Halloween X: Follow The Money
3 Mar 2004
Excuse me, did we say in Halloween IX that Microsoft's
under-the-table payoff to SCO for attacking Linux was just eleven million dollars? Turns out we were
off by nearly an order of magnitude — it was much, much more than
The document below was emailed to me by an anonymous whistleblower
inside SCO. He tells me the typos and syntax bobbles were in the
original. I could not, when I received it, certify its authenticity,
but I presumed that IBM's, Red Hat's, Novell's, AutoZone's, and
Daimler-Chryler's lawyers could subpoena the original. On March 4th,
within 24 hours of publication, SCO confirmed that the memo is legitimate.
Explanatory comments are interspersed in brown serif font
(I changed this from green because of complaints from the colorblind).
Particularly noteworthy bits of the original are in red.
--- From the mailbox of chris sontag
From: Mike Anderer
Sent: Sunday, October 12, 2003
To: [email protected]
CC: Bob Bench
Subject: Conversation Friday
I know you were going totalk to Bob later Friday, but I figured I would
outline the issues.
1) Baystar is easy as they were just a Microsoft referral and would be 2%
2) Any licensing deal would be at 5%
3) Much of the other work would go from 2% to 3% as I have engaged in
direct, but this would require according to Bob either Darl or you
signing off on the fact that this ane was not a referral.
4) On the patent side for IPX, where foes that fit it. I am working
with the lawyers to get these moved from provisional to more complete in
the next week. I think it will spawn at least 3 patents. Ed and I are
the inventors on these. What do we fo here
5) The RedHat, Acrylis examiniation, there is no upside here is this
billable seperatly. I bought a PC and loaded up RedHat and will take
that over and work through it with the Lawfirm. What do we do here?
I realize the last negotiations are not as much fun, but Microsoft will
have brough in $86 million for us including Baystar. The next deal we
should be able to get from $16-20, but it will be brutial as it is for
go to makerket work and some licences. I know we can do this , if
everyone stays on board and still wants to do a deal. I just want to
get this deal and move away from corp dev and out into the marketing
andfield dollars....In this market we can get $3-5 million in
incremental deals and not have to go through the gauntlet which will get
tougher next week with the SR VP's.
We should line up some small acquisitions here to jump start this if we
do it. We shoudl also do this ASAP. Microsoft also indicated there was
a lot more money out there and they would clearly rather use Baystar
"like" entities to help us get signifigantly more money if we want to
grow further or do acquisitions
This Microsoft deal is the Ante to the poker game...We should get this
done and go after several $2-3 Million deals from the expense side of
The will help us a lot and if we execute we could exit and Unix
componients we have build potentially back to Microsoft or MCS.
I think they are on track and may not be able to push much more this
round, but there are other ways to get money from them, their partners,
investment bank referrals, etc..
Do kepp in mind that they have brough us between $82 million and $86
million if this deal is between $4million per quarter where Rich is at,
or it turns into %5 million wjich is the lowest number Chris had
There will be more, lons, partnerships, etc..but we need to just get
this one done. It is too high profile, it is also critical, but they
are not the people to pitch. We should get what we can from them ad
then work the other and larger areas of the company and groups where
they have real budget and need for our help.
Let me know your thoughts.
There you have it. At least a third of SCO's entire market
capitalization, and their entire current cash reserves, is payoffs
funnelled from Microsoft. Their 10Qs reveal that
every other line of cash inflow is statistical noise by comparison.
The brave new SCOsource business model is now clear: sue your
customers, shill for Microsoft, kite your stock, and pray you stay
out of jail.
Five days after this memo was written, SCO's PR chief Blake Stowell
responded to widespread speculation that Microsoft was behind the
Bystar deal by vehemently denying it.
This continues to be SCO's party line. Their
acknowledges that the memo is authentic but claims that Anderer —
the consultant they hired to find, handle, and brief the Board Of Directors
about this kind of
Transaction (see the
Statement of Work in his
contract with SCO), was mistaken about the deal. They
would have us believe that Anderer wrote this memo to Chris Sontag expecting
to collect a commission for bringing in Microsoft on a deal that, according
to SCO, didn't involve Microsoft at all.
We think the kindest interpretation we can put on these events is that
Blake Stowell isn't lying through his teeth, but was kept out of the loop
so he could honestly deny all knowledge of Microsoft's involvement. If so,
we wonder what else SCO's director of PR doesn't know...
And, of course, the next question to ask, the one that might pierce all
of SCO's and Microsoft's denials, is a very simple one: did Mike Anderer
get paid his commission on this "misunderstood" transaction?
There is reason to believe that the Securities and Exchange Commission is on the
On 13 March, Mike Anderer gave an
on NewsForge in which he says "I suspect Microsoft may have 50 or more of
these lawsuits in the queue."