SCO makes Unix revenue disappear in Q1

SCOsource can't crack five-figures

By Ashlee Vance, 14th April 2005

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The SCO Group continued to lose money in its first quarter, as it suffered from lackluster Unix sales and made just a few thousand bucks in licensing revenues.

SCO pulled in $8.9m during the first quarter - a major drop from the $11.4m reported in the same period one year earlier. It attributed the biggest chunk of this revenue loss to vanishing Unix product and services sales. On the plus side, SCO managed to trim its net loss to 17 cents per share - one penny better than the 18 cent per share loss reported last year.

SCO's chief Darl McBride vowed to ride out these difficult quarters, as the company awaits its blockbuster Unix/Linux IP trial with IBM.

"Despite the decline in revenue, we successfully implemented efficiency and cost reduction measures that have had a positive impact on operations and contributed to the Unix business operating profitably," McBride said. "We remain steadfastly focused on winning in both the court room and in the market place."

SCO still has $15.4m in cash and equivalents hanging around along with $4.8m in an escrow account that will go toward its mountainous legal fees.

"Our net cash position after backing out the costs of litigation that have been paid and budgeted for under our agreement with our legal counsel remains steady," said Bert Young, CFO at SCO. "Combined with the fact the Unix business is generating cash, we believe we are in a position to continue operating our core business and see the litigation through to its conclusion."

SCO plans to ship its OpenServer 6 product during the first half of this year.

A successful new product would be welcome, as SCO's current ventures aren't paying off terribly well.

During the first quarter, SCO saw total product revenue fall to $7.3m from $9.7m one year earlier. Its service revenue also dropped to $1.5m from $1.7m.

The controversial SCOsource licensing program brought in $70,000 during the quarter. That's a huge jump over the $20,000 last Q1 but hardly the type of revenue SCO had once been hoping for. The SCOsource licenses allows customers to use Linux "free and clear" regardless of what happens with IP litigation, according to SCO.

SCO managed to tighten its bottom line by making huge sales and marketing cuts and by trimming research and development costs. ®