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SCO Reports $6.5 Million Loss

“We believe the release of Legend will strengthen the overall ecosystem of partners, developers, customers, and resellers that rely on OpenServer and will also present SCO with opportunities to upgrade our current installed base.” SCO had previously said at SCOForum, SCO’s annual reseller conference, that Legend would arrive in the first quarter of 2005. McBride […]

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Steven Vaughan-Nichols

Dec 22, 2004

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“We believe the release of Legend will strengthen the overall ecosystem of partners, developers, customers, and resellers that rely on OpenServer and will also present SCO with opportunities to upgrade our current installed base.”

SCO had previously said at SCOForum, SCO’s annual reseller conference, that Legend would arrive in the first quarter of 2005. McBride explained that the delay was due to the beta process and that SCO is “just getting everything tightened down before it goes out.”

Next page: Legal developments.

In regard to SCO’s lawsuits against IBM and other companies concerning Unix IP issues, McBride said, “Litigation efforts have centered around discovery and motion practice in the various cases.”

In the one concrete new legal development, McBride indicated that SCO would no longer be pursuing its case against DaimlerChrysler AG at this time. In July, Judge Rae Lee Chabot of Oakland County Circuit Court in Michigan had dismissed SCO’s claims, except for the issue of DaimlerChrysler not filing its response to SCO in a timely manner.

“After the court dismissed the certification claim, we determined that it would not be a wise use of resources to pursue the timeliness claim alone. Therefore, we moved to stay that claim pending further clarification of the issues on the IBM case,” McBride said.

SCO is staying the course with its other legal actions with AutoZone Inc., IBM, Novell Inc. and Red Hat Inc. In no small part, this is because SCO has a new financial relationship with its lawyers.

The new agreement with Boies Schiller & Flexner “caps our legal fees and ensures we have their representation through the conclusion of the IBM litigation, including the appeal process,” said Bert Young’s, chief financial officer of SCO.

“The revised fee agreement limits the overall cash costs of the legal fees associated with our litigation from September 1, 2004, to a total of 31 million, other than any contingency fees. In return for this new fee arrangement, we’ve agreed to increase the contingency associated with any award on a scaled basis from 20 to 33 percent, depending on the overall size of the judgment or settlement,” Young said.

“We can’t overstate the importance of our finalized agreement with our legal team,” McBride added.

During the earnings call, McBride did not address the issues of a major executive shakeup at the Canopy Group, SCO’s parent company and majority stock holder. Both Canopy Chief Executive Ralph Yarro and CFO Darcy Mott have left their positions.

Yarro has been replaced by Bill Mustard. Mustard comes from Smooth Engine, a senior management consulting company. A replacement for Mott has not been named.

According to Blake Stowell, SCO’s communications director, however, Yarro is still SCO’s chairman and Mott remains on SCO’s board.

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SCO Reports $6.5 Million Loss

Steven Vaughan-Nichols

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