SCO staggers on

. . . keeping an eye on the penguin

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SCO staggers on

Sep. 29, 2007

SCO's sins continue to catch up with it. While the company was granted its request for a hearing to explain why it shouldn't be delisted from the Nasdaq stock exchange, on Sept. 28 it received another Nasdaq delisting notice for a different reason.

SCO, a Lindon, Utah, company best known for its Unix operating systems and its Linux litigation, had been scheduled to be delisted on Sept. 27. SCO appealed and, as is almost always the case, was granted a hearing. SCO will have its chance on Nov. 8 to convince the Nasdaq Listing Qualifications Panel that it shouldn't be delisted for seeking Chapter 11 bankruptcy.

As a result of this reprieve, the company will still be listed on Nasdaq until at least the middle of November.

In the meantime, since SCO's stock price has declined to below a dollar a share for more than 30 business days, Nasdaq notified the company that it will be delisted for this cause unless it can either convince Nasdaq that it should be allowed to continue to trade on the exchange or the stock goes above a dollar a share. At the market close on Sept. 28, SCO was trading at 17 cents a share.

SCO has been declining for years thanks to its failing Unix business and its costly failures to win any of its anti-Linux cases. The straw that broke the camel's back though was when the U.S. District Court in Salt Lake City ruled in August that Novell, not SCO, owned Unix's IP (intellectual property).

This decision not only knocked out the props from SCO's biggest case—its fight against IBM—it also immediately threatened to destroy the company's finances. As a result of the decision, the court was to decide on Sept. 17 how much of the money SCO had made from its Microsoft, Sun and other Unix IP deals, which ranged from $26 million to $37 million, should go to Novell.

SCO will face its Nasdaq challenges with a new chief financial officer. The former CFO, Bert Young, had been with SCO since April 2004. The new CFO, Ken Nielsen, starts Oct. 1. According to a company statement, Young left SCO to pursue new opportunities.

Bad news and all, SCO CEO Darl McBride continues to see SCO's future in rosy tones. In an interview with the Salt Lake City Tribune, McBride hinted that SCO may yet find a buyer. McBride said, "I can tell you that other parties are very interested in our business," and that the court's rulings will be overturned on appeal by the 10th Circuit Court of Appeals when that court hears the facts and witnesses. McBride, however, did not give any specifics as to who these parties might be, or what new facts or witnesses might come forward to prove the rightness of SCO's causes to the court.

—Steven J. Vaughan Nichols

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