| SCO's financial decline continues |
Jun. 06, 2007
The SCO Group, best known for its Unix software and Linux litigation, on June 5 reported results for its second quarter ended April 30, 2007. As expected, the company's revenue continued its decline.
For the just-ended second quarter, SCO's revenue was a smidgeon over $6 million. This was down from $7.1 million for the comparable quarter of the prior year. The net loss for the second quarter of fiscal year 2007 was $1.14 million, or five cents per diluted common share. Still, that was better than the net loss of $4.69 million, or 22 cents per diluted common share, for the prior year's comparable quarter.
So far this year, SCO's revenue was $12 million, down from $14.47-million for the first two quarters of the prior fiscal year. The net loss for the first two quarters of this fiscal year was $2.16 million, or 10 cents per diluted common share. This is comparatively an improvement over last year's net loss of $9.27 million, or 45 cents per diluted common share for the first two quarters of the prior fiscal year.
As always, SCO blamed its decline on continued competitive pressures from Linux on its Unix software and services. The improvement in net loss was due primarily to reduced legal costs and operating expenses.
"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 CEO, in a press conference. "We are committed to our strategy of serving our Unix customers, developing innovative new mobile technologies and protecting our valuable intellectual property."
Investors would be hard-pressed to find reasons to hope that SCO's legal situation will improve. SCO's cases against both Novell and IBM continue to go poorly.
SCO's legal costs were $1.06 million in the latest quarter. This was down significantly from costs of $3.76 million for the prior year's comparable quarter. SCO expects that its 2007 legal expenses will be less than they were for 2006.
In its coffers, SCO still has cash and cash equivalents;some of which is reserved for legal expenses -- that totaled $11.18 million as of April 30, 2007, compared with $12.66 million as of October 31, 2006. The company still has the financial resources needed to pursue its lawsuits.
While SCO's Unix business continues to decline, and its dreams of billions from its Linux-related lawsuits continue to transform into nightmares of endless and fruitless litigation, the company is continuing its shift to mobile application software. For example, SCO recently announced a new release of HipCheck, its mobile Unix and Windows server management technology.
The one bright spot in SCO's financial picture of doom and gloom is that the company has managed to push its stock share above $1 a share. On the morning of June 6, SCO's stock opened at $1.30 a share. If SCO's stock had not risen above the $1 watermark by Oct. 22, the company would have faced delisting from the NASDAQ.
-- Steven J. Vaughan-Nichols
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