SCO Claims $15,300,000 From SCOsource

Hollins writes "Yesterday, SCO filed their latest 10-Q. In it, they claim over fifteen million dollars in revenue from their SCOsource initiative (mostly from Microsoft and Sun) with a decline in revenue from all other sources. A lot of interesting statements are in the 10-Q, including "The success of our SCOsource licensing initiative, at least initially, will depend to a great extent on the perceived strength of our intellectual property and contractual claims and our willingness to enforce our rights. Many, particularly those in the open source community, dispute the allegations of infringement that we have made"."

Comments

burned by their own lawsuit ?

[gmack]

"caused by the worldwide economic slowdown, increased competition from other alternate operating platforms, and uncertainty from our recent Linux announcement. This impact was largely felt in our distribution channel in the Americas and Europe."

That's interesting.. it indicates at least some customers have given that lawsuit as the reason for not using their products.

Sun is involved!

[raahul_da_man]

Sun has paid Sco a quarter million. Why on Earth is it helping bankroll an attempt to destroy Free Software?

It's time to boycott Sun. It's about time it learned you can't bite the hand that feeeds you.

Microsoft, of course, is no surprise. I'm slightly amazed they didn't give Sco more money.

Re:Two companies

[Greyfox]

Sun's been making noises about being able to distribute the Linux kernel irrespective of the outcome of the IBM/SCO battle, if I read the news right. I assume it's to their advantage to imply that they're the only legal Linux distributor for as long as they can, so it'd be to their detriment for SCO to go bankrupt too soon. Once SCO goes under, they'll be back to having to compete head-to-head with IBM.

They're taking a big risk of alienating the community that way. Personally I wouldn't play my cards that way given that a hefty hunk of the product offering (Mad hatter et al) coming up is open source based.

Business Model?

[Professor_Quail]

Regardless of whether or not their claim regarding the Linux source code is true, what kind of a business are they planning to run in the future? At this point, their 'other' revenues are dropping, so I wonder if they just plan to sit around and threaten people so they can collect royalties.

If they're earning revenue in any other meaningful way, it'd like to hear it.

Re:Business Model?

[MuParadigm]

I posted this in a previous SCO thread, but I'm reposting it here, because it's the best answer I can think of to explain SCO's "business model"

What Does Darl Get Out Of It?

Darl gets a big fat payoff if he can deliver four straight profitable quarters. Most of it is in stock, which means he'll have to keep up the fiasco for extra quarter or two to cash out.

At that point, I think we can expect him to leave SCO -- if there is any SCO left to leave. Maybe the final legal showdown will be Darl v. Ralph, to be filed in late 2004 or early 2005. We all know how much Darl loves to sue his employers.

Anyway, this means the SCO v. IBM case is not likely to ever make it to court because there's *no* motivation for Darl to go that far.

In the meantime, he'll do whatever it takes to show profit on the next two or three 10-Q's. He'll slash personnel, support, anything, doesn't matter how it affects SCO's long term prospects, as long as he shows profits each quarter.

He'll try to get people to pay for SCO IP in Linux licenses NOW, not after the case is resolved in court, because he doesn't care what happens that far down the line.

He needs the money on the books and in the 10-Q next quarter and the following quarter. He's got two profitable quarters in a row now, though he probably wouldn't have made it this quarter without cutting personnel and associated costs. Two more to go, and he's golden.

If he hasn't done it already, we can expect some *extremely* creative accounting over the next two quarters. Personally, I think that asset listed as "Goodwill" is just the start of SCO's attempts at creative accounting. Or maybe more money from MS. MS, according to the latest 10-Q (available at SEC), has apparently purchased those "expanded licensing options" that were mentioned in the April 30 10-Q.

Darl's biggest fear is that something will shut down SCO and/or it's FUD machine within the next two-three quarters. If he sounds irrational and afraid, well, that's because he is. He can't pull any more profits out of Germany. Australia, Austria, and Poland are lining up to gag him in their countries. Red Hat's trying to do the same in the U.S. Of course, none of this matters much as long as no court decisions are reached within the next 3 quarters. Which means delay, delay, and delay will be SCO's legal strategy going forward.

