SCO - What have WE Forgotten? 738
"Over the last eight months I have read countless posts on Slashdot regarding SCO and most if not all of the posts view the scene with rose-tinted spectacles. Promises are made that SCO will be buried and that McBride will find himself in prison, yet they are still there and McBride is still in charge. The men and women who play the stock market on a regular basis are no fools and something unknown to Slashdot readers made the SCO stock price rise by 2.4%, on December 26th, over half a days trading. If someone buys a stock they expect the price to rise, so what have WE forgotten that could be good news for SCO investors? The principle of 'many eyes' has been used by the Open Source movement before. Thousands of people examine source code, submit patches, and ensure that we give the best software we can to the community at large. Bugs are announced and fixed within hours and all of us know that this methodology provides a better solution than that offered by closed source products. We now need to apply the same methodology to the SCO problem, all of us need to consider what we know about this sorry affair and how we can legally contribute to the downfall of the SCO Group.
SCO have been ordered to produce their evidence against IBM by midnight on January 11th, 2004. This gives us [five days] to make sure that when the IBM lawyer marches into court he has a spring in his step, knowing that he has every Linux user on the planet behind him. THEN we can talk about SCO being buried, but not before.
Thank you for your time and a Happy New Year."
This is nothing new (Score:4, Insightful)
Trouble is, you can also find 100 investments that looked just like the great bargain-basement opportunities, but went from low-valued to zero-valued during the same year. Nobody knows for sure which ones are which until after the fact. Some people are better at guessing than others; those people go on to be successful mutual fund managers, but even the successful ones get it wrong a lot of the time. They keep making money because they have their funds spread out over a lot of stocks, not because they have crystal balls in their closets.
Here's an interesting fact: Very few stock funds, even the successful ones, outperform market indexes over the long term. Lots of high-profile funds do really well for a year or five but then have a lousy year or two and lose all their gains relative to the market as a whole.
If you want to build wealth trading stock in public companies, history says the most successful strategy is to buy a wide, diverse portfolio. Keep buying into it over time, whether the market is up or down ("dollar cost averaging.") Then ignore the people who happen to get lucky on a particular stock pick -- because you know if you try to do that, you're much more likely to end up broke than rich.
Skeletons in the closet (Score:5, Insightful)
The way I see it is... (Score:4, Insightful)
you forgot to read groklaw (Score:1, Insightful)
Invalid Assumption (Score:5, Insightful)
The fact that SCO is listing higher is an indictment on the mentality of investors not a reflection of the soundness of their legal case.
POV (Score:5, Insightful)
It doesn't mean anybody has 'missed' anything, just that the people that invest in SCO are not doing so based on the technical or legal merits of its lawsuit.
Re:SCO (Score:3, Insightful)
Too true! Look what it did for Enron...
Oops
Stock investors smart? (Score:4, Insightful)
Hell, do you know anyone who wouldn't take 1000 to 1 odds when the American legal system is involved?
A key thing to remember: (Score:5, Insightful)
We have forgotten... (Score:3, Insightful)
We have forgotten not to act like those who we dislike.
We have forgotten to take the high road.
And this includes letters and statement from leaders in the community, as much as ACs on Slashdot.
Re:This is nothing new (Score:3, Insightful)
I actually had the buy screen up with my cursor on the buy button and had second thoughts at the last second...
If by some weird miracle I had actually held the stock that long.. I wouldn't be posting in a slashdot forum from work today.
Two factors (Score:4, Insightful)
1) Legal wrangling always has some uncertainty involved. If SCO has a 10% chance of winning the case, they get $1 billion. A 2 Billion billion dollar settlment times .1 is 200 Million, which is around
their market cap.
2) Let say that investors fall into 2 categories, people of the opinion that SCO will win, and people who are of the opinion that SCO will lose.
The first set buy SCO stock, thinking their investment will pay of 10x. If they're wrong, they'll lose the investment. The second class of investors have to short sell the stock, especially since options don't seem to be available.
The second class of investors have a much worse situation. They can double their money, but if SCO wins, they could lose a great deal of money, in theory there's no limit. What's worse is that if there's a legal victory, the stock is likely to spike, making the possibility of cutting your losses before they get too bad difficult. The current trend is also discouraging. The stock has been slowly gaining value over the months. This would mean a short seller will have to keep pumping money into their initial investment, waiting for the moment when SCO's stock crashes.
If you fall into the second camp, I think the risk is just to vast and the payout too far away for people to jump on.
OTOH, buying puts looks like a much better deal, but they don't seem to be availible.
What do you mean they aren't fools? (Score:3, Insightful)
Lots of people buying stocks are fools. Look at how many of them lost money during the "dot com boom".
Greed (Score:2, Insightful)
The main problem in the next year is the environment that the SCO/IBM case will play out in. If you're rooting for SCO, vote for Bush.
You have forgotten to short SCO (Score:2, Insightful)
Short their stock.
The truth has a way of shaking out, and when the current SCO hype is undone and the price plumets to a fair value, you will cover your short and buy a speedboat or two (I like Donzi).
