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Microsoft *Was* Matchmaker Between BayStar & SCO

Microsoft *Was* Matchmaker Between BayStar & SCO

  • Read Bruce Perens on SCO's "Tapestry of Lies"

    BusinessWeek is today confirming the Net rumors that have been circulating alleging that Microsoft helped finance a small Utah software company's three lawsuits - against IBM and two corporations that use Linux, AutoZone and Daimler-Chrysler.

    According to the report, written by BWOnline's Jim Kerstetter:

    Lawrence Goldfarb, managing partner of BayStar, says that senior executives at the software giant had telephoned him about two months before the investment. Would he be interested in investing in SCO, they asked? Goldfarb wouldn't identify the executives, but says neither Chairman William Gates nor CEO Steve Ballmer were among them. He says Microsoft didn't put any money into BayStar or the SCO investment. A Microsoft spokesman says that the company has no "direct or indirect" financial relations with BayStar, but declined to comment when asked whether execs called BayStar to suggest investing in SCO.

    "Goldfarb's latest revelations don't provide a smoking gun," Kerstetter writes, "but they will undoubtedly add more grist for the suspicions of Linux enthusiasts who believe Microsoft is pulling out the stops to curb adoption of their beloved software."

    SCO Group stock, which started the week at just under $11, lost 10% of its value on Tuesday and another 7% yesterday, when it closed at $9.51.

  • More Stories By Linux News Desk

    SYS-CON's Linux News Desk gathers stories, analysis, and information from around the Linux world and synthesizes them into an easy to digest format for IT/IS managers and other business decision-makers.

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    Most Recent Comments
    Societal Tool Abuse Report #1238 03/11/04 05:38:13 PM EST

    You said it Milo,
    Hey, I heard that SCO gets two weeks to peruse the AIX code of IBM's or is it Novell's. Who's to say they don't photocopy all the code and then send it over to MS. Hell, who needs corporate espionage anymore, just pay a lawyer to subpeona someone's source code, and be like hey yea, my mistake. See ya later. And zip off with a zip diskette, No?!!!! Gives societal tool a new meaning
    This whole legislative battle is a joke. Why exactly did they drag out the proceedings after taking note the copyrights aren't interpreted as SCO feigned to believe? Well, for starters, they can start looking at anybody's source code in the immediate vicinity of their market topography. They've pratically got Carte Blanche~ to anybody's source code with whom they can reach. The motives are even more convoluted because they're in bed with microsoft. If you don't believe me, look at MS's new plans to come out with blade servers. What better way to start an enterprise if you can recycle someone's code to fit your design of optimization and compatability.
    Here, I'll spell it out.
    Microsoft is ripping off the AIX code
    SCO is a tool of Microsoft doing dirty work
    Really I'm making this up, have you ever watched Pelican Brief?, something just stinks about this, and SCO COULD NOT HAVE POSSIBLY HAVE FELT THEY COULD WIN THE LINUX SUIT BASED ON COPYRIGHT arguements.
    The greatest trick the devil ever did was convince the world he didn't exist

    Milo 03/11/04 05:17:07 PM EST

    But we knew already Microsoft funded somebody that gave millions to microsoft, Anyway, you suck

    Smithy 03/11/04 02:41:42 PM EST

    Too bad Microsoft did not put some money into Baystar so they could invest that money in SCO.
    What Microsoft should do is put in HUGE amounts of cash in SCO, so they can have a a fair chance of defending themselves from the intellectual property thieves, bullies and terrorists at IBM and the psychotic Linux community.
    It is perfectly LEGAL for Microsoft to invest their shareholders money in any company that is going to help Microsoft take down a bunch of rabid Microsoft hating fanatics of the Linux community.
    Best use of shareholders money I can think of (and I AM a Microsoft shareholder :) )
    I am 100% for anything that SMASHES the evil Linux psychopaths!
    As for Baystar, their investment in SCO has more than trippled already! And thats just for starters.
    An astute move if I ever saw one.

    SCOXwatcher 03/11/04 01:41:18 PM EST

    No sophisticated investor dumps
    $50M into a small cap company like SCOX without some guarantees or other
    opportunities to offset the risk - they aren't called "hedge funds" for nothing.

    youngsd 03/11/04 01:35:30 PM EST

    If you actually read the PDF, you will see that you are jumping to conclusions. The chart showing Vulcan Ventures (and Microsoft, for that matter) is a chart of data from PlacementTracker showing the overall number of PIPE deals. The vast majority of which have nothing to do with Baystar. This paper was Baystar's way of convincing people that PIPE transactions are a good thing.

    None of which is to say that Vulcan and/or Microsoft didn't invest through Baystar -- just that this PDF says nothing about it.

    PH - Buyout 03/11/04 01:24:04 PM EST

    I clearly reject the first analyse on the buyout.
    SCO has indicated in the past that it was HIGHLY interested in a buyout.

