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McBride Letter to Customers and Partners - We're Not Dead Yet
Friday, January 12 2007 @ 03:23 PM EST

SCO has just filed an 8K with the SEC that has attached to it a letter from Darl McBride to customers and partners.

I take this as the SCO answer to Novell's statement in a recent court filing that bankruptcy for SCO is inevitable. The letter says, "The vantage point of the CEO’s office provides a perspective that others are not giving." First, they intend to continue to develop, sell, maintain and support their UNIX products. Me Inc. is bringing them new customers, he writes. As for the legal front, SCO has had some setbacks, he acknowledges, but "the rumors of our death have been greatly exaggerated." Their legal expenses should be less next year.

************************

EX-99.1 2 a07-1801_1ex99d1.htm EX-99

EXHIBIT 99.1

January 12, 2007

Dear SCO Customers and Partners:

As 2006 has come to a close and we begin a new year, I want to provide you with the CEO’s update on our products and our business. The vantage point of the CEO’s office provides a perspective that others are not giving.

First and foremost, on behalf of our employees, stockholders and numerous worldwide partners, I want to personally thank each of you for your business and your loyalty to our products. SCO is committed to enhancing and innovating our product lines and seeing them evolve. In recent years we have provided you with key new releases of UnixWare 7.1.4 and OpenServer 6. We are proud of our UNIX product heritage, including its performance, stability and security and we will continue to develop, sell, maintain, and support our UNIX products for our customers.

We continue to work with hardware system providers to certify many of their servers with the latest SCO UNIX offerings. New hardware certifications are updated on a weekly basis from systems provided by Acer, DELL, Fujitsu-Siemens, HCL, HP, Intel and many others. These vendors continue to certify their systems for SCO UNIX because customers continue to require the reliability, security and performance that SCO OpenServer and UnixWare offer. This gives you, our customers, a broader choice of hardware to choose from.

In addition to our UNIX business, it’s been encouraging to see the innovations taking place with our Me Inc. mobile technologies. Our mobile technologies are attracting new customers, while at the same time providing our existing customers with a way to use their applications in a mobile business environment.

Our Me Inc. mobile technologies are helping customers in significant ways. Products like Shout and Shout Postcard are helping people communicate in innovative and productive ways. HipCheck helps companies remotely manage and control their IT systems. The anticipated Day-Timers Mobile solution will help increase personal productivity. These new mobile solutions are made possible through our new Me Inc. Mobility Server, which is the back-end server technology that does much of the heavy lifting to make mobile phones substantially more powerful and useful. This provides our customers with a richer mobile experience and a greater affinity for our products.

Our efforts to protect our intellectual property continue through the legal system. We continue to believe in the merits of our cases with IBM and Novell and look forward to a successful resolution of those claims. Although we have had a few setbacks in the court proceedings, important and significant claims remain in the case. In other words, to paraphrase a line from Mr. Twain, the rumors of our death have been greatly exaggerated.

We recognize we have invested heavily in protecting our intellectual property. While we expect to continue incurring legal expenses in 2007, our expectation is that those expenses will be less than they have been in prior years. Some of the larger expenses related to IBM discovery, expert witness and technical expert reports are now behind us. With these expenditures behind us, the outlook for the Company’s cash expenditures for the upcoming fiscal year is in a very manageable position.

We are committed to operating our UNIX business on a cash flow positive basis and we will make any necessary adjustments in our business in 2007 to accomplish that. With the combination of our existing UNIX business coupled with our new Me Inc. mobile products and services, I believe SCO is positioned to see improved results during this fiscal year.

We are honored to call you our customers and partners and we look forward to earning your business every day. As time permits, please stay in touch with me and let me know how we can better serve you. I look forward to reporting our progress to you throughout the coming year.

Warm regards,

Darl McBride
President and CEO
The SCO Group, Inc.

This letter is subject to the safe harbor statement regarding forward-looking statements included in our Current Report on Form 8-K filed with the SEC on January 12, 2007.


  


McBride Letter to Customers and Partners - We're Not Dead Yet | 244 comments | Create New Account
Comments belong to whoever posts them. Please notify us of inappropriate comments.
Corrections
Authored by: TonyW on Friday, January 12 2007 @ 03:32 PM EST
Please place correction in this thread, so that PJ can find them easily

[ Reply to This | # ]

Off topic comments
Authored by: TonyW on Friday, January 12 2007 @ 03:34 PM EST
Please place off-topic comments in this thread. Use preview before posting.
And please make links clickable

[ Reply to This | # ]

He's Not Dead Yet
Authored by: tuxi on Friday, January 12 2007 @ 03:36 PM EST

Remember Monty Python's Holy Grail? He's merely nearly dead! I expect Novell to bop SCOX on the head to finish them.