I do not often short stocks, prefering to avoid the risk, but in this case...
Invest at your own risk.
Re:This is nothing new (Score:5, Insightful)
For all you Canadians out there... (Score:5, Insightful)
http://geology.about.com/cs/mineralogy/a/aa0420
You could have made a mint on it if you bought in at the right time. The stock went into the $200 plus range, then became worthless over a period of a week.
History repeats itself.
Re:Skeletons in the closet (Score:5, Insightful)
"Many eyes" (Score:3, Insightful)
The parent invokes the "many eyes" image as if that will necessarily mean SCO's downfall. But the parent implicitly acknowledges is that there are ALSO "many eyes" - in the market - actually, make that "many many eyes" that are scrutinizing the case and that seem to be voting that they believe there IS merit to the case.
There's several possibilities here, one is that the smart money's just playing up the price until every-day-joe jumps in and buys, at which point the smart money will dump it. Given the length and depth of SCO's rally, I think this seems unlikely (but I've been wrong many times before).
Another possibility is that maybe - just maybe - the market knows more than Slashdot zealots know - or will let themselves admit. Maybe a lot more companies than we know are paying SCO's licensing fees. IANAL, but maybe their case has much more merit than you would guess from reading
A third possibility is that SCO's price rise is just an unhappy coincidence completely unrelated to the legal action. Who knows, maybe the case will fall flat on its face and SCO will go in the crapper as so often predicted here. The market has been wrong many times before.
But one thing is clear, you can't get a good sense of what is going on by reading the opinions of chauvinists - like, say, here or on any of the forums populated by people who've gotten rich or hope to get rich holding SCO.
Re:Invalid Assumption (Score:5, Insightful)
Investors don't buy stock in companies like SCO. Speculators do. SCO stock isn't an investment, it's a wager.
Think Pump and Squeeze (Score:5, Insightful)
They can also use the paper value of the stock as collateral to buy things. This seemed to work best by their buying Vultus (another Canopy Group company). In this way, they can allow the Canopy Group to show real profits with real money even though its really the Canopy Group shuffling things around. It would be risky for them to acquire outside companies this way since it would expose their scheme to more parties who either want their cut or sue them as well.
You miss the point. (Score:5, Insightful)
I think the core of the question is not stock value, but is there something about the overall situation that we are missing. Is there something that we are overlooking that might lead to a "gotcha" by McBride and crew that we can prevent now.
That is a question well worth pondering.
did you even read the article (Score:1, Insightful)
What you have forgotten... (Score:1, Insightful)
Re:We have forgotten (Score:0, Insightful)
In that case, I think Howard Dean should be arrested because he could be shoplifting gay pr0n. That would explain a lot of his crazy behavior.
Re:Skeletons in the closet (Score:3, Insightful)
If the issue is that proprietary closed-source code was placed by an unscrupulous developer into an open-source product, then the openness of open source won't help you.
There are still skeletons in your closet, and for the casual reader of open-source code there's no way to distinguish the initially proprietary code from totally new code written by this aforementioned unscrupulous developer.
We forget... (Score:5, Insightful)
JFS was originally written for AIX, then rewritten from scratch for OS/2, and then ported to both AIX and Linux. So it's the OS/2 version we have in Linux now. I can't see how SCO is going to pull this, and I don't think they know themselves. If the court decides SCO owns the rights to JFS, it would be like IBM worked for SCO under a slave contract (do slaves have contracts?). Everything that touches Unix would be the property of SCO. They would never sell another license if that happened -- if the GPL is viral, SCO's license would be alienesque (like Ridley Scott's Alien, that is).
So SCO is threatening everyone else too. They want $3.50. I mean $699. If anything that has touched Unix in some way is their code, the fact that IBM has dumped some such code into Linux would make Linux their code too. So the case is absurd. Or it seems to be. It looks like Nigerian scam-spam: It's far too good to be true (for SCO's investors: if they win, they own the world), and it probably isn't. But with the media coverage SCO gets, at least some people will be stupid enough to buy stock.
In the meantime, maybe SCO actually has a few extra cards up their asses^H^H^H^H^Hsleaves, and maybe they actually have a case. But it's not the same case they play through the media.
Re:SCO (Score:2, Insightful)
Re:This is nothing new (Score:5, Insightful)
(You don't have make it your sole purpose in life, but could you at least sacrifice a rubber chicken upon the altar of literacy?)
Spelling flame aside, I pay frequent homage and occasional tribute to Mammon. He's a lesser god, but his temple is always a hive of excitement. And it's from that perspective that I'm speaking.
I don't regret not buying SCO. The investment premise is that there's a one-in-ten chance that they'll be able to slip this scam past a judge, and sock IBM to the tune of ONE... BILLION... DOLLARS. (Or that IBM will simply buy the entire company for $500M to prevent the scam from working.)
That's it. If you buy SCOX, you're buying a lottery ticket. A hedge against fraud and stupidity, as it were -- if these dirtballs manage to make their scam work, it's the end of Linux and a very bad omen for the rest of the technology industry. If you're heavily invested in RHAT and NOVL, for instance, you might want to own some SCOX on the off chance that the judge falls for the scam and lets Darl wipe Linux off the face of the earth.
