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Exactly What Kind of a Deal Does SCO Have with Microsoft?

Exactly What Kind of a Deal Does SCO Have with Microsoft?

The infamous SCO Group is being provocative again.

It wrote the SEC to tell the agency about the $50 million investment it just got and in the short little filing it made the tantalizing statement that "In the coming months, SCO intends to expand the licensing program to include migration options for those end users who may be looking for alternatives to Linux."

Well, we wondered whatever SCO meant so we asked for a translation. SCO spokesman Blake Stowell said that the outcast company has in mind to set up a program for people who are scared of the IP issues surrounding Linux but still don't want to pay the SCO tax.

Stowell said, "SCO will assist customers in migrating to a proprietary OS that has a more sound IP foundation. How will we assist customers I'm not sure that we can say just yet other than 'stay tuned.'"

So naturally our next question was "What operating system?" and this is where SCO gets potentially inflammatory. Stowell replied that he meant SCO's own Unix, "other versions of Unix and" - check this out - "other proprietary operating systems that may not be Unix."

Well, last time we looked there weren't too many of those still around, but we're still waiting to hear whether he's referring to Windows.

The filing, by the way, says that Microsoft coughed up $8 million in the October quarter, its second of two license payments to SCO.

Meanwhile, the magic number for David Boies, SCO's famous lawyer, is 20%.

According the sweetheart deal that he's still putting together with SCO - well, they're negotiating a "modification" to their arrangement - he gets 20% of any IP license fees SCO collects, 20% of any settlement it might get from IBM to resolve that $3 billion lawsuit SCO's got pending against it, 20% of any equity funds SCO raises during the suit, and 20% of any sale of the company, which is widely suspected to be SCO's sole motive in suing IBM and bedeviling the Linux community.

The Wall Street Journal, which read the SEC filing that SCO made the middle of last month mentioning these arrangements, had some fun and calculated that if SCO gets sold, it could be worth close to $50 million to Boies.

To come to that figure, it used SCO's $247 million market cap the other day as the base - and the $50 million would be without any premium.

The filing also says that Boies' law firm Boies Schiller & Flexner might be issued 400,000 shares of SCO stock, worth around $7 million, and get paid $1 million on top of that.

The firm is being partially paid on contingency, but exactly what that means wasn't explained.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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Most Recent Comments
Earl Darlington 11/11/03 06:26:48 PM EST

I wonder if there are enough users and developers around to by SCO and make it totally open source, inc. Unix and all of its software.

Bill Malkin 11/08/03 05:57:42 AM EST

This Fear, Uncertainty and Doubt will very soon be replaced by Free Unix on the Desktop. When the universities and technical colleges went Unix in the 80's the business world soon followed. Then it was Windows in the 90's and now it is Linux/Java. SCO has about as much chance of obtaining licence payments for Unix as big bad IBM did of its Micro Channel Architecture back in the early days of the PC - none. SCO and those like them should study their history, just as George W Bush should have read up on the Vietnam War. Round and round we go.

Arthur Guy 11/08/03 02:10:32 AM EST

It is time for ALL writers of LINUX code to contact the SEC
demanding that the code contributed freely to LINUX is the
property of the code writer and is not to be included in
ANY comercial product. So, code contributers, you have a duty to perform. What better way to short circuit SCO.

Mark 11/07/03 11:48:44 PM EST

It seems that SCO's lawyer knows how to make the outrageous claims game work on the goverment. I wonder why the DOJ lets SCO get away with outrageous claims without presenting evidence. I assume the Attorneys are the ultimate winners in this battle. In the unlikely event that SCO prevails, they will loose. $$$

Edward Gore 11/07/03 11:15:19 PM EST

You know, one of the things Martha Stewart is accused of by prosecutors of illegally doing is manipulating the value of her company's stock by falsely (at least in the prosecutors' minds) stating publicly that she is innocent of the insider trading charges. Given that state of affairs, why aren't the SEC and DOJ investigating SCO's CEO and others involved for what my be far more aggregious violations including false public statements regarding Linux code that have done wonders for SCO's stock value?

Bruce Hogman 11/07/03 08:32:10 PM EST

Magicians use flashy distraction to keep you from seeing the action that is the real "magic".
This is similar smoke and mirrors.

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