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.
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.
Re:This is nothing new (Score:3, Funny)
Re:This is nothing new (Score:3, Informative)
Re:This is nothing new (Score:5, 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:This is nothing new (Score:5, Funny)
If it's too good to be true... (Score:3, Interesting)
Mark my words! After SCO gets slapped around in court, Darl & Co. dumps their shares, SCO's stock price plummets, and stakeholders get all pissed off, this will end up one of the worst (and most publicized) corporate scams in recent memory.
Dream Mine (Score:5, Interesting)
I tend to take any stock that comes from Provo with a grain of salt. Provo is the MLM capital of the world. Here is another Utah Valley company: The Dream Mine [reliefmine.com] was revealed to a prophet about a hundred years. It is not a traditional mine. The mine actually leads to the hidden vault of treasures buried by the Nephites. FYI, the Nephites were from a lost tribes of Isreal that came to America on a submarine a few thousand years ago. They got all the best treasures. But the Lamanites (American Indians) were horrible sinful creatures. They killed all the Nephites. The Nephites buried all of their treasures before the final battle.
The trick to the mine is that the secret entrance will not be revealed until God is getting ready to smite the gentiles.
This investment is great if you wish to hedge against Armagedden, and the stock tends to do quite well, despite the fact that it won't have a product until the end of the world.
Unfortunately, you have to be of the faith to own stock.
SCO is likely just another dream mine. As mentioned early, the faithful have a long history of falling for every MLM and get rich quick scheme you can name. They often get burned. Of course, if the case comes before a jury of the faithful, SCO will win big time, regardless of the merits of their case.
The Utah Court system is SCO's ace in the hole. If the jury thinks that ruling in favor SCO would make Utah Valley the new Bellevue, then they might rule for SCO. Regardless, I would be worried about shorting SCO or any penny stock from Utah, as Provo Stocks have certain irrational characteristics.
Re:Dream Mine (Score:5, Interesting)
It's a sucker's bubble. Basically, what the anti-SCO press is missing can be found at GrokLaw.
You have to understand something very simple:
1. There are very few people in SCO's pool of stock compared to other small cap investments.
2. A majority of that stock is held by institutions and these institutions are known for quasi-legal and illegal practices - just like Canopy.
3. Because of 1 & 2, the ability to control the price of the stock is greatly enhanced, and so long as Baystar, RBC, Renaissance Capital and others feel the need keep the price up, no amount of shorts will affect it for very long. There will not be enough shares out there to make it happen - they've seen to that.
I tend to take any stock that comes from Provo with a grain of salt. Provo is the MLM capital of the world. Here is another Utah Valley company: The Dream Mine was revealed to a prophet about a hundred years. It is not a traditional mine. The mine actually leads to the hidden vault of treasures buried by the Nephites. FYI, the Nephites were from a lost tribes of Isreal that came to America on a submarine a few thousand years ago. They got all the best treasures. But the Lamanites (American Indians) were horrible sinful creatures. They killed all the Nephites. The Nephites buried all of their treasures before the final battle.
The trick to the mine is that the secret entrance will not be revealed until God is getting ready to smite the gentiles.
Well, you are half-way correct about the Dream Mine, but we'll save that for another conversation because the topic itself leads people to think you've lost your marbles using this as an example.
Utah Valley Mormons have got to be some of the most gullible people I have ever met. Faith has nothing to do with it. It's the wide-eyed ignorant bliss that comes from ignoring the rest of the world in the hopes that it will go away.
This leaves sharks like McBride (who was a putz back at BYU when I was there) to prey on the "innocent" using the Church and the Utah culture as a backdrop to Rape, Pillage, and Burn his way through everyone's money. In Wall Street circles, that's know as Standard Operating Procedure. And for that you get bonuses, accolades and a chance to do it again.
I think the word you are looking for here is Gaddianton.
Nitpicks (Score:5, Interesting)
The submariners were Jaredites, who supposedly came straight from the Tower of Babel. Nephi and friends just had an unremarkable ship. Also, in the traditional interpretation the Lamanite ancestors all came on Nephi's ship; it wasn't until people examined Native American DNA that the idea of unmentioned Siberian-descended Lamanite groups became popular.
The Utah Court system is SCO's ace in the hole.