Had SCOX been optionable, I'd have bought put options, several months ago, and every one of those options would have expired worthless, because the scam has lasted a lot longer than I thought it would. But of course, going net short SCOX is just as much a speculation on a judge's ruling as going long SCOX.
The reason I didn't buy or attempt to short SCOX has nothing to do with a hedge against stupidity or speculating that the scam will eventually be unwound and Darl will finally get his much-deserved perp walk.
It's because I don't play the lottery. Either way. There are good and bad companies out there that are undervalued. Buy those. There are good and crappy companies out there that are wildly overvalued. Don't buy those.
SCOX is a crappy company for which there's no way to know whether it's undervalued or overvalued. The risk of going long or short do not justify the rewards.
My position on the behavior of The SCO Group is that they're a bunch of lying fuckweasels who deserve nothing less than a forcible sodomization with a diamond-grit-encrusted Louisville Slugger wielded by SEC Chairman Bill Donaldson himself. But so long as the stock's valuation is dependent upon the presence or absence of Clue Receptors in the neural pathways of a single human being, I have (and will take) no position in SCOX stock.
Re:SCO (Score:5, Insightful)
SCO is a catch phrase outside of tech circles. I literally had to tackle my mother to prevent her from investing. She argued about them being in the press and once the lawsuit was settled the advice she was getting was they'd triple in value. After shedding some light on the grounds of the lawsuit and how I felt about the facts of the case she understood why I freaked out. But then again, just because thats how I feel doesn't mean the judge/jury won't find in their behalf.
I'm not claiming to have any more information then any other casual observer to all this, but to answer the question of why is the stock price rising?, in my mother's case, its because some dumbass calling himself a stock trader said there was a buzz and is forcasting the stock going through the roof after they win some lawsuit they're part of.
Expected value (Score:5, Insightful)
Let's take a different approach and assume that if SCO wins its case, everybody will stop using Linux. At that point, SCO will be worth its cash on hand. Ignoring whatever it needs to shell out to lawyers and Satan, $3B in cash would give a $3B book value and a $3B market cap since they would have no revenue. In that case, their current market cap is 1/12 of that, so the market is giving them a 1/12 chance of winning. That's a lot better than the 0.005 probability, but I still feel much better being on the 11/12 side.
Disclaimer: this are back-of-the envelope calculations. Please do your own math before drawing any conclusions and please share the results here.
Truth is a slippery fish (Score:3, Insightful)
Clearly investors are not blind to SCO's situation. They are a sinking ship and are trying to rescue themselves anyway they can. Indeed, I believe from the beginning, their strategy was to try and convince IBM that buying SCO was the cheapest solution. I say this because these type of investors are not interested in a long drawn out court battle. It will take ten years to sort all this out, which is far to long for the typical large investor.
Furthermore, evidence to the buy me so I do not hurt you tactic can be found in overtures that have made towards Goggle. Simply put, Goggle is looking at $10+ billion dollar IPO which could be severely harmed by a lingering intellectual property lawsuit from SCO. So what does SCO hope Google will do? Why buy them with some pre-IPO shares and end all the legal problems. Guess who makes out incredibly well the day of the IPO by selling their shares?
Other than picking a fight with IBM, they have done nothing but post press release and send letters to create FUD in the market. So what to do? Get back to work, ignore SCO. Do what go us here in the first place -- write code, solve problems, use Linux, and plan world domination
Re:The core of the lawsuit (Score:3, Insightful)
But if you follow what's going on (I read GROKLAW regularly) you see that SCO is just plain in flail mode. IBM's version of the SysV contract has an appendix that says "but anything IBM invents, IBM still owns." Whoops, there goes SCO's whole claim to JFS and just about everything else.
Meanwhile, SCO has tried to admit very vague claims, and the judge didn't permit it. So SCO has to produce specific claims. SCO also tried to demand a huge pile of stuff from IBM, and the judge didn't go for that, so SCO can't go fishing, looking for something of which to accuse IBM.
This is IBM. They are careful with contract stuff and IP stuff. SCO might manage to find some little point that IBM didn't handle 100% perfectly, but IBM will absolutely destroy SCO's main claims, and IBM's counter-suit against SCO will be enough to destroy SCO itself.
SCO has done a bad enough job in the court so far that it may not take 5 to 10 years before this gets decided in IBM's favor. The biggest issues might get thrown out completely before the case even goes to court! If that happens, the SCO stock price will plummet.
steveha
Re:SCO (Score:2, Insightful)
They eventually collapsed, but they were walking dead long before that. Because rich friends have other rich friends in powerful places. All of the executives who pump-and-dumped the company, they should be flat out tortured to death. One might well be able to link their manipulation of energy prices in california to at least one death. But honestly, the economic toll was much greater than any life.
