RSSSCO Warns SEC It Might Not Survive Novell Payoff
By Scott M. Fulton, III | Published September 20, 2007, 11:51 AM
In its quarterly 10-Q filing with the US Securities and Exchange Commission on Tuesday, UNIX provider SCO Group expressed its fears that, if it were faced with a judgment ordering it to pay Novell for several years of using UNIX trademarks recently found to have been owned by Novell all this time, it may not be able to continue business.
"As a result of both the Court's August 10, 2007 ruling and the Company's entry into Chapter 11, there is substantial doubt about the Company's ability to continue as a going concern," the company stated in its SEC filing Tuesday. "Absent a significant cash payment to Novell for this matter, management believes it is remote that the undiscounted future cash flows generated by the Company would not be sufficient to recover the carrying values of the long-lived assets over their expected remaining useful lives. However, if a significant cash payment is required, or significant assets are put under a constructive trust, the carrying amount of the Company's long-lived assets may not be recovered."
The company acknowledged Novell's claim that SCO may owe it as much as $30 million, plus interest, and would seek to have a trust established by the federal bankruptcy court appointed to SCO's case, for that purpose. Though a scheduled court proceeding on that matter was delayed on account of SCO's bankruptcy filing late last week, the delay was only for a day. On Tuesday, as reported by Groklaw - the virtual pool reporters for the entire world with respect to SCO - that court ruled against Novell's request for a trust establishment, on the grounds that Novell might be perceived as being given preferential treatment...when SCO has so many other creditors to address.
Thirty million may seem a small amount, but SCO remains a very small company, as the rest of its 10-Q report last Tuesday indicates. In the quarter ending last July, SCO made a little less than $4.7 million in revenue from the sale of UNIX, and precisely zero ($0) revenue from the licensing of its intellectual property. Given that the cost of its licensing business is something greater than zero, the profit numbers for that quarter remain somewhat below zero: at just over $2.5 million in loss.
Sadly, SCO is actually losing less money this quarter than it has in several previous quarters.
But the question of where much of this lost money is going may have to become more transparent as a bankruptcy court starts managing SCO's finances. In an 8-K filing yesterday, SCO revealed that just one day before filing Chapter 11, its board of directors approved a $50,000 raise for one of its board members, Ryan Tibbits, to $210,000 per year.
Elsewhere in that filing, the company admitted it had received a delisting notice from the NASDAQ stock exchange, which is common practice for a company that has just filed Chapter 11. While the company says it plans to appeal NASDAQ's decision, it may not have much to say about it in the end, and may simply want to let it put that issue - trading late this morning at 20 cents per share - out of its misery.
I'm guessing that in another few weeks we'll be hearing that Novell is going to take ownership of SCO. Since the company isn't worth $30 million it might just be "sold" to Novell to pay for things.
Hopefully they'll do the smart thing and fire all of the dirt bags in Managment who have been raping the company all this time.
I always admired the way that Mike Krasney ran CDW. He had a very modest annual salary - but his bonus structure was such that if the company met it's targets (which was about a 20% increase per quarter) he would get an annual bonus (a substantial one at that). But if the company did poorly or didn't meet the goal, he got nothing.
The company met the goals for quite some time and he got the reward - same for his other senior execs - I thought that was a perfect way to handle things. Perform - get paid, don't perform - don't get paid. Our teachers could learn a thing or two from this. (sorry couldn't resist)
The days of these corporate bigwigs getting paid astronomical sums for nothing, needs to stop. I can't believe that shareholders are willing to put up with this any longer. How much money have they lost because the fat cats have been lapping at the bowl for too long?
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|Oh, somebody call a wahhh-mbulance for SCO. This is some of the best news I've heard in a while.
They have done this to themselves. They showed absolutely no mercy to those they were trying to extort money out of. Time for them to "man up" and accept the consequences of their actions.
I love sweet retribution. Better late than never.
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|Scott Fullton article omit that the SCO board member and general counsel, also cut himself a $50,000 BONUS cheque, while signing on the company Bankruptcy paper.
The pay raise is outrageous in itself, but the cash bonus (tax-free, all taxes to be paid by SCO-DIP) is really out of this world.
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|You missed part of it. Besides the $50K raise he received a $50K net bonus ($50K *after* tax bonus). So besides the raise he received the equivalent of a $75K bonus the day before they declared bankruptcy!
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|"a judgment ordering it to pay Novell for several years of using UNIX trademarks"
Ah, not exactly.
UNIX is a registered trademark of The Open Group.
SCO and Novell had a contract where SCO was supposed to collect license fees for Novell, but it pocketed the money instead.
Now SCO's problem is that stolen money is not included in your assets when you declare bankruptcy. But since they have spent it all I guess really that is Novell's problem.
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|On August 10, 2007, Judge Kimball, hearing the SCO v. Novell case, ruled that "...the court concludes that Novell is the owner of the UNIX and UnixWare Copyrights". Novell was awarded summary judgments on a number of claims, and a number of SCO claims were denied. Yes it is true that. As of 2007, the owner of the trademark UNIX® is The Open Group, an industry standards consortium. Only systems fully compliant with and certified to the Single UNIX Specification qualify as "UNIX®" (others are called "Unix system-like" or "Unix-like").
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|It's funny how SCO was trying to get money out of every business using linux, and now it turns out they didn't even have the patents and such they claimed to have.
That just goes to show you, don't be a jack*** to people, it will come back and bite you in the ass!
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|Microsoft is brilliant.
Fund the guy's who own unix and have them fud linux.
Wait, Novell really owns unix? Hurry up, lets partner with them, and help them put SCO out of business!
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|DUh!! Isn't that the point?
Death to SCO. The World Roars with Cheer...
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|Wonderful news!
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