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SCO's profit turns to loss as Q3 revenue tumbles

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The SCO Group suffered a massive drop in third quarter revenue and has made moves to cut costs, rearrange legal fee agreements and counter potential takeover bids, the company announced today.

SCO's revenue fell to $11m in the period, which compares to $20m in the same quarter last year. The major reason for this decline was a result of a huge fall in sales of SCOsource licenses. SCO's "we'll get you clean" business generated only $680,000 in the third quarter compared to $7.2m last year.

SCO said it plans to continue closing some overseas offices and moving into smaller offices where possible to cut costs. In addition, it has now set a $31m cap for the fees it will pay to Boies, Schiller & Flexner for legal help in its ongoing battles against IBM, Novell and Red Hat over Linux and Unix. The law firm will now receive a larger percentage of any award SCO receives from the court battles. SCO additionally adopted what is known as a shareholder rights plan to try and offset takeover bids that might come as a result of the company's low stock price.

"We remain steadfastly committed to enforcing our intellectual property rights on behalf of our customers, employees and shareholders," said SCO CEO Darl McBride. "Through the combination of the quarter's positive developments and our current cash position, we are well-positioned to pursue our current litigation through its conclusion."

SCO's net loss for the third quarter came in at $7.4m. This figure compares to a net profit of $3m in the same period last year.

During a conference call, McBride tried to put his best spin on the results. The brightest spot for SCO in the quarter came as its Unix business returned to profitability. These sales, however, appear to have done little to improve SCO's overall bottom line. McBride also said the company remains confident that more information backing up SCO's claims against Linux will come out as the court proceedings move along and documents are unsealed.

"There is a wide gap between what IBM and SCO are looking at and what the world has seen," McBride said. ®

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