Where the rubber hits the road, the economy runs on trust, trust between people than things are reliable as they are said to be, trust that they will perform as expected. When people betray that trust, a betrayal which hurts everyone everywhere. It does diminish us as a species. It makes us all weaker. Those betrayals should be answered with punishments that are cruel, unusual, and inhumane. The sins of the fathers should be visited upon his sons and daughters. Is it their fault, no, of course not. But no success, no joy, nothing to love should remain as proof of the life of a person who so wronged everyone.
But in that same vein, we value things like integrity, in words only. We don't punish rich people. Including Martha, she's not going to be swinging a 20 lb sledge making the most darling gravel the prison system has ever seen. McBride isn't going to jail. He'll just be an executive consultant for other companies. It's no seat on the board. But like OJ's in ability to get the best tee times, it is in its own way a prison without bars.
5-10 years? (Score:3, Insightful)
The BS from SCO could certainly last a long time, but how long can they afford the lawyers required to face IBM-et-al before they end up with moths in their pockets?
Re:SCO (Score:4, Insightful)
These are the same dimbulbs who gave us the tulip mania a century ago ($3000.00 for one bulb?!?)
Most investors ARE stupid. They follow the herd. They get less than the average return, because, when those margin calls come in, they HAVE to sell, unlike the large institutional investor who can ride out the dips. On average, the little guy loses, and the big guy gains. So, what else is new?
As to the original question - What have we missed? NOTHING. We're talking about a company where their legal counsel doesn't seem to be able to distinguish between patent law and copyright (should make him feel at home here on /. :-), and doesn't know that your statutory right to make a backup copy of ANY software is a minimal right that doesn't include greater rights (a la the GPL and multiple copies). The only thing we're missing is a poop-and-scoop to clean up after their shit.
The question was stupid. Okay, I'm done ranting.
Re:did you even read the article (Score:5, Insightful)
Re:We have forgotten... (Score:3, Insightful)
I don't know about you, but I haven't forgotten to be humble - I just don't want to be.
We have forgotten not to act like those who we dislike.
Bullshit. When was the last time that anyone in the Linux community held press conferences where they made bullshit claims? Or made false claims in open court ("Within two days - a week at most - we will be filing lawsuits against Linux users" - Kevin McBride, Dec 5, 2003.)
We have forgotten to take the high road.
No, actually, that's SCO.
Re:We have forgotten (Score:3, Insightful)
But unless you have some way to actually back up what you are saying.. it's all just absolute fantasy.
If he were doing that, especially in something this public, he would be risking personal financial ruin and prison time... despite what you all may think, do you think Darl is a stupid retard who doesn't know how things work?
Re:This is nothing new (Score:5, Insightful)
Recent news tells us that all of these people can and are wrong sometimes. The fines imposed on the likes of Merrill Lynch and JP Morgan should tell use wonders.
Personally, I'm waiting to see if SCO can produce anything substantial in court, which is where they will live and die with this. Here's my prediction: If SCO cannot produce any substantial evidence to their claims, the price will drop to the sub-$.25 level faster than Bill Clinton's trousers with an intern.
Re:did you even read the article (Score:4, Insightful)
My opinion: If that's the case, the author is an idiot. This whole situation shows the signs of a textbook pump-and-dump manuever. The fact that Linux was chosen as a bogus legal target is fairly irrelevant other than the fact that MS may have been involved with encouraging that decision. IBM is far larger and more powerful than both SCO and Microsoft put together. If they thought they stood a chance of losing, they would have just bought SCO outright.
My prediction: In the end, this whole thing will backfire on the evil men who started this mess. Linux will be championed not only as a victor, but as an unstoppable force. SCO will wither and die for lack of a workable business model. MS will continue to lose the PR war against OSS.
Sidenote: It is not ethical to invest in an unethical company just because their sleazy tactics are causing a temporary stock rise.
More like 'What have we learned?' (Score:3, Insightful)
Vote Krumwiede in 2012!
Re:Invalid Assumption (Score:3, Insightful)
SCO at some price is a reasonable investment. It is akin to an option: you have paid some price for a possible upside, while your downside is limited. Given the complete unpredictability of the court system, especially if a jury is involved, you have to assign the scenario of an SCO win some weight. What this weight *is* is better addressed by a trial lawyer than by software engineers or legal theorists.
I can think of trials where the wrong side won, can't you?
Re:Stock investors smart? (Score:2, Insightful)
Speculation is very risky; investing is somewhat risky.
The difference between the two is well described here [investorhome.com].
In short, investors are interested in a company's intrinsic value (as reflected in its business fundamentals); speculators are interested in how other people will value a company (as reflected in the stock price).
Someone buying SCOX is either a speculator or a (most likely) deluded investor.
Re:darl for president: (Score:0, Insightful)
Load of rubbish (Score:2, Insightful)
Re:Think Pump and Squeeze (Score:3, Insightful)
I have watched SCOX stock price for a while and have been mystified by the way it succumbs to reality briefly and then magically defies gravity, especially surprising at times when there are no new events. In the scenario you describe the people with stock sales slated in the future have a strong motive for spending money now to keep that stock price high and level. That explains a LOT.
