SCO's Losses and Revenue Declines Continue in Fiscal Q2

Published: June 7, 2007

by Timothy Prickett Morgan

Commercial Unix operating system supplier The SCO Group has managed to make it through another quarter as it awaits whatever justice it has coming to it in its Unix-Linux lawsuit against IBM. But the company's sales continued to decline in the second quarter of fiscal 2007 ended April 30, and SCO also booked another loss that is large compared to its revenue stream.

For the quarter, SCO's sales dropped by 16 percent to just over $6 million, and the company booked a net loss of $1.14 million. While this loss is mostly attributable to the $1.07 million in legal fees that SCO had in the quarter, and it is a lot better than the $4.7 million loss it had in the year ago quarter, SCO is still losing money and its business is under tremendous pressure from Linux and Windows alternatives on the same X86 and X64 iron that its UnixWare and OpenServer products run on.

"Even though competition continues to impact our revenue, we are pleased that our legal costs and operating expenses are lower than the comparable prior periods, which improved our financial results," said Darl McBride, SCO's president and chief executive officer, in a statement accompanying the financial results. "We are committed to our strategy of serving our Unix customers, developing innovative new mobile technologies and protecting our valuable intellectual property."

During the quarter, SCO had $4.9 million in product license sales, down 14 percent, and $1.1 million in services sales, down 19 percent. It received no SCOsource intellectual property licensing revenues during the quarter, and unless something dramatic happens in its lawsuits, SCO probably will never receive such funds again.

SCO exited the quarter with $11.2 million in cash and equivalents at the end of the quarter, some of which is restricted to paying legal fees in the IBM lawsuit and several other lawsuits related to the case that SCO has pending with Red Hat and Novell.

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