Who is selling SCO stock?

SCO's stock has gone up significantly in value since the company filed its suit against IBM. There has been speculation that the real purpose of the whole operation was to inflate the stock price and give insiders a chance to cash out before it all falls apart. Insider trades must be publicly documented, of course, so we took a moment to see what has happened so far.

Perhaps the most interesting filing so far is this S/3A form, first filed in February and since updated several times. It appears that two external stockholders, John R. Wall and Morgan Keegan & Co., have decided to dump an even million shares that they hold. SCO has gone through the whole registration process - at its expense - to make this happen, but the proceeds go directly to the two sellers.

Mr. Wall got his (800,000) shares at the end of 2002 (along with $100,000 in cash) for a $1 million note payable by Vista.com, a company he founded. Those shares, at current prices, are worth nearly $7 millon. Not a bad deal.

Morgan Keegan was retained by the company "to act as an exclusive financial advisor to assist the Company in its analysis, consideration and if appropriate, execution of various financial and strategic alternatives available to it including, but not limited to, securing additional equity and/or debt capital and potential strategic transactions including mergers, acquisitions and joint ventures" (2002 annual report). The cynical among us might conclude that a "strategic alternative" has indeed been chosen. There is, however, no evidence that either of these two large shareholders have anything to do with the lawsuit - they are simply happy beneficiaries.

There have been some recent sales by SCO executives:

• Opinder Bawa has one filing for having sold 15,000 shares, and another for 8,000 shares. He would appear to have sold all the shares he possesses (but he still has a lot of options).

• Robert Bench has three filings: 7000 shares, 5000 shares, and 4100 shares.

• Jeff Hunsaker sold 5000 shares at the beginning of June.

• Darl McBride sold 7000 shares just after the suit was filed.

The record thus shows a small amount of cashing-in as the stock price goes up, but, with the exception of the large sale by John Wall and Morgan Keegan, nothing all that significant. If all this is truly an effort by SCO management to cash out, the people involved have not yet made their move.

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