And if they really believed in the company's future as master of all *nix, would they be selling off that stock at a mere $17?
The Bigger Idiot Theory (Score:3, Insightful)
It's entirely possible that many of these traders don't know or care if the SCO arguments are valid. They could well be banking on finding the bigger idiot before the day of reckoning.
We forgot to underestimate people. (Score:5, Insightful)
What WE forgot was that just because something has no technical merits doesn't mean it can't have some short-term financial merits. The same thing was true of the dot com bubble. Ultimately most of the businesses being developped were nothing stable, and couldn't survive long or turn a profit. That is irrelevant, however, when it comes to 'herd mentality' - because when you get enough people together they are governed by their lowest common faculties - which normally means desire and fear. Even investors who knew that the dot com thing was an artificial bubble would jump on the bandwagon, because if you could get out soon enough, you could really clean up nicely. Likewise, you don't have to believe that SCO has any chance in hell of winning, you just have to gamble on the greed of many other people and hope that it might cause enough noise to get you rich before it bursts.
Re:SCO (Score:5, Insightful)
Not so. Most people who play the lottery are stupid, too. But no amount of smarts is going to help you make a "killing" playing the lottery.
The stock market is similar to the lottery, except that the expected payback is usually somewhat above 1.0, instead of the 0.5 or so payback that most state lotteries yield. (I assume everyone here realizes that the an almost fraudulently advertised $100M jackpot figure does not represent acutal present value.)
Sure, some people do much better than average in the stock market, just as some people get lucky and win the lottery. However, much of that is dumb luck, and most of the rest is due to having inside connections and privileged information you can't access as a member of the general public.
Members of the public don't have enough information to reliably pick stocks, just as they can't predict which pingpong balls will pop out of the lotto machine. Thus, your best bet as an indivdual is to treat the stock market the way the state treats its lottery: diversify enough so that the individual gambles are irrelevant and depend on the overal odds to bring you revenue.
Re:did you even read the article (Score:4, Insightful)
Investors have a tendancy to fall for hype.
What have we forgotten? How about the fact that SCO releasing EVERYTHING they say on prnewswire where the investors get to see them.
Re:Skeletons in the closet (Score:5, Insightful)
But it's not the case that a single skeleton would destroy Linux. Judges don't say "wow, in this code base of 17 million lines there are 150 lines that belong to SCOX... SCOX now owns all of Linux". It doesn't work like that. The judge will do his or her best to award fair compensation but revoking the rights of 1000s of Linux developers isn't fair.
SCOX wants an outcome that isn't fair. That's the #1 piece of evidence that what they want is not going to happen. Judges don't like unfair! A contract can even be revoked if the judge thinks the outcome is unfair. There are special legal words like "equitable" that come into play and I admit I don't understand the finer details. But I'm certain that a fair outcome won't involve the judge revoking the rights of 1000s of Linux developers just to uphold the rights of 1 little Utah company.
If there is a skeleton and if it is significant and if the code isn't already in the public domain and if SCOX can prove they have clean hands and if there is no way to remove the code without destroying Linux... only then should we worry. Right now, we haven't even gotten past the first if statement. But that's what SCOX has to prove by Jan 11 (court order, no more delays) and we'll all find out about it roughly 2 weeks after that.
Re:SCO (Score:5, Insightful)
Trading volume on SCOX is THIN. about 1/20th of what IBM trades, not even 1% of Nortel's daily volume... hell, VA Linux (or whatever it's called now) trades more than 4x as much stock.
So no, there's is almost no mainstream press about SCO, we sit here with CNBC on all day and I don't think I've seen SCO mentioned once since this whole thing started. I've tried to point it out to traders around me, and they don't really care about the company one way or the other. Heck, the Reuters newsfeed on SCO barely has anything other than reports of large individual trades or press releases. But from Slashdot, you'd think that they've got major front-page headlines on 5 major newspapers, and an expose running on CNN 3 times a week.
So what you're getting is a small number of small-cap technology traders who have seen that this stock has skyrocketed in the past year, and they keep trading it in relatively small amounts. Speculative investors are seeing this as a company that's going up in value, and they want to get in while they can. When will the bubble collapse? When they lose in court, which could take years still, through stalling, appeals, etc.. Throw on top of that the very real possibility that they could actually WIN something if they get the right judge and convincing enough "experts" on their side. Even if they DO lose, since so few people outside of the tech circle care, the price could remain inflated for some time with the right amount of spin on the part of SCO, and investors trying to salvage their investment.
Just remember that just because everyone on Slashdot knows about it and knows it's bullshit doesn't mean that the rest of the world has a clue.
Re:This is nothing new (Score:3, Insightful)
> premise is that there's a one-in-ten chance that
> they'll be able to slip this scam past a judge,
> and sock IBM to the tune of ONE... BILLION...
> DOLLARS.
When did they drop their claim from three billion?
>
> the scam and lets Darl wipe Linux off the face
> of the earth.
Even if SCO wins on all counts and IBM loses all appeals, IBM will just _buy_ them. They'll only be worth three billion. IBM has more cash on hand than that.