12 months of cash flow

[Hamfist]

It also says that they have only about 12 months of cash left at the rate they're losing money. That means if they don't get more money from licensing, they will be broke before the IBM case comes to trial. If someone else sues them, they'll probably go under even sooner.

I sure hope someone else sues them soon.

Re:Not MOSTLY from Microsoft and Sun...

[_Sprocket_]

Are y'all sure that Sun did give SCO $$$ recently ?

Usually the glib responce is "RTFA" - in this case its RTF10K. To quote:

We initiated the SCOsource effort to review the status of these existing licensing and sublicensing agreements and to identify others in the industry that may be currently using our intellectual property without obtaining the necessary licenses. This effort resulted in the execution of two license agreements during the April 30, 2003 quarter. The first of these licenses was with Sun Microsystems, Inc. ("Sun"), a long-time licensee of the UNIX source code and a major participant in the UNIX industry, and was a "clean-up" license to cover items that were outside the scope of Sun's initial UNIX license.

...

The license agreement with Sun provides for an additional $2,500,000 to be paid to us by November 2003.

...

In connection with the payment of $2,500,000 to us by Sun during the quarter ended July 31, 2003, we granted a warrant to Sun to purchase up to 12,500 shares of our common stock, for a period of five years, at a price of $1.83 per share. This warrant was valued at $150,000 using the Black-Scholes option-pricing model and reduced our licensing revenue for the quarter ended July 31, 2003 by that amount.

The other licensee mentioned was Microsoft. There's your proof that the mystery license went to Sun. Unless, of course, you believe SCO lied in their filing.

Re:Slashdotted!

[MuParadigm]

They run into three problems if they actually try to send out those invoices.

A) The obvious fraud charge that everyone has already discussed.

B) Anyone who receives one of those invoices might try to challenge SCO's copyrights. Given that the presiding judge ruled ATT was "unlikely" to prevail on their copyright claims in the BSD case, SCO does not want to put their copyrights to the test in court.

C) Anyone receiving one of those invoices might ask for declaratory judgement, requiring SCO to shut up.

It's less a dog and pony show than a strip tease. And I really *don't* want to imagine Darl naked.

Re:Two companies

[ckd]

why Sun?

Anti-AIX propaganda? They were sending out FUD emails to (among other people) a friend of mine saying "hey, we'll help you switch from AIX to Solaris, since we don't have any licensing problems"....

Re:Two companies

[zerocool^]

I just looked at it.

Though I have no love for solaris, and I like budget options, I always defend sun hardware. Probably because I work on it on a daily basis (we use everything from IPC's to our quad proc ultra II at Netmar).

The hardware is rock solid. I mean, you have to beat them with hammers to break them. The PROMS die before anything else goes bad, and that's just cause of the battery. And when the prom dies? Just boot it and make it set it's own mac address in the OS. The fact that we still use IPC's (as monitoring servers, rstat graph displayers, etc) is a testiment to how long they last.

I just looked at the sun website. The machine you offer does indeed cost $40k, or close to it ($35k). However, make sure you see what's included in that. It's 4x Ultra SPARC III Cu 1.05 Ghz processors, EACH with 8MB of cache. On top of that, there's 32 256MB sticks of registered memory, 2 10k RPM 73GB discs, 2 Gigabit ethernet ports, and dual 1440 Watt power supplies. That's a beast of a machine.

Oh, and wait, what's this?

I configure a machine almost matching the specs. The difference here is the processors, which are 2.8 Ghz Xeons, but ONLY 2MB OF CACHE, and they're also only 32bit. Otherwise, the same. 8GB of ram, 2 10k rpm 73GB SCSI drives. Guess what? It cost $28,000.

Between $28,000 for 32 bit procs with 2MB of cache, and $35,000 for 64 bit procs with 8MB of cache, I might go ahead and bump it up.

I wish people would realize that sun is rock solid hardware and not that much more expensive.

~Will