| The SCO-Microsoft connection grows darker |
Oct. 10, 2006
The cat is out of the bag. According to BayStar Capital's managing partner Larry Goldfarb, Microsoft allegedly assured BayStar that it would somehow "guarantee" BayStar's $50 million investment in SCO.
Specifically, Goldfarb has testified to the U.S. District Court in Salt Lake City that Microsoft senior VP of corporate development and strategy, Richard Emerson, "discussed a variety of investment structures wherein Microsoft would 'backstop,' or guarantee in some way, BayStar's investment.... Microsoft assured me that it would in some way guarantee BayStar's investment in SCO."
Pam Jones, editor of Groklaw, reported recently that she has obtained a copy of Goldfarb's Declaration, and that the BayStar executive also said, "I had discussions with Kenneth Lustig, Microsoft's managing director of intellectual property and Tivanka Ellawala, from Microsoft's corporate development department regarding the SCO deal.
These revelations can come as a surprise to hardly anyone. Almost as soon as the news came out in October of 2003 that BayStar was investing in SCO, there were rumors that Microsoft was behind the deal.
Then, in March of 2004, a memo was leaked that revealed Microsoft, together with BayStar, had brought $86 million to SCO's coffers. Soon afterwards, BayStar spokesman Tom McGrath confirmed that "Microsoft did introduce SCO to BayStar as a possible investment opportunity, but I need to reiterate that Microsoft did not participate in the SCO investment."
Microsoft, of course, denies all.
In a statement, the company said, "Microsoft has no financial relationship with BayStar and never agreed to guarantee any of BayStar's $50 million investment in SCO. The BayStar declaration confirms that no guarantee was ever provided. Microsoft does have a deal with SCO that has been widely reported. We paid SCO for licensing rights to ensure IT interoperability for UNIX migration technology, currently in use in Microsoft Utilities for UNIX-based Applications."
What wasn't said, was that Microsoft has had a financial relationship with BayStar. In 2002, Microsoft and Vulcan Ventures, Inc., the investment firm of Microsoft retired co-founder Paul G. Allen, were two of the companies that used BayStar to participate in PIPEs (Private Investments in Public Equity). PIPEs are a BayStar investment specialty.
Microsoft, of course, also had had a long, sometimes troubled history with SCO, before the details of this deal came to light.
What does all this mean? Allonn E. Levy, litigation attorney with Hopkins & Carley in San Jose, Calif., said, "Although the declaration does not indicate any actual money was paid by Microsoft, it does suggest that the software behemoth was operating behind the scenes, employing its extensive industry contacts, in an apparent effort to help SCO finance its lawsuits. Certainly, Microsoft has an obvious interest in promoting the lawsuits since the lawsuits are seen as an effort to undermine the legitimacy of the Linux Operating system -- widely viewed as the only remaining viable competitor to Microsoft's Operating System."
It also shows, said Levy, that "Not surprisingly, the declaration also suggests that BayStar is displeased with the dramatic decline in the value of its $50 million investment in SCO in light of alleged comments by Microsoft executives 'that it would in some way guarantee BayStar's investment in SCO.' Of course, BayStar's 50 million dollar lesson is: get your guarantee in writing before your write your $50 million dollar check."
Before the BayStar and SCO relationship was over, BayStar tried to take over SCO. The investment house failed in this, and then tried, with limited success, to pull its investment out of SCO.
-- Steven J. Vaughan-Nichols
Do you have comments on this story?
Talkback here
NOTE: Please post your comments regarding our articles using the above link. Be sure to use this article's title as the "Subject" in your posts. Before you create a new thread, please check to see if a discussion thread is already running on the article you plan to comment on. Thanks!
(Click here for further information)
|
|
|
7 Advantages of D2D Backup
For decades, tape has been the backup medium of choice. But, now, disk-to-disk (D2D) backup is gaining in favor. Learn why you should make the move in this whitepaper.
4 Legal Reasons to Control Internet Access
The Internet is obviously a valuable resource for many organizations. However, many are exposed to legal liability concerns because they fail to control Internet access. Learn if you're safe in this white paper.
Rapidly Resolve J2EE Application Problems
Whether you are in the process of building J2EE applications or have J2EE applications already running in production, you must ensure that they deliver the expected ROI. Learn how in this white paper.
Load Testing 2.0 for Web 2.0
There are many unknowns in stress testing Web 2.0 applications. Find out how to test the performance of Web 2.0 in this white paper.
Build Better Games Online
For the game infrastructure providers, life is complex. Making money from games has become more complicated. Why? Find out in this white paper.
Building a Virtual Infrastructure from Servers to Storage
This white paper discusses the virtual storage solutions that reduce cost, increase storage utilization, and address the challenges of backing up and restoring Server environments.
Gaining Faster Wireless Connections with WiMAX
Welcome to what is quickly becoming the hyperconnected world where anything that would benefit from being connected to the network will be connected. Learn more in this white paper.
Is Your Desktop a Security Threat?
The new wave of sophisticated crimeware not only targets specific companies, but also targets desktops and laptops as backdoor entryways into those business’ operations and resources. Learn how to stay safe in this white paper.
Increasing SAN Reliability by 100 Percent
Storage area networks (SAN) are a strong part of storage plans. Learn how to increase your reliability and uptime by 100 percent in this case study.
|
|
|
|
|
news feed