Not yet, it isn't. Judge Wells certainly doesn't seem to have a pro-SCO prejudice, and at the rate the McBrides are going the case may never make it to a jury trial. Even if it gets that far and SCO's lawyers somehow manage to get a biased jury, Novell has as much of a "hometown Utah company" appearance as SCO does, and based on their statements and copyright filings Novell looks like they're going to bat for our side.
Regardless, I would be worried about shorting SCO or any penny stock from Utah, as Provo Stocks have certain irrational characteristics.
I'd be worried about shorting SCO because every stock (especially every thinly traded stock) has certain irrational characteristics. If there are suckers out there who will pay $20 a share for SCO, how do I know there aren't suckers who would pay $40 a share?
Re:This is nothing new (Score:5, Informative)
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-
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.
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.
Application Binary Interfaces (Score:5, Interesting)
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.
Re:Expected value (Score:5, Interesting)
SCO knows it won't get revenues from anyone other than Fortune 1000 corporations. They say explicitly in their FAQs that home users are not going to be asked to pay. Someone on Slashdot actually tried to buy a license, with the comic result that SCO admits the licenses are not being sold to the public at large.
If each Fortune 1000 corporation has 100 Linux systems scattered to and fro, that's about $70m. Each company would be asked to cough up $69,900 each. If SCO genuinely has a case, the Fortune 1000 companies will almost certainly cough up, since $69,900 is a tiny fraction of the legal bills they would have to confront from defending a lawsuit.
$70m in revenues for SCO is going to look pretty good, even as a one-time thing. Those are the real stakes they're playing for.
Intriguingly enough, this gives them a 17% chance of winning, or about 1 in 6.
Thoughts?
D
Re:This is nothing new (Score:5, Insightful)
Recent news tells us that all of these people can and are wrong sometimes. The fines imposed on the likes of Merrill Lynch and JP Morgan should tell use wonders.
Personally, I'm waiting to see if SCO can produce anything substantial in court, which is where they will live and die with this. Here's my prediction: If SCO cannot produce any substantial evidence to their claims, the price will drop to the sub-$.25 level faster than Bill Clinton's trousers with an intern.
Right on--SCO is speculation (Score:5, Interesting)
My father is recently retired and in the past few years has invested a portion of his savings in stocks, mainly on TSX (Toronto exchange). My father and koreth (author of the parent post) are two of very few people who seem aware of the "interesting fact" regarding stock funds performance against market indeces.
In the stock market, it seems generally to be a VERY BAD IDEA to make investments based heavily on the forecasts on market conditions and the performances of key industres and so on. My dad has had the most long term success by almost completely IGNORING trends forecasts proclaimed by the "experts" and looking at a companies current and past performance vs. its stock valuation. Some criteria are:
1. REAL assets vs capitalisation - Dad never bought into the whole
2. Is the company making money. Dad looks at the whole TSE and on the first pass he drops EVERYTHING that doesn't meed a certain PE ratio as a safe investment, REGARDLESS of what headlines they are making or press releases they are making. Dad didn't get into BRE-X for a reason--they were making headlines about a big gold find but WERE MAKING NO REVENUE YET. The find turned out to be a scam and those who gambled too long lost it all.
3. Do they issue dividends...that is a bonus...and if they do re-invest the dividends they issue back into more of the same stock. You can set it up so essentially you get shares instead of cash and you can avoid brokerage fees.
Pretty simple...and you hold everything you buy until you need to cash out or a periodic review of your investments fails to pass all your criteria. DO NOT let fluctuations in stock price--up OR down--scare you into buying or selling, EXCEPT when said fluctuation causes the stock to move outside the criteria you set as a good investment bet.
Everything else is a gamble--invest your lottery ticket money in it and nothing else.
BTW SCO fails MISERABLY as a safe investment--it fails 1. as its assets are currently next to worthless in comparison to its market valuation--and the only thing that'll change that is winning the IBM case, AND commandeering BSD since Linux users would likely move en-masse to BSD should Linux become expensive and closed. Very inlikely. It fails 2 because it doesn't make NEARLY enough revenue to pass the PE ratio test. AND because if 2. it can't do 3--pay any sort of meaningful dividend.
Re:did you even read the article (Score:5, Insightful)
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.
