February 19, 2008

SCO acquisition wrap-up

Author: Lisa Hoover

The SCO Group was offered a sweetheart of a deal on Valentine's Day last week when Stephen Norris & Co. Capital Partners (SNCP) gave the embattled Unix vendor $100 million to bail itself out of bankruptcy. The company's CEO, Darl McBride, isn't feeling the love, however. When the deal closes, he'll "resign immediately."

Already angered by McBride's claims that Linux contains code that belongs to SCO, many in the Linux community were overjoyed when the company filed for Chapter 11 bankruptcy protection in September. Now, a company once thought to be at the end of the line seems poised to walk another mile.

According to the press release, SNCP's plans include "enabl[ing] the company to see SCO's legal claims through to their full conclusion." Pamela Jones, editor of the popular legal Web site Groklaw, has been following the situation since it's earliest days and , "That's code, I think, for 'this will enable the company to continue to attack Linux'."

Details of the agreement between SCO and SNCP are beginning to emerge and, according to an InternetNews.com story by Sean Michael Kerner, SCO will receive only $5 million upfront, with the rest available on an as-needed basis. Interestingly, intellectual property attorney Mark Radcliffe tells ComputerWorldUK.com $5 million is just what SCO needs to proceed with the copyright lawsuit it initiated against Novell.

Kerner goes on to say that the deal hasn't been officially cemented yet; the US Bankruptcy Court must approve it by April 28. When and if that happens, McBride will be bounced out the door right away. If the deal is not approved, SCO's bankruptcy proceedings continue as planned.

Datamation's Roy Schestowitz notes that for a company with such a troubled and checkered past, it's a mystery why anyone would want to come forward and help rescue it from certain death. "Why would anyone invest in SCO?" he asks. "More importantly, why now?"

Groklaw's Jones may have an answer. She suggests a connection between the new investors and Microsoft's Bill Gates.

In the end, though, all the hype may be just that -- hype. Jim Zemlin, executive director of The Linux Foundation, says all the theories and conjecture are just navel-gazing. In fact, he says the whole story is nothing more than "a speculator picking the bones of a defunct company. The facts of the SCO case haven't changed; the Linux industry is stronger than ever."


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