News

SCO, Google's IPO and selling short

Discussion in 'Other Off Topic Forum' started by Schatten, Jan 6, 2004.

  1. Schatten

    Schatten F1 World Champ
    Rossa Subscribed Owner

    Apr 3, 2001
    11,234
    Austin, TX
    Full Name:
    Randy
    Over the past 9 or so months, I've been following closely with the SCO issues with IP and infringement with Linux and IBM. Even though they appear to be pulling ideas for lawsuits out of their a$$es, I can't exactly judge it on a verdict basis, but only on an ethical basis. Over the past many months, SCO stock has risen and risen, despite all the bad press, and despite having the most hated person, Darl McBride, rule their gameplan, their stock has risen from a dollar up to around twenty.

    https://us.etrade.com/e/t/invest/quotesresearch?etstyle=1y&size=t&sym=SCOX

    On midnight of the 11th, this month, they have to shell up their case against IBM. To date, they have stalled and failed to spill the beans. But then again, if they did, they would be disclosing the quickly changable (from the Linux community) infringing IP code within the Linux source code.

    So my question is, gambling that McBride will fail, even though his stock has shot through the roof, buy now with an uptick to sell short. But is this possible? How long of a time-line do you have on selling short? It isn't like you can hold it for years until you think the stock will go South?

    The next issue is Google's up and coming IPO (they are seeking underwriters at this time, so it will be a while). When it comes out, will it be like PALM, being released at 22 a share and shooting up to 150, yet to fall to 23 at the end of the day? Or has the IPO craze gone South, and it will just open and stick around in that position?

    Both of these are big names, and not penny stocks. These will have large public eye which some of you might not prefer. I'm only asking these questions for possible ideas, but more along the lines for advice from the experts that trade successfully, or trade for a living. I know it is all a risk, but taking an educated risk is preferred.
     
  2. Evolved

    Evolved F1 Veteran
    Rossa Subscribed

    Nov 5, 2003
    8,204
    Pittsburgh, PA
    The SCO issue is true crap shoot.

    They might win, in which casee every short is going to be squeezed to death. There is already to much short interest in this company. Any positive rumor will cause all the shorts to cover and double the company stock price. Way to much risk of losing all your money either way you bet. IBM on the other hand can afford to keep them in court for 100 years with just TODAYS(1/6/04) revenue. Why not buy some stock in IBM instead?

    I wouldn't bet against Google either. As with a lot of IPO's In the short term there will a jump in price and then a decline. In the long term google is a truely innovative company. However I think being a PRIVATE company has helped google in a lot of ways. The IPO could hurt the innovative spirit in the hunt to meet this quarters profit projections.

    Take a look at the principal creators of google. Did they come from wealthy backrounds? If so this is a good thing IMO. People who suddenly find themselves very rich tend to start to act differently and lose their edge. For guys like Bill Gates it's not about the money because he came from a well off family to start with. I tend to bet on guys like that. Someithng else drives them besides getting rich and retiring at 35. They treat their work like their children, as something that leaves a mark on the world and will continue after they are gone.
     
  3. Schatten

    Schatten F1 World Champ
    Rossa Subscribed Owner

    Apr 3, 2001
    11,234
    Austin, TX
    Full Name:
    Randy
    Definately some good points in there to keep in mind. Reminds me of a few friends who started up a company. They want to get it so right so they can sell it off and retire onto the next project.
     
  4. Doody

    Doody F1 Veteran

    Nov 16, 2001
    6,099
    MA USA
    Full Name:
    Mr. Doody
    i agree with you on the google front. i don't believe that what they do is all that defensibile. the minute they open they're (very tightly closed) kimono, a zillion competitors are going to go to town with rewnewed vigor to try to beat them down. i don't see how being public will help them all that much - they're already #1. they should stay private, but i assume they don't entirely have the choice - the investors want their money out :).

    doody.
     
  5. Doody

    Doody F1 Veteran

    Nov 16, 2001
    6,099
    MA USA
    Full Name:
    Mr. Doody
    i don't know your friends, but don't rush to paint everybody with the same brush.

    there are plenty of good start-up ideas that are started up SOLELY to be bought out later. they create something very specific that the bigger companies aren't likely to create and their exit strategy is for one of those bigger companies to buy 'em out eventually. in the long run, it's often cheaper for the big company to do some of its riskier R&D this way instead of in-house with its huge overhead costs, cultural challenges, and the like.

    but at google's valuation (billions and billions of stars!) that's for sure not the play ;).

    doody.
     
  6. Schatten

    Schatten F1 World Champ
    Rossa Subscribed Owner

    Apr 3, 2001
    11,234
    Austin, TX
    Full Name:
    Randy
    definately not going to paint them with the same brush at all. I wish I could say they work for peanuts, but that would be living a life of luxury compared to the type of living these guys have had in the last few years.

    they have released some fantastic products! however, it all comes down to timing. for instance, the Sirius and XM deals were all about marketing dollars, rather than landing the best product. these guys actually released a far better product, ford even wanted in, but they couldn't because of the dollars that went to the firestone issues at the time. other car manufacturers were going to get in it as well, but it failed at the timing issue. XM and Sirius still aren't bad products, but for the type of alternative-radio and type of alternative-cd type of music products for the time - they are the last on the list in regards to possibilities and abilities to perform. but not everything that is the best gets released, nor praised in the marketplace.

    thanks for the opinions.
     
  7. Mitch Alsup

    Mitch Alsup F1 Veteran

    Nov 4, 2003
    6,333
    I follow this case closely.

    The porported infringement code shown to various audiences has been traced to system 7 circa 10 years before SCO even existed and others to BSD 4.x also several years before SCO even existed. albeit with different comments.

    SCO will have an emense uphill fight with all the modern ways to trace lineages of code sequences back into the distant past in just a few minutes. If the case is adjuicated by a jury of computer litterate people, SCO stands a 1%. If by standard illerterate americans willing to serve jury duty, they stand at best a 10% chance of winning.

    In my opinion, this is simply an exit strategy for the SCO brass. Notice they are all dumping options at a rapid pace. My estimate is the IBM will eat them alive and get a preliminary injunction preventing SCO from asserting its porported rights agains various Linux users at the first court date in a few weeks.
     
  8. noahlh

    noahlh Formula 3

    Aug 28, 2003
    2,225
    NYC, NY
    Full Name:
    Noah
    The last I checked, it wasn't even possible to sell SCO stock short -- nobody is lending. This may have changed, but I tried to short it a few weeks ago and ran into a wall.
     

Share This Page