Re:did you even read the article (Score:3, Informative)
Actually according to todays Wall Street Journal, Microsoft's market capitalization is $296,802 million, IBM's is $157,504 million, and SCO Group's is $235 million, so, infact Microsoft is quite a bit larger than IBM and SCO combined.
But the fact remains that IBM could probably have bought SCO if they wanted to.
Re:did you even read the article (Score:5, Interesting)
I invest in shares on a fairly minor basis and was so appalled by the boom of the late 90's (Warren Buffett: 'how are these companies ever going to make money?') that I got out altogether for a while. I missed some massive profits - as we probably all have here - but totally missed the subsequent crash as well. I finally started coming back in at the end of 2001.
The problem back then was that shares were vastly overvalued but kept on rising because they were rising. The charts looked great and pension-funds managers who pulled their funds out of these overvalued stocks were sacked shortly afterwards because their funds were underperforming.
Then came the crash and we all got burnt. That is even forgetting companies like Enron or Worldcom.
It even looks to me as though SCO have learnt from those two companies. They are filing their correct figures and their broken business-plan with the SEC. No fraud there. People who invest there will deserve all they get, the only question is the timescale.
Re:IBM is bigger than Microsoft (Score:5, Interesting)
In terms of employees, IBM is 6x bigger than Microsoft.
In terms of revenue, IBM is almost 3x bigger than Microsoft.
In terms of revenue per share, IBM is almost 15x bigger than Microsoft.
IBM is the worlds' largest software company, not Microsoft. It's just that IBM bundles their software w. services and hardware.
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.
SCO (Score:5, Funny)
Besides, the SCO might get somewhere. After all, they've got Sen. Orrin Hatch (R. Utah) looking out after them. He's got to keep his son employed somehow.
Re:SCO (Score:3, Insightful)
Too true! Look what it did for Enron...
Oops
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.
Exactly (Score:3, Interesting)
Notwithstanding, they have yet to "make" money, and are only profitable due to one of the richest companies in the world. As an extension of the will of MS, their stock price deserves to be higher.
Alas, people are ignorant. When MS is finished with them, or when IBM makes them pay, or when Redhat gets their day in court, it will be a rude awakenin
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: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:SCO (Score:3, Informative)
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.
Skeletons in the closet (Score:5, Insightful)
Re:Skeletons in the closet (Score:5, Insightful)
Re:Skeletons in the closet (Score:4, Funny)
If it's mod points ye be wantin', I have none.
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
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.
The way I see it is... (Score:4, Insightful)
Re:The way I see it is... (Score:3)
No offense, but you need to start hanging out with a smarter crowd. Investors and analyists were sayind for years that the .com bubble would eventually burst, even if they were content with riding the wave to make a quick buck. Even most personal investers knew that the .com stuff couldn't last forever, but that didn'
We have forgotten (Score:5, Interesting)
-- Cheers,
-- RLJ
Re:We have forgotten (Score:3, Interesting)
-B
Re:We have forgotten (Score:3, Interesting)
This most certainly HAS been the case. Examine SEC filings on Yahoo to see which principals of the company have been selling off significant portions of the stock and you will see what I mean.
Re:We have forgotten (Score:5, Informative)
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.
Re:Think Pump and Squeeze (Score:5, Funny)
Sounds like SCO needs some fiber!
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 rea
Re:We have forgotten (Score:4, Informative)
Gods I'm tired of hearing this.
Corporate execs cannot just call their broker and say "buy!" or "sell!" when it comes to companies that they have insider knowledge on. You must file SEC forms months or years in advance, and there are time periods before routine announcements (10Q/10K) where you are prohibited from selling stock. Nobody has accused anyone at SCO of violating these rules. If you can, then go to the SEC.
As for Daryl, he has a mere fraction of his stock options. Go read the contract -- it's spelled out quite clearly in their 10Q/K statements. They didn't make a profit last quarter, so that resets the clock on the 100k (or 150k? I don't recall anymore) options that he would get for 4 profitable quarters. Oh, and even if he was awarded them -- guess what? He still can't sell them for 1-2 years under SEC and SCO regulations. The rest of his shares vest over a 4 year time frame.