Re:IBM is bigger than Microsoft (Score:3, Insightful)
This only tells you what people are willing to pay for a stock. Enron, the day before their collapse seemed invincible. (I know, the collapse was somewhat gradual, but non-the-less.)
This was touched on by people higher in the story, but in many cases, stock prices rise, not because the company has and brings value, but simply because someone else is willing to buy the stock for more. This is how ponzi schemes work. They "work" great as long as things are going up. When the weight of the fraud crashes, though, it's murder.
IMHO, IBM has much more intrinsic value and brings said value to the shareholders and company. MS, on the other hand, has loads of people who are willing to pay inflated prices for the stock.
In short, Market Caps may be an easy metric to use, but not very valueable.
Cheers,
Greg
Re:You miss the point. (Score:3, Insightful)
How many times has a sleazy DA, or some sleazy lawyer found a friendly judge and gotten a verdict so crazy it went against common sense even?
For me the Keith Henson trail comes to mind.
It's not what WE missed... (Score:2, Insightful)
I don't think it's what they know; Rather, it's what they don't: IMHO not many people who deal stock for a living actually read /., or other "grass-root" publications. They read "serious" magazines or web sites, and the kind of press SCO has been getting there is very encouraging...
SCOX is rising on a wave of disinformation, carried forth by people who don't have a clue not because they're stupid, but because SCO runs an extremely well-managed PR campaign.
Re:It's not what WE missed... (Score:4, Insightful)
I work for an investment bank and IB analysts pull information from EVERY source. What technologists often miss, is that we look at it from a different perspective. Professionals don't care how cool a technology is or how miserable SCO's actions are, they care about the changes in future revenue this could cause, how far that revenue is in the future, the risk associated with achieving that financial goal and the different profit scenarios associated with each level of risk.
SCO might be a bubble, but with the attention it draws, it also has a very solid chance of not being a bubble. The larger investors will be watching this stock VERY closely and would dump it way before you have any idea that SCO is going down. One aspect in their favor for you to consider is that of all of the posts here I don't see anyone giving this argument any credit at all. That's the most dangerous sign I've seen yet and I hate SCO as much as anyone here, but I'm not blind either.
SCO could win this in several ways and no, it doesn't have to be inbred juries. The GPL has never been tested in court, I haven't seen anything indicating that this is 100% reliable. Losing that would be huge and the impact on the open source movement would be tremendous. SCO also might actually have a 'silver bullet' of stolen or misappropriated Unix code. There are good reasons why they wouldn't release this code. If they did, the Linux community would make sure that the offending code wasn't in the next kernal release (which would probably be all of a week in coming) and then SCO could only go after users for past use of their code. That wouldn't generate anywhere near the revenue that they will if they can catch the Linux community cold and then force you to pay them or abandon your IT infrastructure until a patch comes out. That's much more enforcable as well.
In fact, SCO's 'public letters' could all be a smoke and mirrors game, and the code they've released so far to endless ridicule here on
The author of this original thread had an excellent point - sure it's easy to dismiss them as non-technical people who read 'serious' magazines. But you're missing the point, you're talking about people who have made a LOT OF MONEY investing in companies, it's what they do. If SCO was just smoke and mirrors don't you think some analysts would be crying that? Surely at least one arbitrage firm would be setting up a short position (and yes you can do short positions while mitigating your upside risk). But I don't see any of that - before you accuse the 'other side' of reading misleading press check your own.
Now, you may be right, SCO might be full of it, but after seeing all the posts on this article and not seeing any actually talk about places where SCO might actually have a good point, I'm actually worried now that they might have a much stronger position than I had ever thought. Before this, I didn't really follow SCO, but now I'm very concerned.
The science behind finance and pricing and valuation at the large IB's is just as valid as any amount of technical knowledge you have, just in a different area. And I imagine people have been all over SCO's future and the potential embedded profit scenarios in their legal action and that's reflected in their current price. SCO isn't in the same situation as the internet bubbles, people have seen these types of lawsuits before, they know how to value them, this is not new. This concerns me.
I still can't bring myself to buy stock in SCO, but I'm very concerned know that they might actually have something.
Re:It's not what WE missed... (Score:5, Insightful)
That may or may not be so. Analysts also sometimes lie, as the New York Attorney General recently demonstrated in a successful court case. I won't speculate on whether it's more of a case of ignorance, lying, or a cynical evaluation of the ignorance of the market on the part of certain investors, that has been driving up the price in this case.
SCO might be a bubble, but with the attention it draws, it also has a very solid chance of not being a bubble.
Let's apply Occam's Razor here: I move that they are getting lots of attention because (a) they are sqwarking a lot; (b) they are scaring some Fortune 500 companies, at least temporarily until the CxOs talk to their legal advisors; (c) there is a lot of money and a catastophic harm to the Linux market puportedly at stake here, if you believe SCO.
Attention does not imply correctness. Popularity does not imply correctness.
The GPL has never been tested in court, I haven't seen anything indicating that this is 100% reliable.
