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SCO faces Nasdaq delisting
Sep. 20, 2007

How many times can SCO dodge a Nasdaq delisting? The third time may prove its last for the embattled Unix company.

The first time around, SCO faced delisting from the Nasdaq stock exchange for failure to turn in its 2004 annual report. In 2007, SCO was in danger of being delisted because its stock had fallen below a dollar a share for 30 days.

While SCO's stock has slumped to less than 20 cents a share after having its claims to Unix's intellectual property stripped away by the courts, it's not its stock price that has brought it to the brink of falling off the Nasdaq. This time, it's the result of SCO filing for Chapter 11 bankruptcy.

Threatening a company with delisting because of filing for Chapter 11, unlike the first two times SCO faced near-death Nasdaq delistings, is optional. The Nasdaq staff decided, using its discretionary authority under Nasdaq Marketplace Rules 4300 and IM-4300, to delist SCO's stock by Sept. 27, unless SCO appeals Nasdaq's decision.

On Sept. 19, SCO decided that it will file an appeal. Now SCO will be granted a hearing by the Nasdaq Listing Qualifications Panel. There is no assurance, though, that the panel will grant the company's request for continued listing.

Even if SCO convinces the panel to let it stay on the Nasdaq, it will soon face delisting again since its stock fell below a dollar a share on Aug. 15. This means the clock has already started for delisting SCO on the grounds that it share price has dropped below the $1 minimum for 30 business days.

If SCO is delisted, its stock will only be available from individual stock brokers who handle OTC (over the counter) trades. As such, it will become what's commonly called in investment circles a pink sheet or penny stock.


Steven J. Vaughan Nichols



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