October 25, 2003

Opinion: Microsoft's coming acquisitions

Author: Chuck Talk

Okay, so I am speculating, but I am beginning to think that Steve Ballmerâs hints and Steven Van Roekel may have yet telegraphed their next move. Microsoft cannot stay solely a packaged software house and remain as competitive as it has been in the past. Web Services are their hope for growth and will tell if they can, or continue to flounder around in search of profitable growth.

The latest revelation seems to fit back into an acquisition from the Canopy Group as this would once again serve a dual function for the boys from Redmond. There have been some recently strange goings on at the Canopy Group companies just below the surface, and one of those is the quiet separation of the best products under the Canopy umbrella into new domains, which may signify a separation for value (in other words to set up for buyout by someone else).

Among these separations have been the litigious Center 7 group which fought Computer Associates has now become Vintela Authentication Services and can be found at:

Vintela

What is uniquely interesting about that is that the SCO Group had announced a deal with Microsoft for âtheirâ Vintela authentication services, yet now this appears to be a separate entity, together with a fresh new CEO who just happened to have been employed at the loser in the Canopy/Computer Associates litigation prior to becoming CEO for Vintela. That worked out rather nicely for him, as they say.

The other not-so-obvious separation appears to be in the very early planning stages, but is also evident. That is the Volution Manager Product line formerly from Caldera (now the SCO Group) which appears to be migrating out from under their so-called intellectual property stack. You can see this is in the planning stages if you go to:

Volution Tech

So, what is this all about? It would appear to me to be a way to send more money to the Canopy Group, while trying to retain the appearance of non-involvement with the SCO Group vs. IBM & the Linux community. That would make sense for Microsoft, because they could take away the Canopy/SCO Groupâs best assets and add to their so-called war-chest against IBM. It would also explain the Royal Bank of Canada and BayStar Capital investments and further cement the ties that they have so adamantly denied up to this point.

What is worse is that it would also raise serious questions as to what BayStar and RBOC knew, and when they knew it. It would come across to me as insider trading with BayStar and RBOC buying in to the SCO Group basically with foreknowledge of the impending acquisition(s). That leaves me wondering just whether they will take the risk, but then given the very serious lack of criminal enforcement from the SEC and the DOJ in corporate crime these days, one has to wonder what it will take to get anyone involved in seriously investigating these deals.

I am now only wondering how they can spin the deal out so that it is not as blatant as all that, but then again, they just might do it. It would fit into the Web Services play they want in the tools for management that they want and once again it would be adopting tools that were winners on Linux in an attempt to starve out the applications available for Linux. It would also serve to fund the ongoing Canopy FUD litigation. I bet what we are seeing is the negotiation process ongoing and getting close. That would explain a whole lot of the serious growth (as in none) and trend to mitigate the potential losses for what are presumably intelligent investors (RBOC and BayStar Capital). If you knew you were only funding a short-term deal that would go up as the merger-acquisition(s) was (were) announced, you could win both ways:

  1. By short-selling and cashing in
  2. By selling out when the acquisitions were completed

The appearance of ethics would have nothing to do with it, for as we seem to see all too often, insider trading just doesnât worry these people. They seem to have the idea that âscrew you â you are a nobodyâ for the small investor, and the âwe are above the law because we are wealthyâ.

I wish I could say that my government was more inclined to stop such nonsense. I donât think they will (currently). I would remind my readers who disagree that nobody from Enron except the very small fish have been netted to date, some three years on into that whole mess. Many people said they would be prosecuted and nothing has happened. Many people also said we would find weapons of mass destruction, and once again, we havenât found them.

This is all speculation at this point â but it would make a hell of a lot more sense than acquiring the SCO Group directly, and EDS is probably too pricey after all. If they want to continue to sit around and have others do the work, then buying a toolmaker with ready built management tools such as Vintela and Volution Technologies makes absolute sense. It sucks, but it makes sense from their perspective. It also reeks of very fishy dealing, but it wouldnât be the first time for the boys from Redmond, now would it?

As I said, it is speculation and should not be considered an absolute at this point. It would give our Redmond types the chance to get into the UNIX platform, but knowing their myopia, they will only try to use this as a way to kill competition. It just fits the spots on the leopard.

The opinions in this article are solely those of its author and may or may not be shared by OSDN editors and management

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