrangement may help hide any past links to Microsoft, assuming there were.

According to a February 15 posting on Groklaw, the new deal may better provide for the "...avoidance of any antitrust worries Microsoft might conceivably face from airing of linen." The Groklaw posting adds the following concerns about the new Memorandum of Understanding [MOU]:

"Suitably insured, assuming they can find an insurance company stupid enough to take on these liabilities, the company will go private and then give its full and aggressive attention to raping and pillaging the FOSS community some more with SCO's bogo lawsuits against Linux. Well, that's how I read it. It is, of course, at least in part also a shot across the bow of IBM. Still not interested in settling, the MOU fairly screams?"

But SCO doesn't actually have a $100M "War chest" from its new partners. Its really a $5 million dollar deal with a $95 million line-of-credit, subject to due diligence and discovery by the lenders. And the 'credit' comes at a high interest rate.

Jim Zemlin, the president of the Linux Foundation, puts down the financial threat more succinctly:

"The terms of the proposal are publicly available with the court, and what they show is that SCO would receive only $5 million dollars in cash - the rest could only be drawn down at an exorbitant rate of more than 17%. Not a very efficient cost of capital...."

And if Novell and IBM prevail in court, SCO will owe a lot more than that.

See Groklaw on the MOU: http://www.groklaw.net/article.php?story=20080215072706542

Also see: http://www.businessweek.com/ap/financialnews/D8UQEJBO1.htm

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Mulyadi Santosa [mulyadi.santosa at gmail.com]

Wed, 27 Feb 2008 09:37:35 +0700


several things caught my attention: 1. vmsplice() kernel security hole.

2. Innotek was acquired by Sun



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