LINUX PIPELINE NEWSLETTER
http://www.linuxpipeline.com/
Tuesday, April 20, 2004

In This Issue
1. Editor's Note: Baystar Vs. SCO: More Ironic Than Alanis
2. The Kernel: Top Stories This Week
  - Insurer Provides Details On Plans To Offer Linux Litigation
Protection
  - BayStar Demands Return Of $20 Million Investment From SCO 
  - Sound Card Support Is The Achilles Heel For Linux
3.. Only The Best Linux And Open-Source News
4. INTERVIEW: Sun Microsystems CEO Scott McNealy
5. TRENDS: MySQL Gets Ready For Its Close-Up
6. VOTING BOOTH: Cast Your Vote On The Sun-Microsoft
Alliance
7. Shameless Self-Promotion
8. To Unsubscribe And Subscribe

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-----------------------------------------

1. EDITOR'S NOTE: 

BAYSTAR VS SCO: MORE IRONIC THAN ALANIS

You have to appreciate the irony of SCO's situation. How
frustrating - to be accused in public of doing something wrong,
but not to be told what it is, so you can't even effectively
defend yourself. SCO's entire business is at stake. 

This is pretty much what SCO did to the Linux community a year
ago when SCO filed its lawsuit against IBM. And it's now
happening to SCO, as investors BayStar Capital claim SCO has
violated their investor agreement. BayStar is demanding its $20
million back, and will say what SCO did wrong in only the
sketchiest of terms. 

BayStar Demands Return Of $20 Million Investment From SCO 
http://www.linuxpipeline.com/news/showArticle.jhtml?articleId=18901902

All we can do is speculate about the real reasons why BayStar
Capital is looking for a refund. BayStar isn't talking and SCO
says all it knows is in a letter that BayStar sent to SCO on
Thursday.

As Dion Cornett, a financial analyst with Decatur Jones Equity
Partners LLC, pointed out, it seems unlikely that BayStar's
stated reasons are its real reasons.  BayStar cited specific
sections of the investor agreement with SCO. The agreement is a
dense thicket of legal language. But it appears that BayStar
believes SCO either withheld information it was required to
disclose, lied to BayStar, or failed to allow BayStar to review
public statements and press releases, which SCO was contractually
obliged to do. 

Like I said, all we can do is speculate in the absence of
information, but these appear to be unlikely reasons to ask for
out of a $20 million investment, six months after announcing the
investment and two months after drawing up the agreement. 

BayStar had to know that its demand for money back would be a
huge vote of no confidence, and could be a crippling blow against
SCO. In asking for the money back, BayStar was damaging its own
interests, its own $20 million investment in the company. 

So the stated reasons for BayStar wanting out of the deal are
probably a pretext. As Cornett notes, probably what's really
going on is that BayStar thinks its investment in SCO has gone
bad, and is looking to minimize its loss. 

BayStar could be looking to save face. As Cornett said, BayStar
is in the business of investing other people's money, and BayStar
could well think that investing in SCO makes BayStar looks
stupid. "It's one thing to lose a $20 million because you were
stupid," Cornett said, "another thing because you were lied to."

BayStar could simply be looking for leverage to negotiate better
terms. 

Whatever BayStar is doing, it's terrible for SCO. The company
will find it difficult to find other investors. And SCO needs
other investors. The company only had about $11.4 million revenue
in the first fiscal quarter of 2004 - note that's significantly
less than the BayStar investment - and a net loss applicable to
common shareholders of $2.3 million. SCO's future depends on its
winning its claim that Linux infringes on Unix intellectual
property claims owned by SCO. And that's going to be a tough
fight:

- First they have to show that they, and not Novell, own Unix.
SCO and Novell are in court over that issue. 

- They have to prove that Unix intellectual property is in Linux.

- To win against IBM, SCO has to prove that IBM's own
programmers put the IP in Linux.

- They have to break the General Public License, which has been
in use for a decade or so. This is, in part, because SCO itself
was distributing Linux under the GPL. If the GPL stands, the
entire case collapses.