---
tuxi

[ Reply to This | # ]

Translation
Authored by: TeflonPenguin on Friday, January 12 2007 @ 03:36 PM EST
"While we expect to continue incurring legal expenses in 2007, our
expectation is that those expenses will be less than they have been in prior
years."

Translation: This ship is now sinking at a slower rate than we were before.

---
-------------
TelfonPenguin

[ Reply to This | # ]

no matter how many people we need to sack
Authored by: Anonymous on Friday, January 12 2007 @ 03:38 PM EST
"We are committed to operating our UNIX business on a cash flow positive
basis and we will make any necessary adjustments in our business in 2007 to
accomplish that."

Mind you, CFP doesn't mean profitable no matter how often you shout it.

[ Reply to This | # ]

Warm regards
Authored by: Anonymous on Friday, January 12 2007 @ 03:43 PM EST
"Warm regards"

What would you expect. He's in the hot seat, or the frying pan sliding into the
fire, or heading to hell in a handbag. Either way I do think it's warn where he
is at, and getting warmer.

[ Reply to This | # ]

So much spin...
Authored by: PhilFrisbie on Friday, January 12 2007 @ 03:51 PM EST
I had to hold on to my chair so that I could read through to the end!

[ Reply to This | # ]

  • So much spin... - Authored by: Anonymous on Friday, January 12 2007 @ 04:47 PM EST
  • BUT - No Denial... - Authored by: Anonymous on Saturday, January 13 2007 @ 07:04 AM EST
McBride Letter to Customers and Partners - We're Not Dead Yet
Authored by: walberg on Friday, January 12 2007 @ 03:52 PM EST
...the outlook for the Company’s cash expenditures for the upcoming fiscal year is in a very manageable position.
Translation.... "I can fit it all in my pocket now. It was just too unwieldy before we cut it down to size..."

[ Reply to This | # ]

He's not dead .... yet.
Authored by: Anonymous on Friday, January 12 2007 @ 03:55 PM EST
I see him say that "I look forward to reporting our progress to you throughout the coming year." -- in much the same way that he's looking forward to "a successful resolution of those claims.".
What I don't see him saying is that he expects that SCO will survive the year, or that finances will allow them to.

Read between the lines.

I'm guessing that he's told the finance department to not give him the full, gory, details of their finances so that he can grin and speak out of positive 'plausible denyability' until, maybe, the day before he announces bankruptcy.

[ Reply to This | # ]

Legal Expenses
Authored by: Anonymous on Friday, January 12 2007 @ 03:56 PM EST
Legal expenses will be less in 2007 - most of their claims have been thrown out,
and Summary Judgements are imminent for many of the others. As it is very
likely that SCO will be placed in receivership, the spurious litigation will be
halted, further reducing their legal costs.

[ Reply to This | # ]

Exaggeration?
Authored by: Anonymous on Friday, January 12 2007 @ 03:57 PM EST
While there is Twain's "The rumors of our death have been greatly
exaggerated," there is another, more applicable quote to be found in the
Black Knight character of Monty Python & the Holy Grail.

"It's just a flesh wound."

[ Reply to This | # ]

  • Exaggeration? - Authored by: Anonymous on Friday, January 12 2007 @ 04:00 PM EST
    • Exaggeration? - Authored by: Anonymous on Friday, January 12 2007 @ 08:34 PM EST
  • The correct quote - Authored by: Anonymous on Friday, January 12 2007 @ 05:48 PM EST
  • SCO's not dead... - Authored by: Anonymous on Monday, January 15 2007 @ 07:31 AM EST
It's not DEAD!
Authored by: eggplant37 on Friday, January 12 2007 @ 03:58 PM EST
It's merely PININ' FOR THE FJORDS!

[ Reply to This | # ]

It appears BSF may no longer talking to SCOG
Authored by: Anonymous on Friday, January 12 2007 @ 03:58 PM EST

Some of the larger expenses related to IBM discovery, expert witness and technical expert reports are now behind us.
That can be read one of two ways. With regards to expenses for discovery, expert witness and technical expert reports:
  1. No more expenses are expected.
  2. There will be some more expenses but they will be insignificant.
I wonder if BSF shared with Darl the knowledge they are asking discovery to be re-opened so IBM can properly prepare against the new evidence they would like to have added.

RAS

[ Reply to This | # ]

"We are honored to call you our customers ..."
Authored by: Anonymous on Friday, January 12 2007 @ 03:59 PM EST
Does that include IBM, Sequent, DaimlerChrysler, AutoZone, SGI, and Bank of
America?

Just curious.

[ Reply to This | # ]

McBride Letter to Customers and Partners - We're Not Dead Yet
Authored by: Anonymous on Friday, January 12 2007 @ 04:01 PM EST
This sentence is good for playing Mad Libs:

"We are honored to call you our customers and partners and we look forward
to ..."

a) ... collecting your check to cover your SCOSource liability.

b) ... suing the pants off you should you decide not to pay up.

c) ... cashing out and fleeing to Mexico the before any criminal charges are
brought against us.

any others?

