| SCO's revenue goes down, down, down |
Jun. 08, 2006
On June 8, The SCO Group Inc. reported results for its fiscal second quarter, which ended April 30, 2006. The news wasn't good.
SCO, the Unix and wireless software company best known for its rounds of Linux and IBM law suits, showed revenue for the second quarter of $7.126 million. For the comparable quarter last year, the company realized $9.258 million of revenue.
The net loss for the second quarter of fiscal year 2006 was over 4.5 million, a loss of 22 cents per diluted common share. In last year's second quarter, the Lindon, Utah-based company lost almost $2 million dollars, or eleven cents per diluted common share.
To take a slightly longer viewpoint, revenue for the six months ending April 30, 2006 was almost $14 and a half million as compared to just over $18 million for the six months ending April 30, 2005. The net loss for the six months ending April 30, 2006 was $9.275 million, or a loss of 45 cents per diluted common share, as compared to a net loss of almost five million, or 28 cents per diluted common share, for the six months ending April 30, 2005.
While people still think of SCO only in terms of its Linux litigation, the company has introduced several new products from both its Unix and mobile businesses in the first half of 2006. For example, SCO completed its work with MySQL AB to certify the commercial version of the popular MySQL 5 DBMS on SCO's OpenServer 6, its flagship Unix operating system.
SCO also began shipping an Online Data Manager and Mirroring product for SCO OpenServer 6. In a somewhat ironic move, SCO also started offering its own open-source server application stack, SCAMP. Finally, the Unix company provided updated maintenance packs for SCO OpenServer 6, UnixWare 7.1.4, and its email and collaboration server, SCOoffice 4.1.
On its newer mobile service application side, SCO introduced its EdgeClick mobile development platform as well as Me Inc. mobile services during the second quarter of fiscal year 2006. EdgeClick is a mobile development platform that allows SCO solution partners to create and customize mobile services for their customers.
The really bad financial news, and drain on SCO's finances, continues to be the pressure of Linux on its Unix sales. Darl McBride, SCO's CEO and president, said that taken by itself, SCO's Unix businesss was still generating positive cash flow.
SCO rang up $3.762 million in legal and other expenses incurred in connection with the company's IBM lawsuits. On June 5th, SCO replenished its $5 million escrow account. These funds, SCO CFO Bert Young explained, weren't for legal expenses per se, but to cover future expert, consulting, and other legal expenses.
"Despite our revenue decline and net loss, we remain committed to and optimistic about our business strategy," McBride said in a statement. "We are encouraged by the progress we are making in the development and deployment of our EdgeClick mobile development platform and Me Inc. mobile services. Unlocking the value of our core UNIX business will be difficult until we resolve the issues raised by our intellectual property litigation."
As of April 30, SCO still had cash and cash equivalents and available-for-sale marketable securities of over $18.5 million in its coffers. According to Young, this should be sufficient to continue to operate the company's business and to see its Linux law suits to the end.
-- Steven J. Vaughan-Nichols
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