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PR move or reaction to SEC rumors?PR move or reaction to SEC rumors?Posted Mar 11, 2004 5:11 UTC (Thu) by error27 (subscriber, #8346)In reply to: PR move or reaction to SEC rumors? by jonathanbearak Parent article: SCO announces stock buyback program I'm no stock market junkie but it seems that this could have a huge impact on the stock price. SCO's market cap is currently $136.06M. At $9.51 per share that is about 14.3 million shares. Yarro owns 5.5 million shares and the Canopy Group owns another 5.5 million shares and neither of them is trading. So really it's just 3.3 million shares being traded. SCO is talking about buying back almost half of those 3.3 million shares. Essentially all the money that SCO has left came from the pipe deal with Bay Star. At $10 per share it would only cost $15 million. SCO was never planing to pay back the money from the pipe deal so this is a clever investment for them to make.
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PR move or reaction to SEC rumors? Posted Mar 11, 2004 13:53 UTC (Thu) by pyellman (guest, #4997) [Link] It's a PR move. This so-called buy back program is engineered for SCO to do exactly what it did, which is use the announcement as an opportunity to declare it a "demonstration of SCO's confidence in its business model moving forward". Yarro saw the huge declines in the stock value over the last few weeks, and felt he had to step into the breach to do something to protect his own investment. The goal here is to slow down the collapse in the stock price, giving people like Yarro a longer time frame to figure out if and how they are going to able to get money out of all the stock they hold.As for your math, note that the specific announcement is "to repurchase UP TO 1.5 million shares over 24 months" (emphasis mine). In the first place, 24 months is an awfully long time to schedule a stock buy back program, and in SCO's case could be meaningless, as any fool knows SCO's chances of even being around in its current form 2 years from now look to be less than 50%. In the second place, the statement "up to 1.5 million shares" of course does not require SCO to purchase ANY stock to fulfill the strict requirements of the statement. In the third place, no target price is given; I doubt very much that SCO will buy back much stock at prices anywhere near the current level ($9 or $10). In any case, you can be pretty sure that they are not going to throw $15 million of their cash pile into that hole without assurances of additional cash flows from Microsoft, which of course would mean that Microsoft was floating SCO's stock price -- something I have predicted they (Microsoft) would do if and when SCO's stock price began tanking, not necessarily to protect SCO executive's financial interest in SCO's stock, but because SCO's plummeting stock price will effectively neutralize all the FUD and PR SCO and Microsoft generate. That is, many if not most people (those who are not closely familiar with the facts) will correlate SCO's falling stock price with weakness in SCO's legal position and fortunes, which will lead to further declines in the stock, which will -- well, you get the idea. A scenario MS needs to try and prevent. Peter Yellman
PR move or reaction to SEC rumors? Posted Mar 14, 2004 16:50 UTC (Sun) by vonbrand (subscriber, #4458) [Link] I don't think MSFT will (continue to) support SCOX' stock. Right now, if SCOX goes down the drain ASAP, the whole mess goes to no conclusion. And then they can milk that for further FUD. At best, they would want stretch SCOX's slow death out, but not long enough for the unwashed masses to get wind of what is really going on here. But the fact in itself that MSFT is interested in this, and the fact that EV1, Computer Associates, IBM, AutoZone, DaimlerChrysler, Bank of America, et al are Linux users are powerfull pro-Linux signs, unlikely to get unnoticed. That HP, Sun and others offer indemity shows that "big players" are for Linux. This is bad for MSFT spin, they probably by now regret (helping in) stirring up this hornet's nest...
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