SCO Financials Improve As IP Fights Heat Up

By Steven Vaughan-Nichols  |  Posted 2003-12-22 Print this article Print

SCO profits hit new highs, thanks largely to Sun and Microsoft IP sales, as the company initiates makes new legal demands of Unix licensees, Linux users and Novell.

Does litigation pay? The SCO Group Inc. took time out from its continuing legal struggles with IBM Corp. and other Linux vendors to report revenue of $24.3 million for the fourth quarter of its fiscal year, ended Oct. 31. The figure marked a 57 percent increase over the year-ago quarters revenue of $15.5 million. Fourth-quarter revenue from Unix was $14 million, company officials said. In addition, SCO CEO Darl McBride said the company generated $10.3 million in revenue from its SCOsource licensing initiative, which was derived from licensing agreements reached with Microsoft Corp. and Sun Microsystems Inc. in fiscal 2003.

Although McBride said that other Linux-using companies were paying for licenses, he gave no names. When pressed, he said that no large companies had signed, but that many were "on the bubble" and expected to sign up for licenses to use Linux beginning in the second quarter of 2004.

Lindon, Utah-based SCO claimed a profit over the year, but the company reported a net loss to common stockholders of $1.6 million, or $0.12 per diluted common share, in the most recent quarter. A profit was realized by excluding the previously reported charge of approximately $9.0 million for compensation paid to law firms engaged to enforce its intellectual-property rights. Without those legal bills, SCO would have reported net fourth-quarter income of $7.4 million, or $0.44 per diluted common share. In the comparable quarter last year, SCO reported a net loss to common stockholders of $2.7 million, or $0.26 per diluted common share.

For the entire fiscal year 2003, SCO reported net income to common stockholders of $5.3 million, or $0.34 per diluted common share, reversing a net loss of $24.9 million, or $1.93 per diluted common share, in fiscal 2002. McBride claims that this marks the first time that the company has been profitable on a full-year basis.

McBride also reported that OpenServer, SCOs flagship operating system, was doing well in the market, thanks to deals with companies such as NASDAQ, McDonalds and 84 Lumber.

Next page: McBride comments on IBM, Novell

Steven J. Vaughan-Nichols is editor at large for Ziff Davis Enterprise. Prior to becoming a technology journalist, Vaughan-Nichols worked at NASA and the Department of Defense on numerous major technological projects. Since then, he's focused on covering the technology and business issues that make a real difference to the people in the industry.

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