Court Hands Michael Robertson Yet Another Loss, Ruling Supports Former Linspire Employees

Several months back, Michael Robertson* and then-Linspire CEO, Larry Kettler, sued Linspire's bank, Comerica. The court has now ruled in the matter. The case was so absurd that not only did Robertson lose the case, but it was kicked out in summary judgment. That means the judge felt Robertson was so clearly in the wrong that it wasn't worth the bother of a trial, and the Judge refused to let Robertson's lawsuit proceed. This is yet another victory for truth and justice and stands as further evidence that Robertson's attacks on former employees were unfounded. (Here is a copy of the ruling. This was the tentative ruling which the judge confirmed as the final ruling during the hearing.)

Does Anyone Believe Michael Robertson Anymore?

So, why did Robertson sue his own bank?

To answer that, let me fill in some more of the story surrounding my departure as CEO for Linspire...

When I was CEO, I decided to make some shifts in the company's product line strategy which required letting some employees go. These were wonderful, hard-working, committed, trusted, long-term employees, most having worked for Linspire for around five years. These had been some of the most key individuals for Linspire over the years, including our lead OS engineer, the Director of the OS, and other employees and executives.

It was unfortunate that we needed to let these good people go, and I felt the least we could do was give them fair and reasonable severance to ease the blow. After all, it was these very same employees who had just helped Linspire turn in an extremely profitable year. Their good work had allowed us to pay off all of our debt and still have millions of dollars in the bank (which some shareholders believe Robertson took and/or squandered). At a minimum, I felt it only fair to use a very small portion of that year's profits to pay them a respectful severance. I wanted to treat these employees with respect and fairness. I knew by treating these long-time employees fairly, they would be happy to continue to help us if called upon (as departing employees so often are).

That's how I felt anyway. Michael Robertson, however, being the greedy man that he is, originally wanted to see these good people terminated with only two weeks severance. After a week of arm twisting, he suggested slightly more, but still less than I felt what was appropriate.

Fortunately for these employees however, Robertson had no operational or executive role at Linspire (he played absolutely no role in the huge profits we brought in that year), and it was up to me as the CEO to set the severance amounts for any laid-off employees. So, contrary to Michael's suggestion, I laid the employees off with the reasonable severance amounts I felt were appropriate, totaling only a few percentage points of the huge revenue and profits these employees had brought in that year. Prior to every action I took, I consulted with outside counsel to ensure that everything I did was proper and within the scope of my authority.

In less than 24 hours from when I had laid off the employees, I received this email from Robertson:

KC,

Do not do your proposed reduction in force. Please focus all of you energies on getting the new products to market at this time.

-- mr

Translated, I took that to mean: "Hey, before we stick the knife in these employees' backs and fire them with a few measly weeks of severance, let's abuse them one last time. Don't tell them anything about the pending layoffs just yet, but rather, keep them slaving away for a few more days until we get CNR.com and the new version of Linspire out and THEN you can fire them."

When I read this I became so infuriated at the level of greed Robertson had, that I decided to resigned, and sent Robertson this email:

Michael (Chairman of the Board),

I hereby offer my resignation, effective immediately.

After six years of quality service as President, and two years of having also been CEO, it is apparent that you are no longer willing to let me function in ways I see best for the company. Since closing on [recent lucrative deals], you have tried to challenge me and my authority as CEO and attempted to override my judgment with decisions which I do not believe to be in the best interest of the company and its shareholders.

To facilitate a smooth transition, please contact me as soon as possible so we can discuss and coordinate how to best message my resignation to employees, customers, the press, [partners], etc.

Thanks,

Kevin Carmony
President & CEO, Linspire, Inc.

I further told Michael that I didn't want one dime in severance for myself. I just wanted to be done with Robertson's greed, rants and unethical tactics and move on.

Michael replied and immediately accepted my resignation. However, he never did meet with me. Instead of coordinating with me a successful course of transition for Linspire with customers, employees, and partners, Robertson set about a maniacal plan to do all he could to take away the severance payments given to these good employees. He tried to reverse the severance payments, but of course the employee's banks refused. He then did the unthinkable. He filed a false report with the San Diego police department claiming that the money I, as CEO, had given these good employees as severance had been embezzled by them! Who does something that insane?!? Because he wasn't happy with my decision as CEO about their severance payments, he calls them all embezzlers???