If he wants to pump and dump then he's in an awfully bad position to do so -- he'll need to keep it going for 5-6 years in order to sell everything. Even though I expect the lawsuit to take 5+ years, the winds will be blowing for or against SCO well before the end. I still don't get why SCO took this course (other than the obvious cornered rat reason), but it isn't to pump and dump.
On the other hand, there are some very interesting money and stock manipulations happening with Canopy. If you want to look for someone doing questionable things, look there... not at SCO's execs themselves.
Re:We have forgotten (Score:5, Informative)
Sure, Darl may not be getting a lot of options, but it's pretty clear that the secondary execs are trying to get as much out as possible. Can't say I blame them, they've made a lot in the last year or two, it would be foolish to leave it there when the entire share price is based on unrealistically optimistic expectations about lawsuit outcomes. Of course, this only comes out to a half million here, a half million there.
I'm sure that the big money manipulations are going on with Canopy et. al.
Re:We have forgotten (Score:3, Informative)
Well, actually they have. I'm sure the SEC has plenty of complaints/accusations on record at this point, because I keep reading on Groklaw and the Yahoo SCOX bulletin boards that people have called the SEC to complain.
While there are many problems to choose from in making a complaint, probably the most convincing, and the one that goes to the heart of your assertion is that, while claiming that the executives cashing out options (Reginald Brought
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:We have forgotten (Score:3, Funny)
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.
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.
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 weig
Enron? (Score:5, Interesting)
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.
I forgot... (Score:4, Funny)
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: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
Lottery Ticket (Score:5, Interesting)
Now, are things different on Wall Street?
I trade stocks for a living. Some of it is daytrading. from the category Cliff chose, 'from the daytraders-and-lawyers-live-on-different-planets-
The key issue here is potential; *if* SCO wins, it'll win $3B plus leverage vs every single linux user (if collectable, $699/installation for single-cpu installations, more for more processors; also $39(?) per embedded device). The payoff is huge and Wall Street functions on potential and leverage.
What does this imply (or explain) about SCOX and said stock price?
I once read an insightful quip in an investment article about SCO; the quip was 'Buying SCOX is like buying a lottery ticket'. Meaning, there's a huge potential payoff but, chances are, you'll get nothing. The SCOX stock price, hence, is an average of the perception of those two extremes.
2 years from now, SCOX will either be worth $100+/share or $0/share.
In conclusion, the rising stock price is a function of Wall Street's perception of the odds of this lottery ticket.
RD
Re:Lottery Ticket (Score:3, Interesting)
If SCO wins what?
If SCO wins their court case against IBM, which concerns a small contract dispute, they don't get that. They might get some money. That would be about it. They haven't filed any other case. May
potential outcome, not odds, is known (Score:3, Interesting)
It seems as if the probability of SCO winning their contract case (and the implied infringement) AND the probability that they receive a significant award from the case (since
Re:Lottery Ticket (Score:4, Funny)
Yeah, and *if* monkeys fly out of my butt, I'll be able to open a circus.
Re:Lottery Ticket (Score:4, Interesting)
The problem with this is that if SCO wins in court, they still do not have the right to collect license fees for Linux. If part of the Linux kernel infringes, that doesn't mean SCO owns the rest of it - at worst, they'd kill the Linux kernel, and there are replacements in the works anyway. There is no long term business here, but $1B from an IBM win would be of some value in the short term. So the PERCEPTION on wallstreet may be that it's like buying a lottery ticket... Of course the perceived value of an actual court victory would make those shares, ummm, like lottery tickets after all.
Re:Lottery Ticket (Score:3, Funny)
Corrections (Score:5, Informative)
Actually, they've been ordered to state their complaints against IBM; evidence comes later.
Also, their deadline isn't midnight the 11th: as with all such legal matters, it's COB (17:00 local) on the deadline or the first Court day (the 12th) following it. The Clerk of the Court's receipt of the response is the magic timestamp, and the Clerk isn't going to wait up to midnight on a Sunday in the hopes that soon Darl will be there.
None of this matters. (Score:3)
The great thing about the open source movement is its agility under pressure. When there's nothing making it move, its agility-- on things like, say, -- drops to zero, but when things HAVE to happen, they can happen blindingly quick. If SCO does in fact have some real proof of some legal issue hidden somewhere-- unlikely, because if they had it they probably would have played it by now-- I'm convinced the Linux community will find some way to resolve the legal issue and keep going without so much as a hiccup.
