Close
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Logo
  • Latest News
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Latest News
    • Servers

    BayStar Confirms Microsoft Connection to SCO Investment

    By
    Peter Galli
    -
    March 11, 2004
    Share
    Facebook
    Twitter
    Linkedin

      The cat is finally out of the bag: Microsoft Corp. acted as the matchmaker for the $50 million investment led by BayStar Capital into The SCO Group Inc. last October.

      Microsoft has denied for months that it had any role in that investment, but a BayStar official on Thursday confirmed to eWEEK that Microsoft had indeed acted as matchmaker for the deal.

      BayStar, which is based in Larkspur, Calif., and has investments in other hardware and software companies including Neoware Inc., Roxio Inc., Commerce One Inc. and Neoware Inc., structured its $50 million investment in SCO as a private placement of non-voting Series A Convertible Preferred Shares.

      These shares are convertible into common equity at a fixed conversion price of $16.93 per share—the average closing bid price for the companys common stock for the five trading days prior to and including the date of closing.

      Once converted, BayStar will own an aggregate of approximately 2.95 million shares of SCO common stock or 17.5 percent of the companys outstanding shares.

      SCO has sued IBM for more than $5 billion related to Linux, and is also fighting lawsuits against Novell Inc., Red Hat Inc., DaimlerChrysler Corp. and AutoZone Inc.

      /zimages/5/28571.gifLegal experts took a look at SCOs recent legal moves and said its attack on Linux users would be a make or break move for the company. Click here to read more.

      Speculation has been swirling for months now that Microsoft played a role in the BayStar investment, first reported as a possibility by eWEEK last October and more recently last week when those allegations rose again with reports of a memo that links Microsoft with a financial backer of SCO.

      That memo was published to the Web last week by open-source advocate Eric Raymond.

      The latest confirmation of Microsofts role as the matchmaker for the investment, rather than as an investor itself, came Thursday when BayStar spokesman Tom McGrath confirmed that BayStar managing partner Lawrence Goldfarb had been contacted by unnamed senior Microsoft officials about two months before its investment in SCO.

      “Yes, Microsoft did introduce SCO to BayStar as a possible investment opportunity, but I need to reiterate that Microsoft did not participate in the SCO investment and is also not a participant or investor, either directly or indirectly, in BayStar,” McGrath told eWEEK on Thursday.

      McGrath declined to speculate on why Microsoft might have wanted to point BayStar towards SCO as a possible investment, saying, “Youd have to ask Microsoft that. But BayStar made 64 investments last year alone in companies in the life sciences, media and software. We talk to investment banks, company executives, venture capitalists and analysts all the time, who point us toward possible investments,” he said.

      However, McGrath also declined to say if it was unusual for senior Microsoft executives to call and point the company towards a specific investment possibility. “I dont want to be specific as to Microsoft, but generally we get ideas, suggestions and recommendations from a variety of sources.

      “But BayStar ultimately decides on behalf of its investors if it should make those investments. Remember, Microsoft is itself an investor in a lot of companies,” McGrath said.

      For its part, Microsoft spokesman Mark Martin would only reiterate the stance it has held all along, that the company has “no direct or indirect financial relationship with BayStar.” Martin declined to comment at all on Goldfarbs admission that Microsoft officials had approached him about investing in SCO.

      Microsoft has for months now been ratcheting up its battle against open-source software and Linux. In January, the company launched a new advertising campaign, referred to as “Get the Facts,” which is designed to give customers information about the advantages of using its Windows operating system versus Linux, its open-source competitor.

      The ad campaign was seen as yet another way the Redmond, Wash., software firm is trying to counter the effects of the Linux operating system and is in keeping with the strategy embraced by Martin Taylor, who took over the role of Microsoft open-source and Linux strategist last July.

      When he was appointed to the position, Taylor said he would make it his personal mission to publicize more studies that showed that Microsoft software beat the return-on-investment pants off the open-source alternatives.

      Later in January, and building on that campaign, Orlando Ayala, the senior vice president for Microsofts small and midmarket solutions and partner group, sent an e-mail to all his staff, telling them that “there continues to be a great deal of noise in the marketplace about the growth of Linux.”