    The reason IBM didnt buyout them when the stock was still under 2$ may have been that they feared SCO would just use it for publicity.
    But it's far more likely that they feared that if they payed SCO (by buying them), any company in financial difficulties would just sue them, hoping to be bougth.
    Instead, they choose to state an example on SCO : "Mess with us and we crush you so hard that you'll never get back up."

    Oh, and to the highschool analogy : IBM is not our "friend" and neither a "wise older" kid. It's on our side because we are usefull to them. And because they learned the hard way that a reputation as the "evil empire" comes back to haunt you one day (a lesson Microsoft has still to learn). Remember, IBM invented the FUD tactics we now hate Microsoft for.
    IBM is one of the biggest companies, they choose to support Linux because it fits their needs. This is nice, because they make a great ally and a fearsome ennemy. But they aren't a "friend". They might suddenly turn against us if it suites them. That's unlikely to happen anytime soon, but let's not be lulled into a false sense of security and "friendship".

    That being said, I still fully support their attempt to crush SCO. GO, IBM!

    Goombah 03/11/04 01:06:22 PM EST

    Here is a link to the PDF file from Baystar's own website. On page 3 of this there is a chart showing the top ten investors in Baystar. Number one on this chart is Vulcan Ventures which has 1.8 billion dollars invested in Baystar. Microsoft cofounder Paul Allen is one of the largest investors in BayStar Capital. On that same chart which is dated 2002, it also lists Microsoft as the 9th largest investor in BayStar. So paul allen is the number one investor in baystar (1.8 billion) and Microsoft has 0.6 billion investment in BayStar.

    GreenCrackBaby 03/11/04 12:01:14 PM EST

    >Lawrence Goldfarb, managing partner of BayStar,
    >says that senior executives at the software giant
    >had telephoned him about two months before the investment.
    >Would he be interested in investing in SCO, they asked?
    >Goldfarb wouldn't identify the executives, but says
    >neither Chairman William Gates nor CEO Steve Ballmer were
    >among them. He says Microsoft didn't put any money into
    >BayStar or the SCO investment. A Microsoft spokesman says
    >that the company has no "direct or indirect" financial
    >relations with BayStar, but declined to comment when asked
    >whether execs called BayStar to suggest investing in SCO.

    Help me understand this....

    You manage a fund that has $400 million available for investment. Microsoft does not put any money in your fund. Senior executives from Microsoft call you up and say "Please put $50 million into this company called SCO."

    I'm sorry, but why did the fund's managers do what they did? It doesn't add up. You do not just invest 1/8 of your available capital because some guy calls you up and says, "hey, please do this."

    Ouch! 03/11/04 11:53:48 AM EST

    If BayStar bought $50M of SCOX stock at $16/share, then they can't be very happy campers today at just $9.75

    DaveAtFraud 03/11/04 11:47:30 AM EST

    It's actions like BayStar's that have me wondering if there is money to be made as a freelance technical due diligence evaluator. I'll leave the FUD and marketing evaluations to the people who can read the tea leaves, but there has to be a way to make an honest buck telling people, "Don't buy the bridge."

    wing03 03/11/04 11:46:07 AM EST

    As mainstream as Linux has become, I still get the feeling it's an extension of the same old stratification of the regular and popular kids vs. the nerds, geeks and marginalized in school.

    Geeks invent something (Linux) that benefits the rest of the world. Some of the popular kids shake down geeks for their homework (SCO's apparent claims of ownership of Linux). One or two older wiser kids step in to defend the victim. (IBM/RH) The regular kids take the popular side and throw their support at the popular kids (Baystar, et al.) because they think they're right and can't relate to the subculture of nerd and geekdom. (GPL)

    Either that or SCO does actually have a case...

    Smoondog 03/11/04 11:45:08 AM EST

    While SCO has been nothing but inept in their limited disclosures and have taken the (very) low road in pursuing this, it is still very possible that the lawsuit with IBM may have merit. If it does, this could yet prove to be a very nice investment by BayStar. Talk of a pump and dump scheme is extremely unlikely, IMO, and very hard to prove without a smoking gun.

    GrassyKnowl 03/11/04 11:42:14 AM EST

    BayStar wasted their $50M. If you are an analyst working for BayStar, I have a bridge that I want to sell you.

    Tackhead 03/11/04 11:41:08 AM EST

    I assure you, if IBM were to capitulate and offer SCO the buyout, SCO would take it, because a buyout is what they've wanted all along.

    SCOBuyoutByIBM 03/11/04 11:39:33 AM EST

    Why doesn't IBM offer SCO a buyout, peple ask? Trouble is SCO would go one of three ways:

    1. they'd accept
    2. they'd (hah) politely decline
    3. they'd decline, then tell the media that IBM has no faith in their case due to the attempted buyout, and just whore up more media time

    SCO is pre-destined to choose 3.

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