If such a thing arises, then is the time to worry about it. Until indications such a thing exists, though, there is nothing that can be done to prepare, so I can't see paying much thought to it.
So all we're we're mostly forgetting here-- though I've heard it on slashdot a lot-- is that SCO doesn't have to win to win. All SCO has to do is drag things out. In the end, SCO will lose the case and fade into bankruptcy.
What we're forgetting is that having lost and faded, the SCO execs will walk away rich from stock sales and laughing. Meanwhile, the over a year of SCO propaganda will have sunk deep into the heads of execs everywhere and will not come out easily, since the kinds of publications executives read will have reprinted SCOs initial, easy-to-grasp-without-thinking allegations vertabrim, but then probably once the truth comes out won't cover it at all since it's much messier and harder to write into a quick dramatic story. This is all we have to be afraid of, I think.
Donning the tinfoil hat (Score:3, Funny)
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.
Re:Two factors (Score:3, Interesting)
1) The fact that SCO chose to sue for $1B, and then later decided it should be $3B, has almost nothing to do with how much they might win. A jury will decide the damages. Two things that would weigh heavily against SCO are:
One should work to mitigate the damages, if one is being damaged. It appears t
Not about right or wrong (Score:3, Interesting)
The core of the lawsuit (Score:5, Interesting)
The crux of the matter, as I understand it, is that SCO is claiming that the SystemV contract specifies that they retain control over everything developed for SysV Unix -- regardless of who actually does the development. If you want to kick this back into copyright law (which is likely to become relevant), then they're saying that whatever you made is a derivative work. Even though you may license the SysV code it doesn't mean you can do whatever you want with derivative works.
There's a shitload of smokescreening going on, and SCO has made some really amazingly stupid claims (mostly their execs, not their lawyers, although the lawyers have made some stupid claims as well), but it really does get back to this -- is SCO's read on the contract the proper one? It's not a cut and dried answer. The contracts are very old, have passed through many hands, and have several court cases associated with them. The wording isn't clear either.
Personally, I still think SCO's smoking a big crack rock -- their interpretation of the contract is overly broad and utterly insane. But IANAL.
A coworker (ok... technically my boss) asked me yesterday when I expected the lawsuit to be resolved. I immediately replied 5-10 years.
Anyone who thinks that this is going to be finished before then is smoking one right along with SCO.
Re:The core of the lawsuit (Score:3, Interesting)
While I agree that it may take as long, there's also the possibility of a much faster outcome. The way SCO is acting (not giving any evidence), it wouldn't be too suprising to see the case dismissed easly. If they indeed send lame evidence, the case will go on, but everyone will see how lame the thing is and nobody will care about the trial anymore. At that point SCO might as well drop its case since the stock will be down and the bad publicity scheme against Linux will st
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 prod
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?
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".
What if... (Score:3, Interesting)
Unless...they get taken over by some bigger company with an eye on the pie they have baking...
What I'm trying to get at is that with a market capitalization of merely 250 million and with the intellecual property claims they are making they are begging for IBM or (maybe even) Microsoft to buy them out.
Far fetched? Probably. But imagine if the SEC & the European regulators were to allow such a thing to happen?
(just remember where you heard it first)
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.
"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.
We have forgotten that... (Score:5, Funny)
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.
Incorrect assumptions (Score:3, Interesting)
There is one theory that is widely regarded in the investment world, usually called the Efficient Market Hypothesis. It states that the stock market is efficient, that at any given time all public factors relating to a given issue (company) have been considered by intelligent investors and that the price of a company's stock always accurately reflects the value of the underlying business.
The problem with this theory is that it is utter nonsense. People buy companies based on all manner of crazy metrics: whether a certain football team won, a company seeming like a "sure bet," or some charlatan hawking the latest penny issue (that he purchased in large quantity before making the recommendation.) And price, by the way, is determined by supply and demand.
Now, that might make for a very boring story, but it is relevant in the following manner: there is another valuation model that more accurately reflects the way the stock market actually works.
It's called the Greater Fool Theory.