Fortunately, seeing the nonsense in his claims, the police department didn't even open a file up on the case and dismissed it out of hand. However, that didn't stop Robertson from continuing to call these good employees embezzlers, even to this day. For example, Robertson, still calling these employees embezzlers, had false reports filed with the IRS to try and keep the portions of the severance payments which had been withheld for taxes. (The IRS met with all the employees and had them each file a 3949-A fraud report against Linspire, which they each did). Linspire also called these employees embezzlers to try and deny some of their unemployment claims. (They lost on all those attempts as well.)

Michael Robertson ran these employee's names through the mud and did everything he could to get his greedy hands on the employees severance, but alas, to no avail. Two of the employees even offered to give back their well-deserved severance, and Robertson told them it wouldn't be necessary, and yet he continues to this day to call them part of a "criminal conspiracy" to embezzle money from Linspire.

Michael Robertson Sues His Bank

After losing his bogus claims with the San Diego police department, the IRS, and the unemployment office, Robertson decided to sue his bank, Comerica, trying to get the bank to reimburse him for the severance payments, claiming that I was not authorized to wire these to the employees.

So, yet again, Robertson dragged out his ridiculous claims that these severance payments were embezzlement. Even though I was the CEO, and the payments were authorized by me, Robertson claimed that no one but he had real authority to make these severance payments. Not the CEO, CFO, Controller, etc., no one but him. The rest of us were all just embezzlers.

Judge Dismisses Robertson's Case in Summary Judgement

Comerica, also realizing how ridiculous Robertson's claims were, and knowing they were certainly in no way responsible for sending payments instructed by the CEO, filed a motion for summary judgment to have the case dismissed. In other words, they asked the Judge to rule that the case was so groundless, that he kick it out of court and not waste any more of the courts time.

Judge Meyer Rules Robertson's Statements as "Irrelevant."

I attended the hearing which lasted only about a half hour, at which the Judge granted Comerica's motion and disposed of the case in Comerica's favor.

Here are a couple of excerpts from Judge Meyer's ruling:

"Carmony was plaintiff's President and CEO at the time the payment orders were made. Long was plaintiff's Controller. Undoubtedly, both were agents of Plaintiff Linspire, Inc., and were acting within the scope of their agency."

"[The] implied powers of a general agent or manager are very broad, embracing authority to do all acts customarily connected with the business in which he is engaged....An agent has authority: 1. To do everything necessary or proper and usual, in the ordinary course of business, for effecting the purpose of his agency..."

"[Carmony and Long] had actual and apparent authority to cause the payment orders to be issued in plaintiff's name."

At one point during the trial, the Judge seemed frustrated with Robertson's lawyer, and asked him:

"Carmony's the CEO, and Long is the controller! How can there not be authority?"

"Well, I'm not sure I understand. Carmony's the CEO and Long's the controller, and they were at the time of these transactions. How can there be any factual dispute as to whether or not they were authorized agents of Linspire?"

The judge's ruling correctly confirms that I, as CEO, had the authority to wire these employees their severance payments. Sadly, even with a judge saying all this in an open-court ruling, I'm sure Robertson will continue with his false embezzlement allegations against these good employees, showing just what kind of unethical person he is.

Judge Further Rules Robertson's Statements as "Irrelevant"

As part of their "evidence" against Comerica, Linspire included a declaration from Robertson. Filled with nonsense and misstatements, Robertson basically rants that he was the one with the authority, not the CEO. He claims this because I and the laid off employees were all just a bunch of embezzlers. Never one to let the truth get in the way of a good story or lawsuit, he attempted to re-cast layoffs, private executive meetings, and severance payments as some kind of sinister plot carried out by a group of conspiring embezzlers, continually using such words as "secret meetings" and "unauthorized wire transfers" to describe regular business affairs.

Here is what the Judge had to say about Robertson's declaration:

"Because virtually all of the substantive statements made in Mr. Robertson's declaration are irrelevant, the Court declines to issue individual rulings on each discrete objection."