It's a tough job. Smart lawyers might be able to pull it off, but it's
going to be expansive. SCO has to win lawsuits against other
companies with much deeper pockets than theirs: IBM, Novell, Red
Hat, AutoZone, and DaimlerChrysler. 

One of the investors that SCO needs to keep happy is its own
attorneys, Boies, Schiller and Flexner, who are working for both
cash and for a 20 percent stake in SCO. If Boies, Schiller and
Flexner decides SCO's future is weak, SCO could lose another
major investor - and its lawyers too. 

And now SCO has to keep BayStar from taking its money and going
home, which may involve yet another lawsuit for SCO.

--Mitch Wagner, Editor
Linux Pipeline
http://www.linuxpipeline.com/
mailto:mwagner@cmp.com?Subject=LPNfeedback

For more commentary and links from Mitch Wagner, see Wagner's
Weblog
http://wagblog.internetweek.com

-----------------------------------------

2. THE KERNEL: TOP STORIES THIS WEEK

Insurer Provides Details On Plans To Offer Linux Litigation
Protection
http://www.linuxpipeline.com/news/18901931
The insurance would protect customers against lawsuits that might
be brought by SCO, which claims ownership of underlying Linux
intellectual property, and has already sued two Linux users. The
insurance would also protect customers against other intellectual
property claims.
 	
BayStar Demands Return Of $20 Million Investment From SCO 
http://www.linuxpipeline.com/news/18901902
BayStar claims SCO is in violation of their investor agreement.
If granted, the demand would be a significant blow to SCO.
 	
Sound Card Support Is The Achilles Heel For Linux
http://www.linuxpipeline.com/trends/18901998
New Linux distros still fail a task that Windows 95 -- yes, 95! -
- easily handles, namely working with mainstream sound cards.
That sends the cost of commercial, paid versions of Linux
dramatically higher, by columnist Fred Langa.

3. ONLY THE BEST LINUX AND OPEN-SOURCE NEWS
 	
National Security Experts Voice Concerns Over Operating Systems
http://www.linuxpipeline.com/news/showArticle.jhtml?articleId=18902303
Information Security expert Eugene Spafford warns against any
using "general-use operating systems," such as Linux, Windows, or
Solaris in the development of control systems for tanks,
bombs, missiles and defense aircraft. 
 	
Lindows Files For IPO 
http://www.linuxpipeline.com/news/18902432
 	
VMware To Support 64-Bit Extended Windows, Linux
http://www.linuxpipeline.com/news/18902178

Linspire Gives Away Linux OS
http://www.linuxpipeline.com/news/18901866

MySQL Moves On Clustering
http://www.linuxpipeline.com/news/18901462
 	
Lindows Chooses New Name
http://www.linuxpipeline.com/news/18901433

4. INTERVIEW: Sun Microsystems CEO Scott McNealy
http://www.linuxpipeline.com/trends/18902169
McNealy fielded questions about how his company plans to grow its
business in the midst of the current economic environment, and
leverage its partners in the process. 

5. TRENDS: MySQL Gets Ready For Its Close-Up
http://www.linuxpipeline.com/trends/18901570
MySQL -- available in open source -- is on track to gain support
for clustering, Unicode, stored procedures, triggers and views.

6. VOTING BOOTH: Cast Your Vote On The Sun-Microsoft
Alliance
http://linuxpipeline.com/vote/sun_microsoft.jhtml
Is the Sun-Microsoft alliance anti-Linux?

The voting so far: Yes - 79 percent, no - 21 percent, 135 votes
cast. 

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------- Advertisement -------------------

Maximize the potential of Linux with CA Management Software.
CA solutions can backup, secure and manage your Linux
implementation, while also allowing seamless integration into
your existing infrastructure. As a result, Linux can be easily
adopted into your enterprise. To find out more about our
continuing commitment to Linux innovations, visit
http://www.ca.com/linux

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