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Revenues from Linux licensing insignificant for SCO

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Revenues from Linux licensing insignificant for SCO

The SCO Group posted a net loss of $3.0 million on revenues of $8.9 million in its first fiscal quarter 2005. Compared to last year, the loss increased from $2.5 million and revenues were down form $11.4 million.

More than 99 percent of revenue came from the firm’s Unix business, about $70,000 originated from SCO’s licensing program through “a couple of arrangements”. The company declined to disclose where the funds actually came from. Surprisingly, chief financial officer Bert Young indicated the firm is not banking on a success of the litigation against Intel at this time. “It is difficult to predict SCO Source licensing going forward. It is very challenging,” he said during a conference call.

Chief executive officer Darl McBride softened this indication by explaining that the program has not “kicked in” until there was a ruling in the case. “This is why we are focused on Unix right now,” McBride said.

Nevertheless SCO confirmed that it will go through with its litigation process until there is a ruling, even if it is painful for the company in a financial perspective. Litigation expenses were capped at $31 million and the company paid to its law firm a total of $16.3 million in the first quarter. During the next four quarters, the firm will transfer another 2 million each. This will leave SCO with roughly $12 million in cash and cash equivalents by the first quarter of 2006. While the outcome of the IBM lawsuit is predictable, SCO hopes that it can build its business in any case on Unix: “Unix is generating a meaningful, positive cash flow,” Young said. (THG)