In other words, I was the CEO, wiring the severance payments was authorized, and Robertson just needs to get over it and deal with those facts.

I had told Robertson on numerous occasions and in emails that if he disagreed with how I was running the company, that there were steps shareholders can take to remove a CEO. Those steps were never taken, so I had full authority to give these employees severance, even though Robertson wanted to give them paltry severance for their years of hard work.

Our CFO had an employment agreement guaranteeing him two-years of severance should he ever be terminated. I amended that agreement some time ago, all by myself, without any board approval, and removed the 2-year severance commitment. Interestingly, Robertson claims that I didn't have authority to grant severance payments. If this were true, then I certainly wouldn't have had authority to amended our CFO's employment agreement. Perhaps the CFO should sue Linspire to receive those two years of severance?

Greedy Robertson

Even if Robertson was legally in the right here (which the court has ruled he wasn't), it would still show how greedy he is and how he treats employees. Regardless of court rulings, the fact remains that Robertson wanted to treat these employees poorly, and when I refused to do that, he calls them thieves and embezzlers to get back at me and them. Does it get any lower than that?

Robertson "said" he wanted to only give them the smaller severance so that he could keep as much money in the company as possible for it to succeed. Hmmmm...how did that work out for everyone? In just a few months after I left, Linspire was gone and the shareholders have yet to be told anything. Robertson said he didn't want the employees to get more money, and so who ultimately would have gotten the money if I hadn't paid these employees severance? Robertson! It was very transparent to me then, and remains so today, that Robertson wanted as much money for himself as possible. I believe his greed is pretty evident and should give anyone pause before ever working for him. (If you should ever find yourself considering going to work for Robertson, email me for a list of dozens of former employees you can speak with first about Robertson.)

It was pretty ridiculous for Robertson to think that the bank would pay him money just because he disagreed with the severance amounts I, as CEO of the corporation paid. It gives you an idea as to the alternate reality Robertson lives in.

Rather than running around suing people, perhaps he should just focus on actually building something. I've never sued anyone in my entire life. Have you?

Kevin

*Note: As far as anyone knows (since Robertson isn't talking to shareholders we can't be certain), Michael Robertson is the only employee at Linspire, now called Digital Cornerstone, Inc. So, when Linspire/Digital Cornerstone sues someone, it's Robertson doing the suing.

Michael Robertson Loses Motion in Shareholder Dispute over Linspire's Missing Assets

I have some good news to report to the 100 some-odd shareholders who remain in the dark about Linspire's missing cash and assets...

Robertson Loses Motion in Shareholder Lawsuit.

As I had reported back in September, Michael Robertson and Larry Kettler were sued in a derivative lawsuit, alleging misconduct by Robertson and Kettler which harmed the Linspire corporation and its shareholders. (Linspire had millions of dollars in the bank just months prior to its demise, but Robertson remains silent as to what happened to the corporation and Linspire's cash and assets, leaving minority shareholders in the dark.)

You would think with all the attention Robertson has been getting by ignoring the Linspire investors and shareholders, that he would be doing all he can to come clean to them as to what happened. Instead, Robertson's tossed out a legal maneuver which I believe was simply a ploy to try and intimidate the plaintiff who had sued Robertson on behalf of the company and shareholders. Robertson filed a motion to force the plaintiff to come up with a $50,000 bond before they could continue with their case against Robertson and Kettler.

Robertson and Kettler Lose Motion

This week the court denied Robertson and Kettler's motion requiring the bond, which means the case can continue to discovery and eventually to trial.

Even though Linspire minority shareholders still remain in the dark as to what happened, this is at least a small victory for them to see that Robertson will eventually have to explain himself in court.

It says a lot about Robertson when it has taken this type of lawsuit to get him to explain to shareholders what happened and that he continues to fight the process rather than just being forthright with the shareholders.

The question remains: What is he hiding?

Kevin

Michael Robertson--Still Hiding Details About Linspire's Demise

Five Months And Counting--What Happened to Linspire?

