SCO could be knocked off the Nasdaq
SCO could be knocked off the Nasdaq
Feb 21, 2005: The SCO Group is in serious risk of being delisted by the Nasdaq because has not managed to provide its annual report on time, which it claims is because it is still in the process of reviewing its stock options.
SCO, which used to sell Linux products, is going to appeal the decision and is looking to complete its annual report soon. If the appeal is successful, the delisting, scheduled for February 25th, will be held back.
The company's revenues have fallen and losses have increased, despite it having many unfinished copyright lawsuits, with the likes of IBM, which could prove to be very lucrative if they are successful.
SCO's battles with Linux supporters include IBM, Novell, AutoZone, DaimerChrysler and Red Hat.
SCO believes that IBM used the proprietary Unix technology to build its open source Linux, which SCO claims violated the contract IBM had with SCO.
The legal row began back in March, 2003, when SCO sued IBM for US$3 billion over what it alleged was copyright infringement on the part of Big Blue, who SCO said used code from SCO's proprietary Unix to Linux. SCO is also pursuing large corporate users of Linux for compensation in the form of licensing revenue for the part of Linux it believes belongs to it.
After that opening salvo from SCO, IBM launched a counter suit against SCO back in early August, claiming that it breached the terms of the General Public License (GPL) under which it distributed a version of Linux, and violated four of IBM's patents. Additionally, IBM has also claimed that SCO has violated copyrights on seven pieces of IBM-copyrighted software that IBM contributed to Linux under the GPL.
In December, 2004, The SCO Group, signed off on a deal with the two law firms representing the company in its various lawsuits, which caps the amount of money it has to pay for legal representation in return for offering a larger cut of any settlement won to the law firms concerned.
The deal, which was initially announced by SCO's chief financial officer Bert Young during a conference call to announce the company's third quarter results, will allow SCO to limit its legal costs to US$31 million.
However, should the total amount won be less than $350 million, the law firms will be in line to collect 33 percent, with 25 percent the agreed sum for a recovery of between $350 and $700 million, and 20 percent of a settlement in excess of $700 million.
The reason for SCO's lack of profits and hesitation in signing its annual report could be closely linked to the amount of money it has spent on trying to win these court cases. It seems that the only way that The SCO group can make a fresh start and turn the corner towards recovery is through winning these court cases.
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