      He went on to urge them to “separate hype from reality and make sure we work to understand what is really happening in the industry.”

      Next Page: First SCO Licensee Stars on Microsoft Marketing Site

      First SCO Licensee Stars


      on Microsoft Marketing Site”>

      Also helping raise the suspicions of those in the open-source industry that Microsoft is behind the funding of SCO and its many lawsuits is the fact that SCO recently announced that EV1Servers.Net, the dedicated hosting division of Houston-based Everyones Internet, had signed an intellectual-property-licensing agreement with SCO, granting the firm the right to use Linux.

      At the same time, EV1Servers.Net is also listed prominently on the Microsoft “Get the Facts” Web site, and even is posted as an industry case study that shows “the benefits of investing in Microsoft Windows instead of Linux through case studies profiling live installations.”

      The case study is entitled “Leading Hosted Service Provider Deploys Windows-based Hosting Solutions Faster than Linux-based Solutions” and was posted to the site on September 15, 2003.

      It states that “using the Server Provisioning component of the Microsoft Solution for Windows-based Hosting version 2.0, EV1 Servers.net has discovered that it can deploy a Windows-based server, along with the Ensim WEBppliance Pro control panel, in less than half the time it takes to deploy a Linux server with the same control panel.”

      Asked about the relationship between Microsoft, EV1Servers.Net and SCO, Microsoft spokesman Martin would only say that “Microsoft had no involvement in the EV1 and SCO relationship. Microsoft is pleased to call EV1 a customer and an industry partner. However their dealings with other companies are their own.”

      Microsoft has been stepping up its assault on open source and Linux following the loss of many high-profile customers to Linux, many of them governments and governmental agencies and departments.

      In December the Israeli government said it would encourage the development of lower-priced alternatives to Microsoft software in an effort to help expand computer use by the public.

      The governments of Britain, Brazil, Japan, South Korea, China, South Africa and Russia are also all exploring open-source alternatives to Microsoft, while federal agencies in Germany, France and China are all already using or considering open-source alternatives.

      But Microsoft has been fighting back and has actively been lobbying governments around the world not to embrace open-source applications and Linux.

      To that end, Microsoft last January announced a new global initiative to provide governments around the world with access to Windows source code under its Government Security Program, designed to “address the unique security requirements of governments and international organizations throughout the world.”

      /zimages/5/28571.gifCheck out eWEEK.coms Linux & Open Source Center at http://linux.eweek.com for the latest open-source news, reviews and analysis.
      Be sure to add our eWEEK.com Linux news feed to your RSS newsreader or My Yahoo page: /zimages/5/19420.gif http://us.i1.yimg.com/us.yimg.com/i/us/my/addtomyyahoo2.gif

      Peter Galli
      Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.

      MOST POPULAR ARTICLES

      Big Data and Analytics

      Alteryx’s Suresh Vittal on the Democratization of...

      James Maguire - May 31, 2022 0
      I spoke with Suresh Vittal, Chief Product Officer at Alteryx, about the industry mega-shift toward making data analytics tools accessible to a company’s complete...
      Read more
      Cybersecurity

      Visa’s Michael Jabbara on Cybersecurity and Digital...

      James Maguire - May 17, 2022 0
      I spoke with Michael Jabbara, VP and Global Head of Fraud Services at Visa, about the cybersecurity technology used to ensure the safe transfer...
      Read more
      Big Data and Analytics

      GoodData CEO Roman Stanek on Business Intelligence...

      James Maguire - May 4, 2022 0
      I spoke with Roman Stanek, CEO of GoodData, about business intelligence, data as a service, and the frustration that many executives have with data...
      Read more
      Applications

      Cisco’s Thimaya Subaiya on Customer Experience in...

      James Maguire - May 10, 2022 0
      I spoke with Thimaya Subaiya, SVP and GM of Global Customer Experience at Cisco, about the factors that create good customer experience – and...
      Read more
      Cloud

      Yotascale CEO Asim Razzaq on Controlling Multicloud...

      James Maguire - May 5, 2022 0
      Asim Razzaq, CEO of Yotascale, provides guidance on understanding—and containing—the complex cost structure of multicloud computing. Among the topics we covered:  As you survey the...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2021 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×