SCO posts loss vs profit; revenue down 52 pct

Reuters ^ | Thu Jun 10, 2004 01:29 PM ET | Reuters staff

[Ernest_at_the_Beach]

UPDATE 1-SCO posts loss vs profit; revenue down 52 pct Thu Jun 10, 2004 03:38 PM ET (Adds details on legal case, share activity) SEATTLE, June 10 (Reuters) - SCO Group Inc. (SCOX.O: Quote, Profile, Research) , the software developer suing to collect money from users of the Linux operating system, on Thursday reported a quarterly loss versus a profit as revenue fell 52 percent, sparking a 10 percent sell-off in the company's shares. Lindon, Utah-based SCO, which claims that parts of the Unix software code it owns are used in the free Linux operating system, posted a net loss of $15 million, or $1.06 per share, in its fiscal second quarter versus net income of $4,5 million, or 33 cents per share, a year earlier. Revenue fell to $10.1 million in the three months ended April 30 from $21.4 million a year earlier. Shares in SCO fell 57 cents, or 10.5 percent, to $4.87 on Thursday on the Nasdaq after the results were announced. SCO sued International Business Machine Corp. (IBM.N: Quote, Profile, Research) last year, accusing the world's largest computer company of violating its rights by putting parts of Unix into Linux, which can be copied and modified free of charge. SCO is also arguing that corporate users who have adopted Linux to cut information technology costs should now pay to use the system. So far, SCO has not been able to collect from its legal adversaries and said that it had earned $11,000 from its licensing efforts. SCO's main costs are associated with its legal bills, as well as charges it incurred to buy out one of its main investors, BayStar Capital. BayStar Capital, which led an investment group that paid $50 million for convertible stock in SCO, sold its its holding for about $23 million, well below the $40 million face value of its original investment. Few private analysts had provided forecasts for SCO's latest quarterly earnings, but the company said that results were in line with expectations. "Our revenue for the second quarter was consistent with our expectation.... we are committed to increasing shareholder value through profitable operations and increasing cash flow from our UNIX division as well as remaining focused on our intellectual property lawsuits and licensing strategies," Darl McBride, chief executive, said in a statement.

[Ernest_at_the_Beach]

News.

[Ernest_at_the_Beach]

fyi

[BenLurkin]

REUTERS ABRIDGED BUSINESS SUMMARY

The SCO Group, Inc., formerly known as Caldera International, Inc., owns the UNIX operating system and is a provider of UNIX-based products and services. It generates revenue from two sources: sales of UNIX-based products and services, and licenses of the UNIX technology through SCOsource initiatives.

The Company's core business is to sell and service its UNIX operating system and related software products to small- to medium-sized businesses, and branch offices and franchisees of Fortune 1000 businesses. Its main products that drive the majority of its UNIX revenue are OpenServer and UnixWare.

In January 2003, The SCO Group established its SCOsource division to review and enforce its intellectual property surrounding the UNIX operating system. In July 2003, it acquired the assets, engineering personnel and technology of Vultus Inc.

[DreadCthulhu]

Glad to see those fauds at SCO are getting what they deserve. For those not familar with the case, SCO has been claiming that its code has been put into Linux - but when IBM & open-source advocates ask exactly WHAT Linux code was stolen, SCO refused to say.

[DB]

Actually I don't see it simply as "news".

I see it as good news ;-)

[Nick Danger]

This just wasn't SCO's day. Their 'slander of title' lawsuit against Novell was dismissed. They have 30 days to see if they can come up with a better complaint. They also lost their motion to separate the IBM counterclaims regarding patent infringement from the rest of that lawsuit.

The ruling on the Novell suit also an included a denial of SCO's motion to remand the case back to state court. That is a bigger deal than it sounds, because in order to rule that way, the judge had to conclude that the issue of whether SCO owns any copyrights -- or whether Novell still owns them -- is up in the air and presents a Federal question, to wit whether the Asset Purchase Agreement together with Amendment 2 constitutute a "Section 204 writing" transferring copyrights. This means that IBM, Red Hat, and Autozone now have a judge's ruling that SCO's ownership of the UNIX copyrights is unclear and in dispute.

Many people think SCO will choose to pass on the judge's offer to re-file within 30 days, and instead accept the dismissal. They have already lost this lawsuit, because a win on Slander of Title requires malice, and there can't be malice where the title is in fact in dispute. What the judge is really offering them is a chance to settle the "who owns the copyrights" issue now, as opposed to waiting for a separate suit specifically over that issue.

[Ernest_at_the_Beach]

Welll....maybe we are getting closer to the end of this nonsense...

[adam_az]

The S.S. SCO

[flashbunny]

So bay star managed to get out? Smart move. They saw the writing on the wall.

This pump and dump / extortion scheme is coming to an end. If the feds can charge martha for what she did, they should take a look at what darl and the boys have been up to.

Can't wait for the usual suspects to show up and tell us how SCO will prevail on this one. Which of course will devolve into the usual comments that linux is an evil communist operating system...

[Ernest_at_the_Beach]

ROFL!!!

[DB]

Any company that does "business" via litigation and extortion should be crushed. The lowest of the low IMO.

[DB]

Pretty darn funny.

[John Lenin]

When you can't provide a good product and innovation, sue !

[D-fendr]

I don't think they ever intended to be a tech firm.

It's a law firm; a trial lawyer firm, with a losing case.

I hate trial lawyers; especially in my industry.

[John Lenin]

They founded Unix, talk about buggy whips. Linux ate their lunch, now the only thing they have left is a lawsuit. I do not feel sorry for them.

[DB]

They bought Unix didn't they?

I don't think they "founded" anything other than a legal brief...

[DB]

That's pretty much how I feel about it.

[Charlotte Corday]

said that it had earned $11,000 from its licensing efforts

At first I thought this was a typo, so I checked it out. It is correct.

That means that SCO sold exactly SIXTEEN Linux "licences" in three months.

Sweeeeeeeeet!!!