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SCO bags $100m to fight another day

The company that refused to die

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It's Alive! SCO is bouncing back from Chapter 11 and taking itself private, thanks to the munificence of a private equity firm.

The company that thinks it owns some lines of code in Linux - and that anyone who uses Linux owes it a living - fled to Chapter 11 last September, after fighting legal battles against world+dog - to prove that it was wrong. But you have to hand it to SCO: this company is a better escape artist than Harry Houdini.

Stephen Norris & Co. Capital Partners and "partners from the Middle East" will pump up to $100m (our italics) into the moribund firm. So now you know where your oil money is going.

Norris is a co-founder of Carlyle Partners, so he probably isn't mad. And his firm has a cunning plan for involving "new product lines aimed at global customers". He also wants to bankroll "SCO's legal claims through to their full conclusion". Which may be ominous - or may simply mean that the company wants to put to bed those interminable court cases with Novell, IBM, world+dog...

Time for a quote from Jeff Hunsaker, CEO of SCO's operating business. You know, the bit of the company that doesn't sue business partners or bully customers. "This significant financial backing is positive news for SCO's customers, partners and resellers who continue to request upgrades and rely upon SCO's UNIX services to drive their business forward."

We shall see. Re-organisation will enable SCO to slough off accumulated debts of $258m, by the time it emerges from Chapter 11 at some point this year.

But sales have been in free-fall - and not just because people are switching from SCO because they hate the company. In its 10-K filing with the Securities and Exchange Commission (SEC) last month, the company notes:

"Sales of our UNIX-based products and services have been declining over the last several years. This decline in revenue has been primarily attributable to significant competition from alternative operating systems, particularly Linux." Our expectation is that this trend will continue as a result of continued competition, the negative ruling received from our litigation with Novell, and our Chapter 11 filing."

SCO may have earned itself some wriggle room, courtesy of Mr. Norris and friends. But that significant competition ain't going away.

SCO release. ®

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