SCO Loses Revenue and Employees

SCO CEO Darl McBride insisted during the company’s fourth quarter conference call today that the company is not going bankrupt. He did admit, however, that SCO’s recent earnings are not very impressive, but is encouraged by the company’s prospects for 2007.

SCO  reported results for its fourth quarter and fiscal year ended October 31, 2006 on Wednesday, and the numbers are none too pretty.

SCO reported a net loss for the fourth quarter of 2006 of $3.7 million, or 18 cents per diluted common share. The quarterly loss is 9 percent wider than its loss during the same, year-ago quarter, which was $3.4 million or 19 cents per share. SCO cited continued competitive pressures on its UNIX business as the reason for the increased loss.

The fourth quarter loss helped fuel a full-year loss for SCO. For fiscal 2006, SCO’s total revenue declined by 19 percent to $29.2 million, down from $36.0 million for 2005. The net loss for the year was $16.6 million, or $0.80 per share, down by 55 percent from the $10.8 million or $0.60 per share loss in 2005.

There were bright spots. SCO said its ongoing legal expenses related to lawsuits with IBM , Novell and other firms over UNIX intellectual property and copyright claims is now costing less than in past years.

SCO reported that its fourth quarter expenses related to the company’s
ongoing litigation costs were $2.2 million, down 52 percent over the comparable
quarter of the prior year, which came in at $3.4 million.

In an effort to reduce expenses, SCO also revealed on the call that it had
laid off 24 employees at the end of the quarter. SCO currently has 144
employees, down from 166.

“With respect to the negativity, some of it is warranted,” McBride said of SCO’s earnings results. “Let’s face it, it’s not a real pretty picture.”

He said one goal is airing SCO’s
alleged intellectual property rights case in a courtroom. Until that
time, however, McBride said that his goal was to “put points on the

Last week McBride sent a
to SCO customers advising them that legal costs would be down and
that they were still very much in business. McBride’s letter countered a
legal filing by
the same week that alleged SCO was going bankrupt.

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