SCO: Microsoft played no role in VC fund-raising

It dismissed claims that Microsoft had helped raise tens of millions of dollars for SCO

The SCO Group Inc. said yesterday that Microsoft Corp. wasn't involved in raising venture capital funding for the company, dismissing claims that a leaked e-mail demonstrated that Microsoft had helped raise tens of millions of dollars for SCO.

An e-mail from an outside consultant to SCO apparently involved in brokering deals for the company was posted to the Open Source Initiative Web site Wednesday. The e-mail suggests that Microsoft "brought in $86 million" for SCO.

The e-mail links Microsoft to a $50 million investment in SCO by a group led by BayStar Capital. BayStar was "a Microsoft referral," according to the e-mail. The BayStar investment was announced last year.

Microsoft and Sun Microsystems Inc. signed Unix licensing deals with SCO in 2003, earning the company $16.6 million, but the leaked memo appears to suggest that SCO has made far more money off of Microsoft than previously thought.

SCO confirmed the authenticity of the Oct. 12, 2003, e-mail, but dismissed its contents.

"We believe the e-mail was simply a misunderstanding of the facts by an outside consultant who was working on a specific, unrelated project to the BayStar transaction. He was told at the time of his misunderstanding," a SCO spokesman said.

The e-mail was sent by Michael Anderer of S2 Strategic Consulting LLC to Chris Sontag, a SCO senior vice president and general manager of the company's SCOsource division, and to Robert Bench, SCO's chief financial officer. The SCOsource division oversees licensing of the Unix vendor's intellectual property.

SCO has drawn the ire of the open-source community by claiming that its copyright-protected code was illegally copied into Linux. SCO has sued IBM alleging copyright infringement and breach of contract and earlier this week sued Linux users over their use of the open-source operating system.

Open-source advocate Eric Raymond in comments on the leaked e-mail said it represents a "smoking gun." It confirms that Microsoft, which has identified Linux, and open-source in general, as one of its main competitive threats, is doing much more than buying a license on Unix technology from SCO, according to Raymond's comments on the Open Source Initiative's Web site.

Raymond is incorrect, the SCO spokesman said. "Contrary to the speculation of Eric Raymond, Microsoft did not orchestrate or participate in the BayStar transaction," he said.


Copyright © 2004 IDG Communications, Inc.

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