Reporter’s Notebook: SCO’s recent fourth-quarter earnings call started on a somewhat ominous note.
SCO spokesman Blake Stowell warned that SCO would only be taking
questions about its Unix and Me Inc mobile business. Read: We will not be taking questions about our legal activities against Novell and IBM. I was on this call and, at first I figured that others might well respect Stowell’s admonition. How naïve of me. It turns out nothing could be further from the truth.
There can be no story about SCO, without the SCO
story. The SCO story is dominated by SCO’s litigious activities against IBM, Novell and, by extension, the wider Linux community.
Darl McBride, the president and CEO of SCO, opened the floodgates all by himself when he discussed the ongoing litigation in his opening remarks.
Considering that SCO accounts for its litigious activities as a cost of
revenue, (since it hopes to make money from its SCOsource licensing program
and/or from a hypothetical court win), it is clearly a prudent action of
financial disclosure for McBride to provide an overview of the ongoing
That being the case, when the phone lines opened up to questions, the bulk
of those asked seemed to be about the litigation, which is, remember, the very same issue that Stowell had warned in his introductory remarks that SCO would not be taking questions about.
With all the Linux journalists on the call, one would expect a less-than-friendly audience.
Questions abounded over whether SCO was, in fact, going bankrupt,
as Novell has alleged. And there were allegations that SCO was not as forthcoming as
it had promised to be about detailing all aspects of their business.
angst and frustration with callers’ questions was evident at
points in the call, especially when he drew long breaths and conveyed a tone that could be
described as restrained frustration. Clearly the conference call was no
party for him.
There was, however, one startling moment in the call that likely put a smile
on McBride’s face.
A participant who said he was from financial firm Bear Stearns took a very positive view of SCO’s ongoing litigation. The caller asked McBride if the goal was to improve cash flow in SCO’s Unix business in order to fund litigation.
“Our goal here is not to be a litigation company and get
our money and go home,” McBride responded. “Our goal here is to run a positive business and meet customer needs and be around for a long time to come.”
The Bear Stearns caller said he sees the litigation as being a real
upside, not only from a business perspective but from a business
perspective. “I wouldn’t want to see it go away,” he said.
Imagine that. A conference call loaded with mostly anti-SCO folks all hoping to hear McBride admit that the company is going bankrupt, and here is a financial guy taking something positive from it.
McBride reiterated that SCO is very committed to the ongoing litigation. “The last thing we’re going to do is walk away from this fight,” he said. “Win, lose or draw, when we have our day in court and we have a final resolution then we will move forward.
“But I agree with you. There is definitely a big upside to being able to have
our claims heard and win the claims that we have on the table.”
I suppose it was a good thing that few heeded Stowell’s request to limit questions. For better or for worse, SCO’s future is tied to its ongoing litigation and no amount of words or warnings to the contrary are likely to change that fact.