It's been five months since Michael Robertson sold off Linspire in a secret back-room deal with Xandros, and yet, the 100 some-odd minority shareholders haven't received any details about this transaction. Robertson has time to file frivolous lawsuits against me to try and take away my freedom of speech, but he doesn't have time to talk to all those shareholders who have lost thousands and thousands of dollars on worthless Linspire stock.

Is there anyone who can be left with doubt as to Robertson's attitude toward employees, investors and shareholders?

Michael Robertson--No Respect for Investors and Shareholders

The lawsuit against Robertson over the missing cash continues, but for Linspire shareholders, we remain completely in the dark.

What is Robertson hiding? Incompetence? Greed? Theft? All three? After five months, if he had a reasonable story to tell shareholders, wouldn't he have done that by now?

By my calculation, Linspire blew through around $35 Million and left absolutely nothing to show for it. Perhaps Robertson is just embarrassed by his colossal failure with Linspire. I netted a profit during my two years as Linspire's CEO, and there were millions in the bank when I left, yet in one quick year it's all gone.

Linspire, SIPphone, MP3tunes, AJAXwindows, not exactly an impressive track record. I can see why Michael prefers to keep in hiding.

Kevin

Michael Robertson Sued Over Linspire's Missing Cash

To this day, Michael Robertson has yet to explain to the 100 some-odd shareholders what happened with the millions of dollars in cash and assets that were owned by Linspire just a few short months ago. The assets seem to have completely vanished, leaving shareholders with no return on their investment or even so much as an explanation as to what happened.

In June, Robertson sold Linspire to Xandros in a back-room deal without any shareholder input or detailed notification. Even though Robertson sold Linspire three months ago, shareholders still remain completely in the dark as to the financial details of the transaction. How does that pass any smell test for investors?

Michael Robertson - Greedy, crook or just incompetent?

At the time the deal was announced, I predicted it would take a lawsuit to ever get Robertson to go public with the details, as it was my belief Robertson's motive for this transaction was likely to hide unauthorized transactions which he may have made using Linspire's assets as his personal piggy bank to reward himself and his father-in-law as well as fund his other companies. It appears I was right in my prediction as a lawsuit has now been filed against Michael Robertson and Linspire's then-CEO Larry Kettler in an effort to force Robertson and Kettler to finally explain to shareholders what happened.

Click here for a copy of the suit with all the details of the allegations.

The lawsuit is a "derivative suit" which is a lawsuit instigated by a shareholder of a corporation, not on the shareholder's own behalf, but on behalf of the corporation. The shareholder brings an action in the name of the corporation against the parties (in this case Robertson and Kettler) who allegedly caused harm to the corporation. Such derivative suits are often brought against officers or directors of a corporation for violations of fiduciary duties owed to the shareholders vis-a-vis the corporation. The derivative suit against Robertson and Kettler was instigated by Kevin LaRue, the one-time VP of Marketing for Linspire and a current shareholder, but any proceeds of a successful action are awarded to the corporation, benefiting all shareholders, not just LaRue.


Because Michael Robertson was the Chairman of Linspire's board and apparently their only board member (shareholders have never been given notice of anyone else having been added to the board since Robertson fired all the other board members over a year ago), it would be improper for him to make deals that would only benefit him as the majority shareholder. The lawsuit alleges Robertson did not fulfill his fiduciary responsibility to not only act in his best interest but in the interest of all shareholders.

Regardless of the ultimate outcome of this suit, if nothing else, it will hopefully, once and for all, bring to light what happened to Linspire. The minority shareholders have a right to know, and it's unfortunate it has taken this lawsuit to get any information form Robertson.

If my suspicions as to Robertson's actions and motives were unfounded, why wouldn't Robertson have come forward with all the books and details long before now? What is he hiding? Why is it taking a lawsuit to bring things to light? Robertson's behavior simply enforces my belief that he was in fact taking advantage of Linspire shareholders and is doing everything he can to cover up his actions.

A year ago, Michael and I disagreed over what was best for the future of Linspire and the shareholders. I resigned and Michael got his way, insisting he knew what was best for the future of the company and that he could return more value to employees and shareholders than the plans I had proposed. So far Robertson has produced nothing of value for the shareholders and the company appears now to be gone. Is Robertson a greedy majority shareholder who navigated things to make sure he got all the assets, a crook who stole the assets, or is he just incompetent, having squandered millions in one short year?

Hopefully this suit will once and for all uncover the truth and the shareholders will finally know what happened with their investment in Linspire and Robertson.

Kevin

PS: "Xandros has done more than any company to put Linux in front of users..." ~ Michael Robertson (More than Ubuntu? Novell? Red Hat? Linspire even??? Robertson said this recently. With statements like this, you can see why I have a hard time believing anything else he says.)

Michael Robertson--Where's the Linspire Cash? (Part II)

Back on July 2nd, I asked Michael Robertson to explain to the 100 some-odd Linspire shareholders what happened with the millions in cash and assets that Linspire had just a year ago?

Today I received the below "Memorandum" in the mail from Michael Robertson, "President & CEO" (and sole board member) for Linspire. (Click image to enlarge.)


It should be pointed out that "The stockholders voted..." and "...the stockholders approved a plan..." really means "Michael Robertson voted..." and "Michael Robertson approved a plan..." since the minority shareholders were not asked to give input. This is the third time, that I'm aware of, that Michael has done things by written consent, without any shareholder meeting or input. The first time was when he fired everyone from the board of directors other than himself, the second time was when he sold Linspire to Xandros, and now this time when he said he'll be dissolving Digital Cornerstone, Inc. Those are all pretty significant events to do on your own, without other board members or shareholder meetings.

According to this latest memorandum, Michael has a plan to "distribute [Linspire's] assets." I wonder what the minority shareholders will be getting? Considering I offered to purchase shares in the company at $.50 per share just one year ago, let's see how good a job Michael Robertson did in running Linspire this past year. Will the minority shareholders see more than $.50 per share? The same? Less?

Also, about a year ago, I presented a plan to Michael to have the company offer to buy back stock from shareholders at $.50 per share. Michael turned down that plan, saying that the company needed to keep all its cash to run the business. He obviously felt by keeping all the cash in the company and running the business himself, that he could make the shares worth more than $.50 per share. So, let's see how Michael performed for the shareholders. Did he turn water into wine, or into toxic waste? (From my vantage point, this is what it appears he's done this past year.)

Lastly, I'm curious how Digital Cornerstone, Inc. could be dissolved when they have ongoing litigation? Just one example is I know they are being sued by a former employee because Linspire did not honor his employment agreement.

I stand by my assessment, that the Xandros deal was all just a big ruse by Robertson to take all the assets and cash for himself, leaving the minority shareholders with nothing. I believe that dissolving Digital Cornerstone, Inc. is simply the next step in his "I-hope-everyone-forgets-about-all-of-this" plan.


Prove me wrong Michael. Anything north of $.50 per share distributed to the minority shareholders and I'll happily eat my words. Anything less than that, however, then in my mind you're either a lousy businessman (who made a bad judgment in not doing the stock buy-back plan), a thief (who took unauthorized funds for yourself, father-in-law, and/or your other businesses when YOU SAID all funds needed to remain in the company for Linspire to succeed), or you simply never intended to "take care of your peeps" all along (and just wanted to see everything go to you).

Stay tuned. I'll be sure and report back what's left for the 100 some-odd minority shareholders.

Kevin

My Video Interview with Chris Pirillo about Linspire's Last Days

I've known Chris Pirillo for several years, and he's one of only a handful of people I follow on Twitter because he's ALWAYS got his pulse on the latest, coolest stuff. In following my blog, he was surprised to learn about some of the "weird stuff" that was going on with Linspire, so he invited me to his live chat room for an Interview. I tried to be as candid as possible with my perspective as to how Linspire came to an end.

Chris posted the interview in two parts...

PART 1 - Part one ended abruptly when there was a technical glitch that blew our connection up momentarily.

http://chris.pirillo.com/2008/07/03/kevin-carmony-interview-part-1/



PART 2 - Q & A - Part two was a very informal Q & A with some of the people in his chat room. You can tell I was more informal and relaxed during this part, as I end up rocking in my comfy office chair for most of this section. =)

http://chris.pirillo.com/2008/07/03/kevin-carmony-questions-and-answers/



Kevin

Michael Robertson Speaks--Intentions Revealed

Michael Robertson finally broke his silence about what the 100 Linspire shareholders can expect from the sale to Xandros. No, this didn't happen in a shareholder meeting, but to a reporter. Apparently reporters matter more to Michael than shareholders. He has time to give them a call, but apparently no time for the 100 people who invested money and years of hard work into his ideas.