Well, admittedly there is a flaky argument prevalent on Slashdot and Groklaw. The arguments runs that if the GPL were "invalidated" it would revert to "no rights to copy", which would kill SCO in punitive damages. Not necessarily. Another possibility is that the court might try to find the "nearest charitable purpose" that is similar to the spirit of the GPL but doesn't break the law.
So that counter-argument doesn't really work. But the problem with your argument is more fundamental. In order to talk about this sensibly we have to speculate on what precisely the judge might try to strike down. No-one, to my knowledge, has put forward a good argument for why any law or constitutional amendment would invalidate any aspect of the GPL - least of all SCO.
Granted, the least popular aspect of the GPL is the copyleft idea. But it is a completely logical fallacy to argue that because it is unpopular with some, then it is somehow legally dubious. Yes, it is perhaps the most likely aspect for SCO to attack. But without a visible chink in the armour, why should we worry?
I think the onus is on you to suggest an actual argument for why the GPL might fail in court.
There are good reasons why they wouldn't release this code. If they did, the Linux community would make sure that the offending code wasn't in the next kernal release (which would probably be all of a week in coming) and then SCO could only go after users for past use of their code. That wouldn't generate anywhere near the revenue that they will if they can catch the Linux community cold and then force you to pay them or abandon your IT infrastructure until a patch comes out. That's much more enforcable as well.
Note that SCO (both predecessors in interest, old SCO and Caldera) has contributed to Linux massively, and even sold it, and continued to offer it for months after evidence of infringement was allegedly discovered. So what we have here is a company spending years giving out its own product for free and misleadingly giving the impression - in a very clear license, the GPL! - that the product being given out is unencumbered in all relevant respects. Even if SCO could persuade a judge that the infringements were not noticed due to gross incompetence on SCO's part, any reasonable judge would give all parties a reasonable grace period to wait for the patch to come out and apply it.
And the law (and IBM's contract with SCO, incidentally) obliges SCO to reveal what code is infringing before it can claim damages. Damages incurred by users prior to that time are innocent infringements, and although they may be technically liable, would any judge in the land award SCO money based on its own failure to mitigate the alleged damages? No, it would not. There is no successful precedent that I have heard of for such abusive rent-seeking towards innocent third-
Re:This is nothing new (Score:1, Insightful)
Buying a company's stock doesn't actually give more money to that company, unless the stock is purchased directly from that copmpany (like in an IPO). Otherwise you're just giving money to the person you bought the stock from.
Re:It's not what WE missed... (Score:3, Insightful)
Investors and SCO's Plan (Score:1, Insightful)
However, it is quite possible that SCO does have a valid claim in the first dispute against IBM. As a community, we do not know the details of the contracts, and it is quite possible one of the contracts has an appropriate loophole. Legally, this claim should not effect anyone outside of SCO and IBM.
However, in reality, there is a painful problem. Since the two issues have been linked closely in the minds of the world, if SCO wins the IBM lawsuit, they will openly state "we were right," and demand royalties. Most people won't understand the difference between the two disputes, and will pay up. The GNU/Linux community will lose a lot of face, and SCO will generate a lot of licensing revenue.
It's certainly a gamble for SCO, but depending on the details of the IBM contract, the odds in the gamble might not be that bad.
At the same time, investors operate on the law of large numbers. If SCO has a 1% chance of being worth 3 billion, it will have a market value of about 30 million. Institutional investors keep large, diverse portfolios, so while each investment like this is a gamble, overall, you lose 99, win 1, and come out ahead. But if you have 500 investments, you're pretty much guaranteed to win a few.
Re:This is nothing new (Score:3, Insightful)
OK ... we are in fantasyland here (SCO has no credible case) but let's just follow up on the "what if". IF some even more than usually insane series of US court rulings found all of SCO's claims to be proven, SCO could end up worth more than Microsoft. The three billion from this license dispute would be chickenfeed compared to what they would hope to make from followup actions.
I doubt whether a realistic expectation that SCO could win enters into the calculations of those that have bought SCO stock. I think, initially, some thought IBM might buy SCO out just to avoid the aggravation this case is causing. Now, there is a combination of factors stopping the price from collapsing. Much of what was market float is now tied up by those who borrowed it to sell short. The short sellers are reluctant to cut their losses (after all, the price will drop eventually). Those who bought stock at something like current prices (hoping for buyout) probably feel that they can afford to hold for a while (because of the short squeeze) on the off chance that something good happens. Anyone for a game of high-low stud poker?
Have we been trolled? (Score:5, Insightful)
The first is that the GPL being tested in court doesn't do a darn thing for SCO. Either they lose (and probably go out of business), or they win and face massive lawsuits by Linux kernel developers over copyright infringement. Yes, without the permission from the GPL, it is SCO who is infringing on copyrights not only by IBM and Red Hat, but also Linus Torvalds and THOUSANDS of other contributors.
Secondly, analyists HAVE been saying that these lawsuits undermine SCO's former core competency as a software manufacturer.
