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.""

Oh that Darl McBride!

[ackthpt]

McBride noted that SCO's sales of Unix-based products "have been declining over the past several years."

I suppose that's why they pay the Darl McBride the big bucks -- nothing gets by him.

The incredible Darl in action! [vi411.org] Does anyone worry his next job will be working for their company?

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.""

Seems the logical approach would be for them to develop Unix and market it aggressively in return, rather than count on hitting the jackpot through the Lawsuit Lottery.

Seems they should have learned something from this example [wikipedia.org], but it does seem to strike everyone that there really never was an interest in growing the Unix market. It was all about suing IBM and other Linux distro makers.

In Other News: Br'er Rabbit informs us he's certain he can defeat the Tar-Baby if he could just get one foot free long enough to take another kick at it.

Re:Microsoft distributing Linux?

[Kelson]

I did a double-take too, but if you look at it more closely, he doesn't say Microsoft distributes Linux. What he says is that other OSes including Linux took away their marketshare. Then he lists a bunch of companies that provide OSes, including Microsoft. So he's talking about Windows in that case.

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.

Re:Other choice quotes

[Just Some Guy]

Oops! At first glance I thought the article was linking to their 10-Q filing [yahoo.com] that I'd just finished reading. Those quotes and numbers are taking from that form, not from the article.

Re:Sun?

[notthe9]

HP-UX and Solaris comply with the Single UNIX Specification and are thusly properly called Unix.

Re:Caldera to SCO: Backing the wrong source

[Anonymous Coward]

Okay...I've been reading the comments, and I am not sure if everyone is on the same page. I'll do a summary super quick for some, and don't blast me is any of it is wrong, its just want I remember. Bell Labs created Linux a while ago, then it sold to AT&T, which in turn sold their Linux stuff to SCO. So for the past few years SCO went on a Suing spree trying to file a suit against anyone who was using Unix or Linux. They are even claim that anyone(yes, even end users) who has ever used Linux owes them $750 for a license. They claim that Linux was created from stolen code of their Unix. They went after IBM, Chryster, Sun, anyone with deep pockets. And how were they getting the money for this....Microsoft gave $50million to another company (i forget what the name was), who in turn, gave it directly to SCO. It was in Microsoft's best interest because a company was suing all of their competitors.

In one of their court cases, the court order SCO to release SCO's code to the court so the court could compare it to the Linux code, ect..., SCO claimed that Unix was propietary, and that they couldn't release it to the court without hurting themselves, so they withheld their code, and the case was thrown out. I think everyone knows that SCO is a big joke, that is looking to make money from nothing. I know a few years ago, when they were making money, it was from their stock, and people getting into the hype. I'm sure the SCO execs all the majority of the ppl who bought the stock, and they probably sold it already while it was high a few years back.

From above, I forget who Caldera was, I am too lazy to look it up. I wrote a paper two years back on this, I can probably find it and upload some of it when I get home from work.

Just my two cents...and a little clarification about a few thing.

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.

It's not going to work for SCO

[Animats]

Novell already sent five heavy-hitters from Morrison and Foerster, the leading bankruptcy law firm, to Delaware to present their side of the SCO bankruptcy. SCO originally wanted to keep paying their lawyers for their various pre-existing lawsuits during bankruptcy. But they didn't even try to convince the bankruptcy judge of that in court today. So that legal money drain stops. Novell indicated they're going to file a motion to restart their lawsuit (it's just stayed temporarily after the bankruptcy filing), and on October 5, Novell gets to argue that their financial claim preempts most of the other creditors. SCO was just supposed to pass royalties through to Novell, not keep them. Judge Kimball agreed, and put that in his summary judgment order last month, so Novell will probably win that one.

Meanwhile, SCO stock is now at $0.18, down 99% from the peak after SCO sued IBM.

Another point they missed

[Weaselmancer]

SCO (originally, anyways) was in the business of selling UNIX systems - which is a niche market. And that niche is pretty well defined. People like us /.ers fill that niche. Ideally, we're the people The Suits ask whenever they say "we need a solution to this problem."

By attacking Linux, they offended pretty much their entire target market. Nobody here would recommend SCO for anything, and last I checked our user ID numbers were over a million.

That is some seriously monstrous bad PR to try to get over.

Of course, all this assumes that Darl actually wanted to run a software company in the first place. Maybe he doesn't care about SCO at all, and just makes these noises in the press because that's his job. It's equally likely that he's a paid assassin out to tarnish the reputation of open source, or even better yet put an end to open source in the business sector. See the Halloween X document for clarification. Link 1. [wikipedia.org] Link 2. [catb.org]

Re:Caldera to SCO: Backing the wrong source

[TheRaven64]

While by 96 DOS was pretty dead that would have been a nice feature for some users.

DOS was dead in 1996? A lot of businesses were still relying on DOS programs back then, and many of those that weren't were using Win16 apps. A DOS runtime environment that could have run Windows 3.11 would have been an interesting alternative to Windows 95.

Re:So, let me get this straight....

[BigBadBus]

Titanic was a steam transport.

Re:Caldera to SCO: Backing the wrong source

[AtlasAxe]

I started work for a Fortune 100 company in 1996 whose primary sales app was DOS-based until after 2000. We were buying plenty of copies of DOS at least until about 1998 (the app was updated to work in a command prompt under Windows 95/98 by that point, but still not converted into a Windows app). Big corporations will buy large quantities of legacy software to stay away from copyright issues.