An e-mail leaked in early March from the SCO Group Inc., indicating that Microsoft Corp. was behind a US$50 million investment in SCO in October 2003 by BayStar Capital, is inaccurate, SCO said.

“It was simply a misunderstanding of facts by an outside consultant who was working on an unrelated project to the BayStar transaction,” said Marc Modersitzki, spokesperson for SCO in Lindon, Utah.

The leaked letter was written Oct. 12, 2003 by Mike Anderer, a consultant with S2 Strategic Consulting LLC. It was addressed to Chris Sontag, vice-president and general manager of SCOsource, the division of SCO responsible for overseeing intellectual property and copied to Bob Bench, CFO of SCO. The e-mail was posted on www.opensource. org by Eric Raymond, president of the Open Source Initiative, after he received it anonymously. Anderer’s writings indicate that SCO raised a lot of money with the help of Microsoft.

The following is an excerpt from Anderer’s Oct. 12 e-mail: “I realize the last negotiations are not as much fun, but Microsoft will have brough[t] in [US]$86 million for us including BayStar,” Anderer wrote. “The next deal we should be able to get from [US]$16-[US$]20 [million], but it will be brutal as it is for go-to-market work and some licenses.”

“This is the smoking gun,” Raymond wrote in response to that comment. “We now know that Microsoft raised at least [US]$86 million for SCO but according to the SCO conference call this morning (March 3, 2004), its cash reserves were [US]$68.5 million. If not for Microsoft SCO would be at least [US]$15 million in debt today.”

The e-mail suggested Microsoft was not only behind the BayStar deal but had the ability to help SCO raise further cash if needed and would rather use “BayStar like entities” to get them the money.

SCO denied these allegations. “Contrary to speculation…Micro



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