Laura DiDio aside, I think analyst reaction to SCOG has NOT been as positive as you make it out to be. And Laura DiDio has claimed that the lack of indemnification is what holds Linux up in the enterprise while failing to mention that no other enterprise OS offers such indemnification. Interestingly Linux as offered by HP now does which should by that measure give them a strong advantage in the marketplace.
Third, SCO did not fare well in the last round of hearings. I have generally used pretrial hearings as a general test of how the judge views issues at hand, and the judge has not reacted well to what IBM has argued are sets of delaying tactics and discovery requests without specific allegations of wrongdoing (i.e. fishing for evidence). SCO will have had 7 months to prepare their response to the discovery request in January, and it will be interesting to see what they do or don't put forth.
Finally, the fact that SCOG was an active contributor and distributor (even after the lawsuit was filed!), they cannot argue that they inadvertantly distributed their trade secrets under the GPL. No one believes that.
SCO IS A BUBBLE. And the SEC is now investigating three banks in conjunction with their handling of Parmalat (including Deutchebank and Bank of America). SCO may be next.
(Sigh) For the tinfoil-hatted /.ers (Score:3, Insightful)
It's very simple, really: A lot of people think IBM will ultimately capitulate and buy SCOX out, win or lose. If that happens, then they get paid (i.e., their stock is bought out.) This kind of thing happens on Wall Street all the friggin time.
Re:It's not what WE missed... (Score:3, Insightful)
Ah, glad to hear that mindshare still equals profit in the pre-collapse hearts of some analyists.
Professionals don't care how cool a technology is or how miserable SCO's actions are, they care about the changes in future revenue this could cause, how far that revenue is in the future, the risk associated with achieving that financial goal and the different profit scenarios associated with each level of risk.
Right. Because if they win, they win big. But they also have no case. This isn't a come-from-behind christmas story kind of no case, this is the Quixotic kind of no-case. No matter how many times you stab the windmill with your spoon, nobody will think you have killed a dragon. 100 million times potential ROI times 0% chance of success is still a terrible gamble.
Losing the GPL means that nobody gets to use Linux, not otherwise. Even with a smoking gun, the code can be excised, leaving SCO without a recurring revenue source.
The larger investors will be watching this stock VERY closely and would dump it way before you have any idea that SCO is going down.
Umm... We already know SCO is going down.
One aspect in their favor for you to consider is that of all of the posts here I don't see anyone giving this argument any credit at all.
Could that be that perhaps that dragon really is a windmill?
That wouldn't generate anywhere near the revenue that they will if they can catch the Linux community cold and then force you to pay them or abandon your IT infrastructure until a patch comes out.
Or you could simply be in violation of copyright law until a patch comes out, and pay the penalty. Neither way does SCO get a recurring revenue source, or a product to sell. Or, for that matter, damages.
But you're missing the point, you're talking about people who have made a LOT OF MONEY investing in companies, it's what they do. If SCO was just smoke and mirrors don't you think some analysts would be crying that?
Ah, you must be referring to those analysts who have proven their abilities at about 2000, 2001. That ones that valued Yahoo as a "strong buy" when it bought Geocities for about as much as Chrysler bought Volkswagon? Or the ones that applauded when AOL swallowed Warner Brothers?
Get off your horse. Financial analysts have given us exactly zero reason to have faith in their abilities in the past five years... Why should we intrinsically assume they are right now, just because they are all shouting at the same fevered, silly pitch?
Re:It's not what WE missed... (Score:3, Insightful)
>Well, admittedly there is a flaky argument prevalent on Slashdot and Groklaw. The arguments runs that if the GPL were "invalidated" it would revert to "no rights to copy", which would kill SCO in punitive damages. Not necessarily. Another possibility is that the court might try to find the "nearest charitable purpose" that is similar to the spirit of the GPL but doesn't break the law.
>So that counter-argument doesn't really work. But the problem with your argument is more fundamental. In order to talk about this sensibly we have to speculate on what precisely the judge might try to strike down. No-one, to my knowledge, has put forward a good argument for why any law or constitutional amendment would invalidate any aspect of the GPL - least of all SCO.
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[Disclaimer: I am not a lawyer, this is not legal advice. It is, however, a logical arguement a reasonable person might find persuasive.]
Okay, I've seen that a lot. Yes, that's exactly what one lawyer thought of, but one problem is that that's what the courts do for wills and trusts. Why is that important?
The court with the "c'y pres" doctrine is disposing of other people's property because there is no one else to decide what to do with it. Obviously, since it cannot be used for what it was intended for, the court would rather not see it go to waste. Now then, how does this logic apply to the GPL? Well, part of the problem is that most of the copyright holders for Linux are alive and well, and thus able to make their own decisions about how to dispose of their own property.
So, while SCO might try this, they might have a hard time convincing a judge that their property should be given away to SCO, rather than disposed of according to the will of the copyright holders... One of the things courts are there to ensure is that people should not be deprived of their property without due process of law. Linus isn't dead, he knows damn good and well how he intends to dispose of it, and I'm reasonably certain based on what he's said that he doesn't intend to hand it all over to SCO to become their private property--he means for everyone to be able to use it, but only under the GPL.