Michael was quoted this morning in a San Diego Union-Tribune story. The reporter, Mike Freeman, did try to contact me yesterday, but when I called him back a few hours later, it was past the deadline, and his story had already been sent off. I did speak with Mike this morning, however, and discussed with him what I'm sharing below.

I'll comment on a few of the quotes from the story...

Robertson said that in any transaction, preferred shareholders and investors are at the front of the line to get paid.

"Any" transaction? That's certainly not true, but it does show how Michael views minority shareholders.

To further understand Michael's attitude to minority shareholders--when I was at Linspire, Michael said he wanted me to transfer $1,000,000 from Linspire's account to himself because "MP3tunes needs some money." (MP3tunes is another company that Michael owns, unrelated to Linspire, with completely different shareholders.) He also wanted me to transfer $500,000 to his father-in-law. I objected, of course, saying that the cash was a Linspire asset.

Linspire had a very good year, so we had money, and I told him we could certainly make a dividend in these amounts to him and his father-in-law, BUT that we'd also have to give the same per-share dividend to all the other shareholders as well. He said that because he and his father-in-law were "preferred" shareholders, they were "entitled" to this special dividend and that "this is a common practice in companies and happens all the time." I knew, however, that Linspire and Michael's preferred shares were not structured in that way (Linspire had two different law firms confirm that point), so I certainly never made these payments.

I guess Michael still needed the cash, and he didn't want to have any money go to the other shareholders, as he then set about removing everyone that stood between him and the money. Within a matter of days, Michael sanctioned a plan to fire the CFO and Controller. He next, without a shareholder meeting, removed myself and our CFO from the Board of Directors, leaving him as the sole member on the board. It was becoming very clear to me that Michael's plan was to see the Board, CEO, CFO and Controller gone, leaving no one to stop him from turning Linspire's assets into his personal piggy bank.

After I left Linspire, because I was fearful that Michael's intentions were to misappropriate Linspire's funds to himself and his father-in-law, I had my attorney arrange for me to review the Linspire books. Michael refused and his lawyers pushed back my requests. To this day, even though I'm a significant shareholder, I have not been allowed to see the books, nor has Michael held a shareholder meeting.

When Michael realized I was putting up road blocks to prevent him from just reaching in and taking out cash, even after all the officers had been removed from his way (and him going so far as to falsely accuse good people of embezzlement for accepting reasonable severance payments), it appears he set out on a new course of action to get at the cash...liquidation.

Every company has different rights for preferred and common shareholders. At Linspire, the liquidation rights of the preferred shareholders were very weak (see S1), being not much different than those for the common shareholders. The difference in liquidation preferences between common and preferred shareholders at Linspire is very small, and it appears Michael set about structuring everything to navigate all the cash from Linspire to him, through that tiny space of differentiation. (It may apparently take a lawsuit to uncover if he was successful in that operation.)

He said he couldn't get into specifics of the deal or say whether anything will be distributed to minority shareholders.

Not even with the 100 shareholders? By law, he will be forced to "get into specifics" to those of us who have invested and hold shares in Linspire.

“I personally have invested more than $20 million in Linspire,” Robertson said.

Pure nonsense!

An investigation in the public documents filed with the SEC can give anyone insight into what Michael has invested. Michael invested equity into Linspire and, at times, extended it loans. Before I left, Linspire had paid back any and all loans to Michael, and the company still had millions of dollars of retained earnings in the bank. Michael's EQUITY investment into Linspire is nowhere close to $20M! In fact, at no point in time was Michael's equity investment COMBINED WITH HIS LOANS anywhere close to $20M. This would be like me loaning you $10 every day for lunch, you pay me back in full at the end of each week, and then 7 years later I say "I invested $18,200 in you!"

