Investor Blasts SCO's Strategy On Linux

SCO Group's public aggression toward Linux users and vendors could cost the company a large investment from BayStar Capital. The venture-capital firm says that SCO needs to make changes, which include altering its communications strategy regarding Linux, if it wants to keep the firm's $20 million investment.

CEO McBride may have to rein SCO in.

BayStar wants SCO to take a more "disciplined approach" in communicating with the public about Linux, a BayStar spokesman says. While the spokesman wouldn't go into detail, SCO's combative stance is unquestionable. President and CEO Darl McBride has publicly declared SCO's plan to systematically sue Linux users who don't pay it licensee fees, and SCO last month filed lawsuits against DaimlerChrysler Corp. and AutoZone Inc., a car-parts supplier.

BayStar also wants SCO to strengthen its management team with people skilled in the areas of intellectual-property management, litigation, and the overall running of a public company. And SCO needs to focus on its year-old lawsuit against IBM, which stands to offer the greatest windfall to shareholders, BayStar says. "We believe that when we invested, there was a strong and valuable asset in the intellectual-property case" against IBM, says the spokesman. "We still believe that SCO has the chance to prevail."

BayStar's threat appeared in a recent Securities and Exchange Commission filing by SCO. A spokesman for SCO says the company is "ready and willing" to work with BayStar to resolve its issues.

Evan Leibovitch, president of the Linux Professional Institute, says any change in SCO's communications strategy won't make a big difference to the Linux community, which has largely ignored SCO's threats of lawsuits. Says Leibovitch: "The Linux community always thought SCO was blowing smoke."