SCO Gets $100 Million, Lives to Die Another Day

Here I was all ready to post my thoughts on user interfaces and ease of use, when news surfaced that theSCO Group has received an investment of US$100 million to take it private.

The company once claimed to own the rights to Unix and then proceeded to sue IBM and Novell for infringing its intellectual property.

Aside from Microsoft, this company might be the biggest nemesis the free and open source world has known.

SCO has been in the throes of death for some time now, ever since a judge ruled that not only does SCO not own Unix, but Novell does, and that SCO owes Novell a lot of money for infringing its intellectual property.

Downward Spiral

Then, SCO filed bankruptcy as a way to get out of paying Novell its due, and said it would appeal the judge’s decision in favor of Novell. In fact, the company said in a recent story that it was “eager” to get on with the appeal because it’s that confident of winning.

To top it all off, the Nasdaq then kicked SCO right off its exchange when its share price dipped below the dollar-per-share minimum. And just this week, the company announced it would lay off 30 of its 115 employees.

The investment announced Thursday will take the company private, rescuing it from bankruptcy and pink-sheet hell — but I doubt it will be able to rescue SCO from itself.

Stephen Norris Capital Partners “and its partners from the Middle East have agreed to provide up to $100 million to finance a plan of reorganization for The SCO Group Inc.,” it said in a statement. “As part of the financing, SNCP will take a controlling interest in the company, while taking it private.

A Plan

“SNCP has developed a business plan for SCO that includes unveiling new product lines aimed at global customers. This reorganization plan will also enable the company to see SCO’s legal claims through to their full conclusion,” the statement continues.

So, how much of that hundred mill is going straight into Novell’s coffers? A portion, certainly. How much will be left afterward? That’s the question on the minds of Slashdot denizens.

“I think, in a backwards way, it’s a good thing. There’s some concern in some quarters that SCO evaporating before the questions it raised would leave those questions unanswered, and that someone might try this stunt again. Now everything, including what SCO owes Novell, will get a full hearing,” wrote MightyMartian in a post on Slashdot.

“We saw a tremendous investment opportunity in SCO and its vast range of products and services, including many new innovations ready or soon to be ready to be released into the marketplace,” said Stephen Norris, managing partner for SNCP. “We expect to quickly develop these opportunities, and to stand behind SCO’s existing base of customers and partners.”

Who is Stephen Norris? He founded the Carlyle Group, a Washington, D.C. private equity firm that has been involved in leveraged buyouts and other high-finance deals, mainly in aerospace and defense.

He also “acted as a principal financial advisor to Prince Al-Waleed bin Talal Al Saud of Kingdom Holding Company, in structuring and negotiating the re-capitalization of Citibank, which returned over $15 billion in profits on about $590 million of equity invested. He also advised or played a key role in other Kingdom Holding Company investments,” according to his bio on the SNCP Web site.

I’m sure the Saudi royal family has a great deal of money, but I’m also sure they’re not in the business of just throwing it away. Time will tell just what this business plan for SCO going forward actually is. My advice would be something other than ill-advised litigation.

Maybe they should try creating something of value and then selling it to people.

Click here to e-mail Jason Z. Cohen.

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