SCO Rides Unix To Financial Turnaround

The SCO Group Inc.'s strategy of collecting on its Unix System V intellectual-property ownership is paying off. The company Thursday reported earnings of $3.1 million, or 19 cents per share, on revenue of $20.1 million for its third quarter, ended July 31. That's a dramatic turnaround from a year ago, when it lost $4.5 million, or 35 cents per share, on revenue of $15.4 million.

Third-quarter revenue included $12.8 million from sales of its Unix-based software and $7.3 million from the company's SCOsource licensing initiative, consistent with projections at the end of its second quarter. SCO expects revenue to be as high as $25 million for its fourth quarter, which ends Oct. 31. The successful third quarter follows SCO Group's first-ever profitable second quarter, when it earned a profit of $4.5 million on revenue of $21.4 million.

SCO's intellectual-property ownership "is extremely powerful," president and CEO Darl McBride said at a media and analyst conference Thursday. "There are two major operating systems in play around the world--Unix and Windows. Microsoft owns Windows, and we own Unix."

SCO Group's ownership of the original Unix System V source has touched off a series of lawsuits and counter suits with IBM and Red Hat since the beginning of the year. SCO Group contends that portions of Unix System V code have been contributed to recent versions of the Linux kernel, without SCO's permission.

The issue of intellectual property in the Internet age has begun to divide the IT industry into two camps--"those trying to destroy intellectual property and those who believe that intellectual property matters," McBride said. "The silent majority is behind SCO, and they're hoping that SCO prevails in the end. It gives other companies the ability to monetize their intellectual property."