SCO shareholders may come away with nothing

Troubled operating system vendor SCO's recent 10-K SEC filing for its financial year ending 31 October 2007 has made for grim reading, as it warned shareholders they may come away from the company with nothing.

"A plan of reorganisation could result in holders of our stock receiving no distribution on account of their interests and cancellation of their existing stock," it stated.

SCO made its announcement off the back of results that showed it suffered an operating loss of $2.9 million (£1.5 million) in the last fiscal year and that revenue from its Unix business - currently embroiled in the long-running litigation with Novell and IBM - fell 26 per cent year-on-year to $21.6 million (£11 million).

"The revenue from our Unix business has been declining over the last several years primarily as a result of continued competition from alternative operating systems, particularly Linux and from the negative publicity of the SCO litigation," it added.

Proceedings in the nearly four-year-old battle between SCO, Novell and other vendors had been put on hold while SCO's financial affairs were sorted out under the Chapter 11 bankruptcy protection filing made last September with the US Securities and Exchange Commission (SEC).

The vendor said it might also be forced to abandon the ongoing court case if assets are frozen as part of the reorganisation it is undertaking through its filing for Chapter 11.

In August 2007, SCO suffered a major blow to its copyright lawsuit when the court ruled it did not own the rights to Unix, which effectively killed off SCO's claims that Novell, IBM and other vendors had breached its Unix intellectual property rights in a variety of products.

Pamela Jones, editor of the Groklaw blog that has been following the vendor's decline, wrote: "In short, they learned nothing. [SCO] are sorry for nothing. They're still looking to make some money somehow, but not for common shareholders or those they owe money to. They'd like not to be held responsible for any of the damage they've caused," she said adding, "well, that's my reading of this 10K".

The latest instalment in the Unix court case meanwhile was decided recently in January, when a US judge set a 29 April court date to begin the trial that will determine damages SCO must pay Novell in compensation for collecting royalties on Unix operating system rights it did not own.

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