“It's important to know that when there are distributions, the investors always get their money back first, and if there's nothing left over it's not a devious plan to screw shareholders."

So, let's get this straight Michael...the tens of thousands in CASH that employees "invested" into Linspire when they purchased their stock doesn't count, but your cash does? You're an "investor," and they're all just peons to be taken advantage of? Do we not even warrant a shareholder meeting? You said you invested $20M--is that the number you're using to cut first in line? What deal did you structure to navigate your weak liquidation preferences through to the cash? Was this a "liquidation, dissolution and/or winding up of the Corporation," or was it an "acquisition of Linspire" as stated in the press release. Will there be a distribution, or will we be writing off our investment in Linspire? Can you blame shareholders for finding you "devious" when you don't hold annual shareholder meetings, refuse to let us review the books, and then liquidate the assets without sharing any information with us about the deal and how it effects us? WHEN WILL YOU HOLD A SHAREHOLDER MEETING AND ANSWER THESE QUESTIONS???

"It's the way it works.”

No, Michael, it's the way YOU work. Hopefully prospective investors in any Michael Robertson ideas are paying close attention.

If you ever find yourself on a boat with Michael, and it starts to sink, don't be surprised if you spot him pushing women and children out of the way as he scrambles for the only life boat, screaming "I'm first in line!"

Kevin

PS: On a minor point, Hoovers was wrong in their quote of $3M in revenue and 18 employees. Revenue is 2007, the year I left, was substantially higher than that, and departing employees have said that Linspire has around 8 employees left today.

Also, Xandros claims to be the 3rd largest Linux company and largest privately held one. Well, you'd have to ignore IBM, Intel, Nokia, etc. who probably employ more Linux engineers than Linspire, Xandros, Canonical, Mandriva, etc. combined and limit it just to Linux distro companies. I'm quite sure Canonical (Ubuntu) is larger than Xandros in terms of employees, users, and I'd imagine revenue as well. As for impact on the space, that's not even close.

Michael Robertson--Where's the Cash?

Linspire Shareholders,

When I left Linspire there were lots of assets in the company (computers, furniture, servers, trademarks, employees, and millions in cash), and virtually no liablities. What happened to these assets and cash?

I have been contacted by several Linspire employees and shareholders, asking me what the Linspire asset sale to Xandros means. I put together this short video using "buckets" to try and explain what happened in very simple terms, based on what information was provided in the 3-paragraph "memorandum."


Since Larry and the other employees now work for Xandros, Michael appears to be the only remaining employee of Digital Cornerstone, Inc., the company we now all own shares in.

So, Michael, the shareholders want to know...

1. What assets remain in the company?

When I left, there was a lot of cash in the account. I assume this has grown, since you sold off the other assets to Xandros.

2. What is the value of our shares?

When I left, I offered $.50 a share to buy stock in the company. The shareholders are all curious what their stock is worth today, ten months later. Have you grown or shrunk the company since then? You always told us to trust that you would take care of the employees and shareholders. Time for you to honor that trust.

3. Since all the assets have now been sold, how do we cash in our shares?

Perhaps Michael is hoping we'll all just forget about "Digital Cornerstone, Inc." and he can keep all the assets for himself? Perhaps he'll use some clever legal maneuver to make sure the 100 shareholders never see anything for their investment in Linspire? Perhaps instead of cash, we now all own Xandros stock or shares of Michael's other companies (both worthless in my opinion).

Without Linspire ever holding shareholder meetings, we remain in the dark, and left to speculate.

Here are just some of the many employees who worked for Linspire over the years (as found on the Linspire website from a Linspire Letter), many of which paid cash to exercise stock options and are now shareholders. Michael asked them all to "trust him."

I have no intention of forgetting, as I'm sure is the case with many other shareholders. I would suggest that Michael Robertson hold a shareholder meeting ASAP to answer these questions.

Kevin

Xandros Acquires Linspire Assets in Secret Back-room Deal

Today, as a Linspire shareholder, I received the below "memorandum" from Linspire. I have confirmed with several other Linspire shareholders that they too received this same notice.

