SCO reports deeper loss, shrinking revenue

The SCO Group, a company engaged in complicated litigation regarding Unix and Linux, reported another quarter of financial losses on Tuesday, spurred by dwindling software and licensing revenue.

The company reported a loss of $6.5 million, or 37 cents per share, for the quarter ended Oct. 31, compared with a year-earlier loss of $1.6 million or 12 cents per share. The Lindon, Utah, company's revenue dropped from $24.3 million to $10.1 million over the same period.

SCO blamed the revenue decrease on competitive pressures and a major drop in the company's effort to license its Unix intellectual property. No analysts surveyed by First Call had financial projections for the company.

SCO also will have to reckon with the fallout from a major shake-up at the Canopy Group, the investor that owns a majority stake in SCO. Canopy Chief Executive Ralph Yarro, who also is SCO's chair, has been replaced at Canopy by Bill Mustard, a Canopy representative said. The executive shake-up was reported Tuesday by The Salt Lake Tribune, which also said Chief Financial Officer Darcy Mott lost his job.

Yarro and Mott remain on SCO's board, SCO spokesman Blake Stowell said. Yarro and Mustard did not immediately respond to requests for comment.

SCO is suing IBM, arguing that Big Blue violated its Unix contract with SCO by moving proprietary Unix technology into open-source Linux. It's also engaged in related litigation with Linux user AutoZone, Unix licensee DaimlerChrysler, Linux seller Red Hat and earlier Unix owner Novell. Though the cases aren't expected to finish anytime soon, SCO meanwhile is trying to make money by licensing its intellectual property to Linux users.

In regard to the SCOsource effort to make money through this licensing and litigation, revenue declined from $10.3 million a year ago to $120,000 in the most recent quarter, SCO said. The program hasn't made much money since SCO signed major licensing deals with Microsoft and Sun Microsystems in 2003.

Costs for the SCOsource program are high, however: $4.3 million for the quarter and $19.7 million for the entire year. Through a new agreement that caps payments to law firm Boies Schiller & Flexner, the company expects to pay $3 million in legal fees.

The company's Unix business, based on its UnixWare and OpenServer products, shrank from $12 million a year ago to $8.3 million in the most recent quarter.

SCO hopes the release of a new version of OpenServer code-named Legend will help. However, the company delayed its release; in June it said Legend would arrive in the first quarter of 2005, but Tuesday the company said it would be the first half.

The slip probably won't have financial effects because upgrades are a gradual process, Chief Executive Darl McBride said. "The opportunity for Legend is not going to be measured in weeks or months," he said during a conference call Tuesday.

The company has been cutting staff in an attempt to cut expenses and return to profitability. SCO employed 275 earlier this year but now has cut that to 200, Chief Financial Officer Bert Young said.

[unknown unknown]

The sooner SCO goes belly up the better.

As for their shrinking business, no one want to do business with an overly litigous company like SCO, who seem to have turn themselves into a bit of a piraya. Whatever came of the minutes of that meeting that was discovered stating Novell retained most of the rights to the Unix code SCO claims to own. You can see the story I am talk about here:
http://linux.slashdot.org/article.pl?sid=04/11/11/0010247&tid=88&tid=106

Waves goodbye

They are history and they deserve it. Hopefully anyone involved in the rediculous lawsuits never gets another job in the tech industry again.

[iceman2654]

Not Surprised

I'm not surpriced that SCO is losing money badly. I think because they pointed the finger so quickly and Linux users that they have lost respect in the industry and the community so eventually they'll just cease to exsist and will be known as a company who didn't have to the tact to pursue what they thought belonged to them. (But I don't think the SCO was right in their patent claims)

Shrinkage, and not from a pool!

SCO's shrinking, both in stock and in employment, is a direct effect of their crusade. Sooner or later, I'm sure they'll start pointing the finger at Apple for having a unix kernal. Then Apple will prove that they own the rights, or the licenses to their unix code, and SCO will fall again. I'm surprised that, for once, a big corporation is getting such backlash, not only from single users and groups, buit by the tone of the media too.

Whatever happens, let's hope they will no longer be a leg for MicroSoft to stand on.

[crichton007]

Isn't This Ironic?

Wouldn't it be ironic if SCO sued themselves into oblivion? Personally I'd like to see them disappear before this could finally make it to court although it would be best for the world if their suit is lost and sets a good precedent for the entire U.S.

[David Arbogast]

objectivity

Lets be fair here. Assuming the courts rule that no property was stolen and handed to the open-source community, then a SCO loss would be fine. On the other hand, if the courts find that property was stolen, and SCO still goes out of business, then what we have is proof that you can illegally *steal* products from a competitor, integrate them with open-source software, avoid prosecution, and destroy any technological advantages your competitors might have. Whether this is good or bad depends on what the court reveals *actually* happened. And before a million anti-SCO trolls jump on me, let me just say, in America, the courts have the final say, and your opinion is worthless once they have ruled.