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The SCO Group continues its downward slide
Posted on Wednesday, January 17 2007 @ 21:16:49 EST by linuxwiz |
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The SCO Group,
which continues to fight legal battles over Linux and Unix, reported
growing losses in 2006 as it jockeys to establish itself as a mobile
application and services provider in the face of stiff competition in
its traditional Unix business.
Revenue for the fourth quarter of 2006 was $7.35 million, compared to
$8.53 million during the fourth quarter a year earlier. In addition,
losses for the most recent quarter totaled $3.74 million, up from the
$3.43 million net losses SCO reported in the fourth quarter of 2005.
For the year ended Oct. 31, 2006, SCO reported revenue of $29.24
million, compared to revenue of $36 million in 2005. Losses for the
year totaled $16.6 million, or 80 cents per diluted common share, up
from a net loss of $10.73, or 60 cents, per diluted common share for
the year ended Oct. 31, 2005.
The losses came as
SCO jockeys to regain its financial footing despite increased
competitive pressures on its Unix business and a string of
money-draining lawsuits it has filed in an effort to protect what it
claims is its proprietary Unix code. In a legal filing last week,
Novell claimed SCO was at the edge of “imminent” bankruptcy, but SCO has denied that.
Instead, SCO says it is focusing on its mobile business to help pump up its revenues. At the SCO Forum in August, SCO President
and CEO Darl McBride said moving forward the company would focus on offering subscription-based mobile services called Me Inc. that it is developing using a new mobile software development
platform called EdgeClick.
In a press release outlining its fourth quarter and year-end
financials, SCO says its drop in revenue is “primarily attributable to
continued competitive pressures on the company’s Unix products and
services. At the same time, McBride stresses that SCO remains committed
to its Unix business. In the fourth quarter, SCO updated SCOoffice
Server for SCO OpenServer 6 and UnixWare 7.1.4 and also began shipping
SCO HA Clusters, high availability software for SCO OpenServer 6.
“Even though competition is strong and continues to impact our
revenue and operating results, we are continuing to develop and promote
our Unix solutions and mobile services strategy, as we believe that the
market, as well as the benefits to our customers and partners, are
significant,” McBride said in a statement.
“The company's
fourth quarter continued to be difficult due to competition in the
marketplace for our Unix business,” says McBride. “In addition we
continued to incur legal expenses in defense of our intellectual
property litigation. Because of decreased revenue and increased legal
fees, the company too the necessary step of reducing expenses to ensure
that our Unix business would generate positive cash flow."
In October, SCO
reduced its headcount from 166 to 142 employees and saved $400,000. The
company also reduced marketing expenses and travel. SCO expects further
price cuts to continue into the first quarter of 2007, says Bert Young,
SCO CFO.
McBride also said
that SCO remains committed to its legal battles, which cost the company
$2.22 million in the fourth quarter. Those legal expenses are down from
the $3.34 million SCO spent in connection with its legal efforts in
fourth quarter of 2005.
“As a result of the recent scheduling orders in both IBM and Novell
cases, we believe that costs related to the litigation will decrease
for fiscal year 2007 as compared to fiscal year 2006," says Young.
"However, because of the unique and unpredictable nature of the
litigation, the occurrence and timing of certain litigation expenses
will be difficult to predict for the upcoming quarters."
As for cash on hand, cash and cash equivalents, available-for-sale
marketable securities and restricted cash to be used for certain legal
expenses totaled $12.66 million as of Oct. 31, 2006, compared to $13.31
million as of Oct. 31, 2005.
“Some of the
negativity [regarding SCO] is warranted," says McBride. "If you just
look at the numbers, the scoreboard over the last few years, it's not a
real pretty picture," says McBride. "The company is focused on actions
to drive us into a cash flow positive position.”
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