The definition of the Greater Fool Theory has changed over time, but a current definition is: a fool buys a stock without any sound fundamental analysis hoping to sell it at a profit to a greater fool, who expects in turn to sell it at a profit to a still greater fool. Rinse and repeat.
SCO may well have a case. I really don't know, but you all had better believe that the Greater Fool Theory played a big role in SCO's meteoric rise.
Pyrrhic victory? (Score:4, Interesting)
But what if whoever is behind this actually wants SCO to lose? Might an IBM victory actually be engineered to be Pyrrhic for Linux?
Consider that both SCO's case and the GPL revolve around the notion of derived work which is legally up for grabs. Might SCO's claim -- that all things UNIX belong to them as derived works -- get laughed out of court in a way that actually weakens the somewhat similar provisions of the GPL?
What if the goal was to downgrade the GPL to a legal equivalent of LGPL or even BSD? (The GPL hopes to make "linking" a criterion for "derived". Is SCO trying or even in a position to make such a claim and get it struck down? I don't know.)
Yes, I realize the situations are different (contract law here, copyright law there), and this hardly explains the investor frenzy on SCO. Still maybe worth keeping in mind...
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
Check out the Numbers (Score:3, Informative)
Some things forgotten (Score:4, Interesting)
- patience. "we" keep forgetting to be patient
- focus. "we" got baffled with bullshit alright
- history. "we" should have *started* with looking into the USL/BSDi case. That's where it'll end and it was very predictable.
- agendas. "we" are stupid to follow the "ememy of enemy equals friend" idea. Distrust Novell. Distrust IBM. Trust me on this
But most importantly, IMHO "we" forgot "our" role in all this. "We" played right into SCOs hand with the endless detail delving. No one but "us" cares. All they see is freaky commie geeks. Of course Darl knew and knows that. He made "us" jump on command. People have rightfully called him the comic relief but to most outsiders so are "we".
So what then? Here's something: sit and wait, perhaps document what happened when if you feel the need to. Write a book about it, someone will (please don't let that be JonKatz or ESR).
Speculators vs. Investors (Score:3, Interesting)
2. Medium term speculators who can afford to lose the money and see the potential gains as worth the risk.
3. The scarcity of the public stock. It's a very closely held company.
The buyers of SCO stock aren't really investors - they're in it for the short term...SCO is a vehicle for making money and nothing more. There are plenty of examples of SCO-type speculators out there. We focus on SCO because the IP issue is near and dear to our hearts, but from a financial point of view, there are a hundred SCO's to chose from if you want to put your money into an extremely volatile stock.
"Investors", the people who look out for more than a year at a time, aren't putting money into SCO or its ilk. They're looking at capital gains, not short term income. Now, there's nothing wrong with either way of investing, but I'm not sure that the volatility of SCO's stock is any indicator that we've forgotten anything.
And, to your other comment, certainly it's worthwhile to rally around IBM, but, in the end, it doesn't matter if we're all on IBM's side or not. The court will decide SCO's and IBM's cases on their legal merits, regardless of who has the larger fan club. But I understand your sentiments...and you probably already knew all of this anyway!
-h-
Fools? (Score:3, Interesting)
People who PLAY the stock market ARE indeed fools. The only real winnners, it's been proven over and over, are the ones who buy stocks of companies that provide real value and hold on to them long term.
More like 'What have we learned?' (Score:3, Insightful)
Vote Krumwiede in 2012!
Sir, in regards to your rambling question... (Score:3, Funny)
Stock Market (Score:5, Interesting)
There are many reasons why SCOX is rising this year. One has been mentioned a couple times already: The lottery ticket theory.
Then, once a stock is rising, it usually drags investors in. Definitely the dumb kind ("oh, it's going up. Must buy"), often the smarter kind, who plan on selling it again as soon as it shows signs of dropping.
Also mentioned already was that SCOX doesn't exactly have a huge volume, so it can be moved by fairly small trades.
And you can bet that Canopy and other investors do everything they can to drive the price up. It is, after all, part of their "net worth".
It all boils down to this: Even if SCO is doomed to fail in the end, from an investment perspective, it can be smart to buy them right until the moment said end starts to happen.
The lawsuit certainly has a much smaller impact than you think. It is easily overshadowed by the press releases and quarterly reports.
Disclaimer: I used to work for a broker, but only for a short time and it's been a while.