[ Reply to This | # ]

BUZZ WORD - innovation
Authored by: Nick_UK on Friday, January 12 2007 @ 04:15 PM EST
I am starting to hate this word. Every time it is used it
is transparent to what really is happening.

MS do not 'innovate'. SCO do not 'innovate'. All they do
is try to develop and play catch up to what somebody else
has experimented with and released (usually) as a free
idea.

I now cannot read any press article further than the first
mention of the word 'innovate' or it's derivatives.

Nick

[ Reply to This | # ]

Newsflash: CEO's can lie
Authored by: Anonymous on Friday, January 12 2007 @ 04:24 PM EST

We all know how far this letter is from the truth. But most SCOX investors have
no clue. This proves that you can say anything to investors and not go to jail.


SOX didn't change that fact.

[ Reply to This | # ]

McBride Letter to Customers and Partners - We're Not Dead Yet
Authored by: JamesK on Friday, January 12 2007 @ 04:30 PM EST
"Important and significant claims remain in the case"

I guess he must have missed most of the claims being tossed.


---
You say "psychotic" like it's a bad thing.

[ Reply to This | # ]

McBride Letter to Customers sure is different
Authored by: Anonymous on Friday, January 12 2007 @ 04:41 PM EST
I must say I like this Letter to customers far more than the Fedora one.

[ Reply to This | # ]

Well invested money?
Authored by: Anonymous on Friday, January 12 2007 @ 04:48 PM EST
Quoting Mr McBride:
We recognize we have invested heavily in protecting our intellectual property. While we expect to continue incurring legal expenses in 2007, our expectation is that those expenses will be less than they have been in prior years. Some of the larger expenses related to IBM discovery, expert witness and technical expert reports are now behind us. With these expenditures behind us, the outlook for the Company’s cash expenditures for the upcoming fiscal year is in a very manageable position.
When we look at the results of the expensive expert witness and technical expert reports, we can be really afraid if the SCOG can invest wisely...

[ Reply to This | # ]

What's Twain?
Authored by: Anonymous on Friday, January 12 2007 @ 04:50 PM EST
Mr. McB says SCO's death is greatly exaggerated. I'm familar with the author
named Samuel Clemens, and at first I thought that was what he was referring to
in the quote. On further reflection I conclude he means "Twain" as in
the standard for image acquisition. As in trying to improve SCO's image. I
guess by "exaggerate" he means to enlarge beyond normal size, as in
"SCO's death will be an implosion of enormous size" for having
squandered $70 million. Or "SCO has prolonged its death throes due to
litigation far beyond anyone's expectations". Any other suggestions or
examples of SCO's great exaggerations?

[ Reply to This | # ]

McBride Letter to Customers and Partners - We're Not Dead Yet
Authored by: comms-warrior on Friday, January 12 2007 @ 04:55 PM EST
*LOL*

This reminds me of Mohammed Saeed al-Sahaf, the Iraqi Information minister;
what he says and what is actually happening are woefully disconnected with each
other.

They are drowning in their legal and fiscal mire and all Darl can manage to do
is describe the water!!!

This scrofulous toad can't seem to get anything right these days.

[ Reply to This | # ]

Hardware certification showing frayed edges
Authored by: stats_for_all on Friday, January 12 2007 @ 05:14 PM EST
The McBride claim on new and continuing hardware certifications caused me to look at its hardware certification database page--

SCO reports certification on 5 Dell boxen:
1800
1850
1950
6850
SC440
and "compatibility" on 2900

On the Dell server website, 1800 and 1850 are EOL'd and no longer offered for sale.
1950 and 6850 (rack) are current The SC440 (budget tower) is current but now sold with a Duo processor instead of the certified Centrino--leading on to suspect the cert is obsolete.
The "compatible" tower 2900 is in the current catalog.

So, two boxen still available for sale from Dell have certs, and one box is given a "compatible" but uncertified rating, one box is certified but has been reengineered. Two certified boxes are no longer available for factory purchase.
One Acer box is certified, I did not do any catalog lookup on it current status. Toshiba certs are for old processors leading one to suspect that most or all are obsolete.

[ Reply to This | # ]

"We continue to believe in the merits of our cases with IBM and Novell"
Authored by: Anonymous on Friday, January 12 2007 @ 05:18 PM EST
Does that mean he doesn't believe in the merits of the cases with Autozone and

Red Hat?

[ Reply to This | # ]

Where is the "L" word?
Authored by: Anonymous on Friday, January 12 2007 @ 05:32 PM EST
Interesting: not a single occurrence of the word "Linux" in the whole
letter. Guess the thought hurts too much...

[ Reply to This | # ]

Dear Darl...
Authored by: Simon G Best on Friday, January 12 2007 @ 05:37 PM EST

Dear Darl,

I just have a few questions for you:-

  • