SCO lifts skirt but investors recoil
Don't you think we're attractive
Cash Register Trying to spur a bit of confidence in its shares, The SCO Group announced a stock buyback program today, touting itself as an "attractive investment opportunity."
SCO's timing here is impeccable. Just yesterday, we pointed to the protracted lull in SCO's shares, as the market cools on its prospects against IBM and on its rights to claim IP (intellectual property) license fees for certain versions of Linux. After enjoying highs over $20 per share, SCO on Wednesday dipped below $10 per share.
SCO's board moved to nurture public opinion of the company's stock by giving the go ahead to purchase up to 1.5 million shares over the next two years. Sooner rather than later most likely being the case.
"This action reflects our strong belief in the fundamental value of our intellectual property and core business," said Ralph Yarro, chairman of the board at SCO. "At current prices, we believe our stock represents an attractive investment opportunity and that this action reflects our ongoing commitment to improving long term stockholder value."
This language is not extraordinary for a buyback announcement, but it does nudge up near an uncomfortable advertisement-like line.
(You were buying in back at $20 per share. What gives now? We certainly have plenty of faith in our claims, as if we had any other choice.)
Companies often use buybacks to show confidence in their operations and to reduce the dilution of earnings by reducing the amount of shares in circulation. SCO could use a bit of help on both fronts.
But the move did not have the desired effect, at least during Thursday's trading. After a brief run up to $10.18, SCO closed the day down almost three per cent to $9.25. ®
Sponsored: Network DDoS protection