SCO Blames Linux For Bankruptcy Filing

Stony Stevenson writes "SCO Group CEO Darl McBride is now claiming that competition from Linux was behind the company's filing of Chapter 11 bankruptcy. 'In a court filing in support of SCO's bankruptcy petition, McBride noted that SCO's sales of Unix-based products "have been declining over the past several years." The slump, McBride said, "has been primarily attributable to significant competition from alternative operating systems, including Linux." McBride listed IBM, Red Hat, Microsoft, and Sun Microsystems as distributors of Linux or other software that is "aggressively taking market share away from Unix.""

Comments

Other choice quotes

[Just Some Guy]

My favorites:

As a result of both the Court's August 10, 2007 ruling and our entry into Chapter 11, there is substantial doubt about our ability to continue as a going concern.

and:

Revenue from the UNIX business decreased by $2,704,000, or 37%, for the three months ended July 31, 2007 compared to the three months ended July 31, 2006 and revenue from the UNIX business decreased by $5,103,000, or 23%, for the nine months ended July 31, 2007 compared to the nine months ended July 31, 2006.

and:

Revenue from our SCOsource business decreased from $31,000 for the three months ended July 31, 2006 to $0 for the three months ended July 31, 2007. Revenue also decreased from $95,000 for the nine months ended July 31, 2006 to $23,000 for the nine months ended July 31, 2007.

Ouch. To their credit (heh, I are teh funny), they managed to only lose $4.6M during that 9-month period, down from $12.9M a year earlier. Unfortunately, it looks like they're also out of things to cut.

SCO is solvent

[darkonc]

SCO is solvent -- unless you include the money that they {claim that they don't,} owe to Novell. . . but even if they end up owing half of the $24M that Novell claims they owe, that would be more than enough to put them into the red.

Thus, . . . even if you accept that competition from Linux has hurt them, what really cooked their goose was suing Novell and, thus, forcing Novell to counter-sue. (Once SCO sued Novell, if Novell hadn't countered with the demand for payment of owed royalties, they might have been permanently barred from suing SCO for that $20M at a later date).

Of course, in their bankruptcy filings, SCO doesn't acknowledge that they owe Novell anything ... presumably under the premise that nothing is owing until the judge declares so in the trial (that is now being held in limbo by the Chapter 11 request). The problem that SCO may have, however, is that -- until, and unless Novell's royalties are declared (or acknowledged) owing, SCO is actually solvent, which means that the bankruptcy court may actually deny their request to go into chapter 11.

On the other hand, admitting that they owe all of this money to SCO would defeat the probable purpose of the filing -- which appears to be keeping Novell off of the list of top creditors. (I'm not going to link to groklaw, here, because their servers are SOOO snowed under by all this sudden attention -- and that just after they upgraded!).

The reason why SCO probably fears Novell being on their list of top creditors is that Novell would then lead a board of creditors which would have an incredibly wide-ranging ability to look into the recent actions of SCO from the inside -- and given how much SCO has been dancing to prevent certain disclosures in court, I expect that they'll be very unhappy to see Novell lawyers walking into the office to pull that very same information out of SCO's files in person.
And then there's the question of how much 'encouragement' Microsoft provided for the lawsuit against Linux in the first place.

Yeppers. I expect that there's gonna be a whole lot of hand-wringing in Utah over the next week or so... possibly even for over the next couple of years.