A repost from Groklaw (Score:3, Interesting)
Posted By: Anon
*Its become patently obvious that this entire lawsuit soap opera was carefully
planned ages ago, and it is succeeding in its primary aims. From the point
SCOG's stock became worthless, and the spreadsheet numbers were projected ahead
to reveal that SCOG was essentially dead no matter what, this project became a
no risk proposition. There is no case, there never was; the whole point of the
"lawsuit" was to waltz up to the biggest IP giant on the block and
slap them in the face, simply to get the largest shock value and the highest
possible media exposure. They *know* IBM will kill them, they also know how long
it will take this glacier to move down the valley. The attack on Linux (outside
the courtroom) is a simple red cape waved to enrage the zealous bulls in the
tech area, and provide a venue to disburse pearls of FUD *seemingly* supportive
of the bogus claims, the details of which will zoom safely over the heads of
investor-types. They will see this as a suits vs. bearded freaks issue and
choose who is making the credible claims based on that alone, and some will
invest cash accordingly. The stock is held in a way that lends itself to easy
manipulation, and they can sell THIS proposition to *outside investors who think
they are inside*, who are investing as a way to make money on the transitory
stock prices, NOT the value of SCOG as a going concern with any hope of a big
recovery. The GAME is to sustain the illusion of the stock value (created by all
the hubbubb and wild claims) long enough to pass the stock holdings from the
real insiders to the dufus outsiders, before the whole theatre folds. The method
used to carefully milk the stock prices without precipitating a sell-off is the
only portion of this drama that will require real skill, and every single day
that goes by with more stock cashed out is a complete WIN, even if there is a
good amount left on the table when the shoe drops. The Big Name Lawyer is on the
payroll to keep the Real Insiders out of prison, and encumber any assets left on
the corpse of the dead company to proxies of the principle players and the
!insider investors, he's the Elihu Root telling them HOW to do what they WANT
to do, working completely behind the scenes. The courtroom end is being handled
by a sock puppet wearing clown hair, as any money or effort spent there is a
hopeless waste of resources; maximizing the time taken for the procedural flow
is the only point of even showing up in court. The ball is rolling, now all they
need is a voice (any voice) in the courtroom saying "yeah yeah whatever,
can we have more time". There is no point in getting all hung up in the
hedgerow country of the details of ANY of SCOG's infringement FUD. If you want
to play the "you attacked Linux, prepare to die" card, the only
target of any consequence is the balancing act of the stock prices. The wind of
truth from a butterfly's wing can tip that one over the precipice, under the
right conditions. *
Note: Insiders are not necessary employed by SCO or even the holding company that owns SCO.
Why investors buy SCO stocks (Score:4, Interesting)
Because trustworthy information of this kind of information normally isn't available, investors make their investment decisions without first looking for "something like Groklaw".
Some investors will think "hmm maybe SCO actually has intellectual property in Linux, in that case their stock is grossly undervalued"... even if they consider the probability of that to be pretty low, it will appear reasonable to them to have a small (in relation to their total portfolio) SCO investment.
Some investors will think "I sure hope that this doesn't work out for SCO because I have investments in companies which will be hurt if GNU/Linux isn't free anymore", and they may decide to buy some SCO stock as part of a risk management strategy (to prevent unacceptable big losses in the case that an SCO victory kills GNU/Linux).
Some investors will think "Those SCO statements sound like utter nonsense to me". These won't buy, but they won't sell either - because they don't have SCO shares, and because "shorting stock", i.e. borrowing shares with a promise to give them back at a later date is difficult (impossible for small-time investors?) and very risky (even if we know that SCO stock will go down in the long run, it is quite possible that they temporarily might go up by say a factor of five for a short period of time before then, and if that's the time when you have to buy because you promised to give back those shares, you lose a *lot* of money).
The above analysis shows two categories of investors who are inclined to buy and one category of investors who are not likely to take any action.
This is consistent with the observed share prices.
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.
It's going to go up until it crashes (Score:4, Informative)
SCO's chances in court are unrelated to the value of SCOX. SCOX is a good deal at $10 today if it can be sold for $11 some time next week. SCO's PR only matters to the value of SCOX because it matters to the people who might buy SCOX from you later.