In classic Michael Robertson form, he has once again completely disregarded the 100 some-odd shareholders of Linspire by pulling off this deal without a shareholder meeting. Most states require shareholder approval of any merger or reorganization of a corporation, or the sale or transfer of all or substantially all of the corporation's assets. Regardless of state laws, common decency would dictate that even if a company only has 1 minority shareholder, there should be a shareholder meeting and the acquisition explained to all shareholders. What do Linspire shareholders get in place of a shareholder meeting? This completely worthless notice in the mail.

Why would Linspire pull off a midnight, back-room sell-off without a shareholders meeting? I'd ask them myself, but they haven't returned emails from me in the last ten months, and since they didn't hold a shareholders meeting in this matter, one is only left to speculate. So, here's my speculation...

This will end up being a completely insignificant event for Linspire shareholders and the end for Linspire customers. I predict this was done to: 1) help Robertson drain the company of its cash and resources. When I left Linspire, we had a very profitable year and the company had millions in the bank. I predict Robertson has moved this money to himself, family, and his other companies, leaving Linspire's minority shareholders with nothing. 2) help Robertson save face by issuing a "Linspire Acquired by Xandros!" press release, instead of living with the public humiliation that Linspire failed under his leadership. (Although, being out lasted by Xandros isn't much less embarrassing.) Such a press release will of course be meaningless unless the acquisition was substantial. As a shareholder, I will eventually find out. 3) Give Xandros a press release and perhaps some way for them to spin this to investors to raise money.

Just watch...this will not be good for Linspire's customers, partners or minority shareholders. I'd love nothing more than to be proven wrong! We'll know as soon as I hear what my stock is now worth.

Ten months ago, I offered Michael to purchase stock in the company for around $.50 a share (in cash). When we find out how much my stock is now worth, after this "acquisition," we'll see just how brilliant of a businessman Michael Robertson was. Let's see how much the value of that stock has changed in the short ten months since my departure. If I get more than $.50 for my shares (in cash, not some bogus, inflated valuation based on Xandros stock), then I'll be very happy and I'll be pleased with what Robertson and Kettler have done with the company. If it's worth a lot less than that, then I'll be very unhappy and it will show just how incompetent (or plane dishonest) Robertson and Kettler are.

To me, this looks like Michael, the "captain" of the Linspire ship, sees the boat sinking, so he casually tells the passengers on the ship that he's just going on a quick supply run, jumps on the only life boat with any cash and valuables he finds, paddles off to safety, and leaves everyone else behind to sink. Pathetic. I left Linspire with millions in their bank account and a plan, but Robertson and Kettler seem to have destroyed it all in ten months.

So, Michael, now that all the assets have been sold, what's my stock worth (again, no worthless Xandros stock please**), and what will happen with Linspire's customers?

Something tells me it will take a lawsuit to find out.

Kevin

**PS: Before Linspire and Xandros try to spin this into something actually positive, I'd like to offer my Linspire shares to either Michael or Andy Typaldos (Xandros' CEO) for $.10 a share. That's 80% less than what it was worth just ten months ago. If this transaction happened at a good valuation, then I'm sure Michael and/or Andy will be all over my offer, right? I'll post here when they accept my offer. Don't hold your breath.

Pinheads and Patriots

Patriot: Ubuntu

See the brilliance of Ubuntu's amazing upgrading process with the screenshots I took of how easy it was for me to upgrade my Linux PC to their latest version 8.04 LTS in literally 3 clicks!

Click #1: I clicked on the update notification alert in my tool bar, bringing me to...


Click #2: I clicked the Upgrade button...



Click #3: I clicked the Start Upgrade button...


I wait a few hours (I can even keep working on my Ubuntu machine during this time), and wa-la, a beautiful new Ubuntu!


Amazing!

Pinheads: Linspire Management

While Ubuntu is perfecting the art of 3-click upgrading of their entire OS, halt the presses for Linspire's latest press release! You sitting down? Hold on to your hats! Here it is...

CNR.com Delivers Linux Users One-Click WeatherBug Software

Apparently this is what is going to make my Linspire stock worth something one day? Ughhh....

Kevin

Follow-up From my Last Blog: The Dating DNA iPhone Web App was well received. Read the articles, blogs and reviews.