Observations from Yesterday

By RFD

July 28 2009

Hans Bayer emails—The arguments over the admissibility of these emails centered
over the inflammatory statements Hans Bayer made about Darl's “weird dream” and
his fixation on the litigation. There did not seem to be any doubt the the
emails were genuine, but Mr. Bayer was expressing his opinion and not speaking
for SCO, and that the emails did not present “facts” to which he could speak to
from personal knowledge. Judge Gross ruled that they were more prejudicial than
probative. Some of the emails were withdrawn and not at issue—but I cannot give
you specifics. Even though they were not admitted into evidence, Judge Gross
read them and they do tend to rebut Mr. Spector's attempt to paint IBM and
Novell as the “bad guys”--there are clearly some within SCO that question SCO's
litigation-at-any-cost strategy.

The Payments to Mr. Norris—The payment of $100k from SCO Japan appears to have
been for a real marketing study, and according to Mr. Norris, was the basis for
his belief that the Unix business was viable. He used it to help line up
potential investors. The payment of $100k from Mr. McBride was, according to Mr.
Norris, compensation to him for his efforts to try to arrange a deal. This was
in conflict with Mr. McBride's testimony, but since the payment was arranged
through Mr. Robins, Mr. McBride may not have known what it was really for. In
his summary, Mr. Marriott stated that much of IBM's concerns about these
payment's had been allayed. I doubt that this issue will have much impact on
Judge Gross' decision. The fact that SCO did not disclose its prior relationship
with Mr. Norris does still raise questions about SCO's “good faith”, however.

The Sale Motion—I doubt it will be approved. SCO has filed an amendment that has
not been reviewed, and it was only briefly mentioned at the hearing. SCO has
provided no evidence that it would bring fair value. Problems remain with
“Executory Contracts”, especially the Novell-Santa Cruz APA. After the hearing,
I overheard someone from SCO express doubt that they would “get the sale
motion.” Judge Gross seemed very attentive to Mr. Harrington when he expressed
reservations about a “private sale” instead of an auction. If there is a sale of
the Unix business, I suspect bids will be solicited—there seems to be several
potential buyers—possibly by a Chapter 11 trustee.

Mr. Spector—His folksy style may be wearing thin. He tended to drone on and on.
Twice during the summation Judge Gross cut him off for taking too much time.

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Eschew obfuscation assiduously.

03:32 PM EDT

By rsteinmetz70112

July 28 2009

I have to wonder how much Darl has been dissuading buyers who don't buy into his
world view.

Management has a duty to the creditors, Darl's primary focus seems to be on
keeping the litigation for himself. How a potential purchaser can defuse that is
difficult to see.

A new owner could pay off Novell's judgment and I think settle AutoZone pretty
easily, I imagine even RedHat could be settled with an appropriate agreement
regarding Linux. It is difficult to see how IBM could be resolved.

If there were a neutral party trying to sell the company I imagine there might
be more potential purchasers offering more money.

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Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

03:54 PM EDT

Resolution with IBM

By Anonymous

July 28 2009

A *new* owner could probably resolve the issue with IBM by paying IBM's legal
costs to date, a very public mea culpa, and a statement of non-infringement by
Linux and other IBM products. I doubt that the current owners could resolve it

short of a smoking crater in Utah.

04:46 PM EDT

Resolution with IBM

By rsteinmetz70112

July 28 2009

It seems unlikely that any new Owner will be willing or able to pay IBM as much
as IBM have spent defending themselves.

We know SCO spent $35,000,000 plus. IBM probably spent more.

SCO isn't worth that much.

---
Rsteinmetz - IANAL therefore my opinions are illegal.

"I could be wrong now, but I don't think so."
Randy Newman - The Title Theme from Monk

04:54 PM EDT

Resolution with IBM

By Peter H. Salus

July 28 2009

No, SCOG isn't (and wasn't) worth $35MM < $X. But IBM's reputation was and
is. We mightn't offer $0.02 for the reputation(s) of the entire McBride family;

but the folks in that administration building in Armonk, NY have a lot of pride

and just aren't going to accept slurs from twerps.

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Peter H. Salus

05:25 PM EDT

Resolution with IBM, Cost Recovery

By RFD

July 28 2009

I doubt that IBM has any expectation of recovering its legal expenses from SCO,
the money is not there. Any recovery would have to come from SCO's lawyers. In
his August 10, 2007 decision in SCO v. Novell, Judge Kimball laid out a pretty
good case the Darl McBride knew that SCO did not own the the Unix Copyrights
when he sent out the 1500 letters, and when SCO file suit against IBM. Any
competent lawyer should have known this as well before filing the suit.

I think IBM refused to settle because it wanted to deter future extortion
attempts. Sanctions of $50 million (or more) against SCO's lawyer might tend to
deter other law from taking on such meritless cases.

It is probably a long shot, but we can hope.

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Eschew obfuscation assiduously.

05:52 PM EDT

Resolution with IBM, Cost Recovery

By PJ

July 28 2009

Well, I'm not IBM, but if I were, I believe I
would be interested in the money Yarro and
McBride have been offering the company, as
my nose would be smelling money.

06:17 PM EDT