| SCO starts to stabilize its finances |
Mar. 01, 2007
The SCO Group Inc. on Mar. 1 reported results for its first quarter ended Jan. 31, 2007. While it wasn't a pretty picture, the company's cost-cutting efforts seem to have placed profitability for the year within the realm of possibility.
Revenue for the first quarter of fiscal year 2007 was just over $6 million dollars. This was down from $7.343 million for the comparable quarter of the prior year. This resulted in a net loss for the latest fiscal quarter of just over a million dollars, or a loss of five cents per diluted common share. Still, that was an improvement over the net loss of $4.5 million during the comparable quarter for 2006.
The decrease in revenue was primarily attributable to continued competitive pressures on the company's UNIX products and services. In short, Linux continued to replace SCO's OpenServer and UnixWare lines.
"The cost structure that we put into place at the end of the fourth quarter of fiscal year 2006 [story] as well as reduced litigation expenses allowed us to reduce both operating costs and cash used in the business," said Darl McBride, SCO's president and CEO. Characterizing the quarter as "difficult," McBride added that SCO is "committed to our UNIX business, introducing new mobile services and defending our intellectual property rights through the legal system."
Still, SCO CFO Bert Young did say that the Unix business, taken in and of itself, had a cash-neutral quarter. Over the next year, Young believes that the company's Unix business will start making money, however.
Legal and other expenses incurred in connection with SCO's Linux litigation with IBM and Novell came to $654,000 in this latest quarter. This was down significantly from costs of just over $4 million for the comparable quarter of the prior year, and down from costs of $2.22 million for the fourth quarter of fiscal year 2006.
As usual, SCO added a boilerplate disclaimer to its financial announcement, stating that, "Because of the unique and unpredictable nature of the Company's litigation, the occurrence and timing of litigation-related expenses is difficult to predict, and will be difficult to predict in the future. While the Company expects to continue to incur legal expenses related to its ongoing litigation during the 2007 fiscal year, the Company's expectation is that those expenses will be less than they were for the 2006 fiscal year."
Despite this, SCO still had cash and cash equivalents available for pursuing its lawsuits. In total, SCO still had over $11 million for its law suits. Short of a major defeat in its Novell litigation, SCO's lawsuits appear likely to go to the bitter end.
Outside of its Linux litigation and base Unix business, SCO continued to shift away from the operating system business to becoming a mobile software service and management company. SCO has just released HipCheck, a new mobile service designed to remotely control and manage Unix and Windows server and PC systems.
The company has also started showing a beta version of Shout Postcard, a new mobile technology for sharing personal photographs and audio on the go via a personalized, multimedia postcard. SCO expects to begin selling the commercial version of Shout Postcard during the second quarter of fiscal year 2007. And in what will strike many SCO watchers as a truly odd turn of events, SCO says it will also be releasing a free Community version of the software.
Additionally, during the second quarter of fiscal year 2007, SCO plans to make available a new set of Unix and mobile technologies to some of the Company's major accounts. This new set of technologies will combine the SCO's Unix operating systems with its mobile services.
-- Steven J. Vaughan-Nichols
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