SCO — What does the market think?
Even though I live in the socialist haven of Canada, I’m a strong believer in the free market.
If it is true that SCO has a right to charge licencing fees on Linux, then the SCOX market capitalization should include both the value of SCO and the “value” of Linux.
Today, the market cap is almost $160M. Before the whole fiasco hit, it was at less than $30M.
So, a gain of $130M is likely the value the market is assigning to SCO’s holding in Linux (assuming SCO hasn’t done anything drastic to increase their value otherwise in the same period). One way of looking at it would be the percentage chance of success times the value of the trademarks. That is, if (for sake of argument), the market sees the value of Linux as $1.3 billion, and SCO having a 10% chance of succeeding, then the value of SCO should increase $130M.
Now, I think the value of the right to licence Linux is worth a fair bit, at least into the $1.5B area, which would correspond to the market thinking there is a ~10% chance that SCO is right.
Just thinking out loud.
Doc made a great point about this issue on last night’s “Linux Show” (http://thelinuxshow.com/). He suggested that win or lose, the Securities and Exchange Commission should be opening an investigation into SCO’s practices. They’ve filed this suit against IBM, fanned the flames to drive share prices (and market cap) ever higher, then sold a large number of those shares at an artifically inflated profit. It’s already been noted elsewhere that key SCO executives are shedding shares in big numbers over the past few months.
Then again, this hardly compares to some of the other recent stock manipulations and the SEC has done virtually nothing. It probably won’t happen, but it’s more food to add to your thoughts.
August 6th, 2003 at 11:30 amThis isn’t the first time the company has done this… Back when they were Caldera, they bought DRDOS solely for the opportunity to sue Microsoft.
Back at the time, we were probably rejoicing at someone taking on the Evil Empire (TM). Little did we know the tactic would come back against us.
August 7th, 2003 at 8:36 am