SCO Starts to Stabilize Its Finances

Income keeps decreasing, but the company's cost cuts seem to be finally catching up with it. Now, if it wasn't for that Linux lawsuit.

The SCO Group on March 1 reported results for its first quarter ended Jan. 31, 2007. While it wasnt a pretty picture, the companys cost-cutting efforts seem to have placed profitability for the year within the realm of possibility.

Revenue for the first quarter of fiscal year 2007 was just over $6 million. This was down from $7.343 million for the comparable quarter of the prior year. This resulted in a net loss for the latest fiscal quarter of just over $1 million, or a loss of 5 cents per diluted common share. Still, that was an improvement over the net loss of $4.5 million during the comparable quarter for 2006.

The decrease in revenue was primarily attributable to continued competitive pressures on the companys Unix products and services. In short, Linux continued to replace SCOs OpenServer and UnixWare lines.

"The cost structure that we put into place at the end of the fourth quarter of fiscal year 2006 as well as reduced litigation expenses allowed us to reduce both operating costs and cash used in the business," said Darl McBride, SCOs president and CEO. Characterizing the quarter as "difficult," McBride added that SCO is "committed to our Unix business, introducing new mobile services and defending our intellectual property rights through the legal system."

Still, SCO CFO Bert Young did say that the Unix business, taken in and of itself, had a cash-neutral quarter. Over the next year, Young believes that the companys Unix business will start making money, however.

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