p2pnet.net News:- “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.”

Both statements come in Eric Raymond’s 10-part (so far) Halloween saga, posted on his Open Source site here, citing a leaked memo from Michael Anderer, ceo of S2 Partners, a “Strategic Consulting” firm, to SCO vp Chris Sontag, and dated October 12, 2003.

Raymond’s site carries the memo, interspersed with his comments. We’ve lifted it without the remarks. It reads:

-- From the mailbox of chris sontag

From: Mike Anderer
Sent: Sunday, October 12, 2003
To: csontag@sco.com
CC: Bob Bench
Subject: Conversation Friday

Chris:

I know you were going to talk 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 [sic] 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 their company.

The [sic] will help us a lot and if we execute we could exit and Unix componients [sic] 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 [sic] in mind that they have brough [sic] us between $82 million and $86 million if this deal is between $4 million per quarter where Rich is at, or it turns into %5 million wjich [sic] is the lowest number Chris had interest in.

There will be more, lons [sic], 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 [sic] 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.

-Mike

“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,” Raymond goes on.

“This continues to be SCO’s party line. Their response 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.”

Linux proponents long have suspected Microsoft, “which sees Linux as a competitive threat, has been a force behind SCO’s Linux-related legal actions,” says NewsFactor here, going on:.

“SCO’s $5 billion lawsuit claiming that IBM moved Unix code into Linux has created doubt about potential liabilities in adopting the open-source OS.

“Both SCO and Microsoft deny working together against Linux. SCO maintains that its lawsuit against IBM - and now Linux users AutoZone and DaimlerChrysler - is necessary to protect its intellectual property. Microsoft has acknowledged that it licensed SCO’s intellectual property, but says it has not otherwise invested in SCO.

“On its face, the leaked memo suggests otherwise. BayStar Capital, referred to in the memo as a conduit for SCO funding, is a venture capitol firm. BayStar has invested $50 million in SCO.

“And Vulcan Capital, the investment firm founded by Microsoft co-founder Paul Allen, has invested heavily in BayStar. Allen continues to be the second-largest Microsoft share owner, after Bill Gates.”

SCO spokesperson Blake Stowell told NewsFactor, “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, and he was told at the time of his misunderstanding.”

Stowell referred to Linux expert Eric Raymond’s conclusions as “speculation” and furthermore, Microsoft did not participate in or orchestrate the BayStar investment, he’s quoted as saying in the report.

Microsoft representatives were not immediately available for comment, adds NewsFactor.

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