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.
McBride comments on IBM,
McBride said he was happy with SCOs progress in the IBM case and the discovery process. In the meantime, McBride warned Unix licensees and Linux users that SCOsource would legally pursue all companies that contribute to or use Linux. By the end of January, McBride said, companies using Linux have three choices: 1) Cease and desist any use of Linux; 2) obtain a license from SCO to use Linux at $699 per CPU (the licensing fee to go up to $1,399 at some time in the future); or 3) continue to use Linux, and lose all rights to the companys Unix license and face SCO in court.
McBride couldnt characterize how much income this move would bring in, but he said he hoped it will be substantial. He emphasized that these points were not based on the IBM suit and that companies should not wait until that issue is resolved since SCO will be taking action long before that case is decided sometime in 2005. Once more, McBride said that IBM and Linux distributors, thanks in part to the GPL, were pushing the responsibility for any licensing or legal costs to Linux users.
Finally, McBride responded to a report that Novell Inc. was still pursuing its own copyright claims on Unix. “Novell is desperate,” McBride said. “SCO has produced documents that say we own the Unix copyrights. Let me be real clear: SCO acquired all rights for Unix and UnixWare, includes copyrights. We see this as a fraudulent notice.” McBride added that SCO sees Novell as being “all hat, no cattle.”
Bruce Lowry, Novell director of public relations, said, “Novell believes it owns the copyrights in Unix and has applied for and received copyright registrations pertaining to Unix consistent with that position. Novell detailed the basis for its ownership position in correspondence with SCO.
“Contrary to SCOs public statements, SCO has been well-aware that Novell continues to assert ownership of the Unix copyrights.”
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