SCO reports poor results
Published: 10 Jun 2004 16:40 BST
The SCO Group reported lacklustre second-quarter results on Thursday, with revenue falling across its three divisions and its loss from operations widening.
SCO, which is embroiled in a number of lawsuits over Unix intellectual property, reported revenue at the low end of its earlier forecast range and missed expectations by the one analyst that follows the company.
During the second quarter, which ended 30 April, SCO generated $10.1m (£5.5m) in revenue, compared with $21.4m in the year-ago period.
In March, the company had said it expected to generate second-quarter revenue of between $10m and $14m. The analyst following the company had been estimating that SCO would make $11.6m in the quarter, according to Thomson First Call.
SCO posted a decline in all three of its revenue segments in the quarter -- products, services and licensing. Last month the company said it had cut a "small" number of jobs in an attempt to make its Unix products group profitable.
The net loss for the quarter was nearly $15m, or $1.06 a share, compared with a net gain of $4.5m, or 33 cents a share, in the year-ago period. Meanwhile, SCO's net loss from operations, excluding special charges, reached nearly $6.6m, or 47 cents a share. Wall Street was expecting a smaller loss of 33 cents a share, according to First Call.
"Our revenue for the second quarter was consistent with our expectation and we also incurred significant expenses for the impairment of goodwill and intangibles and for the exchange of our… convertible preferred stock," Darl McBride, SCO's chief executive, said in a statement.
For the current quarter, which ends on 31 July, SCO said on Thursday it expects total revenue in the range of $10m to $12m.
Earlier this month, SCO reached an agreement with BayStar Capital, under which the company would pay $13m in cash and 2.1m in shares to retire all series A-1 convertible preferred stock held by BayStar. After the payment to BayStar, SCO said it would still have sufficient cash reserves to pursue its intellectual property lawsuits.
SCO is embarked on an ambitious but expensive campaign to profit from Unix intellectual property that it argues it owns but that it says has been illegally transferred into the Linux operating system. In the second quarter, though, its SCOsource licensing effort yielded only $11,000 in revenue at a cost of $4.5m in expenses.
The company is engaged in several lawsuits, most prominently a case in which it argues IBM violated its Unix contract with SCO by moving Unix technology to Linux. IBM denies the charge and is supported by Novell, an earlier Unix owner that argues it never gave up the operating system's copyrights.
SCO's legal actions have riled Linux advocates, triggered new intellectual property protections for Linux users and programmers, and don't seem to have stopped the fast growth of the open-source operating system.
"Some of their core customers are being scared off by the lawsuits," said Dion Cornett, an analyst with Decatur Jones Equity Partners. "SCO has sued some of its customers, and that is what's scaring people off."
As customers go from Unix to Linux, Cornett said, SCO's business is falling off at twice the pace of other software like Novell's NetWare.
Shares of SCO were down in early trading by 44 cents, or nearly 8 percent, to $5.
The company also announced Thursday that it had notified the Berlin-Bremen, Stuttgart and Frankfurt Freiverkehr stock exchanges that its ticker symbol had been listed without the company's permission. SCO is asking the exchanges to remove the symbol.
Did you find this article useful?
24 out of 71 people found this useful
- Share this article:
