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01.09.07

Is Novell the New SCO?

Posted in Antitrust, Apple, Deals, Intellectual Monopoly, Microsoft, Novell, SCO, Servers, UNIX, Windows at 12:04 pm by Shane Coyle

In a posting on Groklaw regarding SCO v. Novell, Novell is demanding the lions’ share of the Microsoft and SUN license revenues, since it appears that SCO was selling something that didn’t belong to them. One notable statement in the filing is this statement by Novell:

For SCO, bankruptcy is inevitable; it characterizes its assets as merely those "remaining" and does not rebut Novell’s arguments that its bankruptcy is imminent.

The question has already been asked, but will Novell acquire SCO’s assets? Tom Yager believes so, in a posting where he theorizes that the Microvell cartel could be colluding against Apple (and everyone else, for that matter) in the x86 server market.

Microsoft bought its way out of Novell v Microsoft, I think, by pretty much ceding majority share of the x86 enterprise server market to Novell. The deal, which Microsoft announced as a partnership, is a real ankle-grabber: a) Microsoft will give 70,000 licenses of SuSE Linux Enterprise Server to Windows server customers, b) Microsoft will let Novell ride along on sales calls, c) Microsoft waives its right to sue Novell over intellectual property, and d) well, the D is not something that Microsoft is handing over. But it’s an awfully big D.

Novell is going to take back ownership of System V UNIX. It supposedly transferred this to SCO, but a Federal Judge found that the contracts had more holes than paper. Novell has leave to contest the agreements, and if SCO goes belly-up while the matter is in debate, Novell’s there to snatch up a very valuable property.

Novell’s management is almost entirely new appointees, with only Hovsepian and LaSala with more than 18 months tenure. Recent financial moves by the company seem to have a familiar feeling, is Novell the new SCO?

Update (Roy):

There are two new items that fit rather well into this discussion. In the first, Dana deal with Novell’s ‘inheritance’ of SCO’s issues.

If this is the end it seems to leave Novell in a curious position. In its deal with Microsoft, Novell appears to have granted Microsoft the power to claim that Microsoft holds the same kinds of rights to Linux that SCO claimed, and fourth quarter downloads indicate that many customers are taking those claims seriously.

You can now brace yourself for what could prove to be SCO’s ‘judgment day’.

In conjunction with the financial results press release, the company will also host a conference call that same day at 5:00 p.m. (Eastern Time) to discuss the Company’s results.

Update #2 (Roy): SCO Responds to Novell FUD

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3 Comments

  1. Rich Wermske said,

    January 10, 2007 at 11:00 pm

    Gravatar

    Your data is in error and unfortunately it calls your thesis into question. I have been commenting on the Novell board’s activities recently at http://www.wermske.com

    Thomas G. Plaskett,
    Director since 2002, Non-Executive Chairman since June 2006, age 63, also a director of Alcon, Inc. and RadioShack Corporation

    Albert Aiello Jr.,
    Director since 2003, age 63, currently a Managing Director of Albert Aiello & Associates

    Fred Corrado,
    Director since 2002, age 66, also a director of two non-profit organizations, Covenant House and the New Jersey Performing Arts Center.

    Richard Crandall,
    Director since 2003, age 63, currently a Managing Director of Arbor Partners, also serves as the chairman of the Enterprise Software Roundtable, also a director of Diebold, Inc., and the Dreman/Claymore Dividend & Income Fund. Chairman of another organization?

    Ronald W. Hovsepian,
    Director since 2006, age 45, serves as President and Chief Executive Officer of Novell, Inc., also is non-executive Chairman of the Board of Directors of the Ann Taylor Corporation.

    Claudine B. Malone,
    Director since 2003, age 70, currently President and Chief Executive Officer of Financial and Management Consulting Inc., also serves on the boards of Hasbro, Inc., and Aviva Life Insurance Company, and Science Applications International Corp., and LaFarge North America.

    Richard L. Nolan,
    Director since 1998, age 66, currently an active professor for several universities, also a director of The Great Atlantic & Pacific Tea Company.

    John W. Poduska, Sr., Ph.D.,
    Director since 2001, age 69, also a director of Anadarko Petroleum Corporation and Safeguard Scientifics, Inc.

    James D. Robinson III,
    Director since 2001, age 71, currently General Partner of RRE Ventures and currently Chairman of RRE Investors, LLC, also is a director and the non-executive Chairman of Bristol-Myers Squibb Company, also serves as a director of The Coca-Cola Company and First Data Corporation, also a director of several private IT Companies held as investments in RRE Ventures.

    Kathy Brittain White,
    Director since 2003, age 57, currently President and Founder of Rural Sourcing, Inc., also serves as President of the Horizon Institute of Technology, also is a director of Mattel, Inc.

    Now, I will be the last person to defend this lack luster board and I have called for the ouster of several of its members. But I would hardly characterize the board as junior or comprised of “almost entirely new appointees.”

    The concept of a Boycott is simply absurd. This isn’t the middle school play yard. It’s business. The critical mass of decision makers necessary to create any material impact on Novell’s financial statements isn’t going to be swayed by passionate screams that the “sky is falling” from idealistic opensource misanthropes.

    I appreciate Tom Yager’s razor wit and the point he is making regarding System V Unix has to be digested as literature and not a legal reference. You are reading far too much into the letter of his words.

    Finally, the logic is non-existent. Novell’s behavior has not been properly established in any context that can be affiliated with SCO’s or Microsoft’s behavior. Despite all the desires to the contrary, Novell is not an innocent youth and this is certainly not their first time at the rodeo. Marketing FUD, by its very nature, is a strategy that lacks substance but sells well. To even imply that Novell is in the Minor Leagues plying *nix FUD with a backwater team like SCO is naive and obtuse. Why market FUD when the facts are so much more effective?

    Vista and Longhorn contain System V code. Follow the yellow brick road, Dorthy.

    Rich Wermske

  2. shane said,

    January 10, 2007 at 11:08 pm

    Gravatar

    My apology, its "management" that is listed on the google page, not the "board" that is an error. Thank you.

    Everything else, including Novell FUDding against *nix (albeit in a more sophisticated and profitable manner than SCO), and Boycotting a company in order to show its management and investors that its actions are unacceptable, I stand by.

  3. Rich Wermske said,

    January 10, 2007 at 11:21 pm

    Gravatar

    Well stated. I respect your conviction and position even as I disagree with it. Ultimately, I suppose we have common cause, yet choose to carry different weapons to the battlefield.

    Oo-Rah, Shane! :-) If nothing else, it will be an interesting drama. Be well.

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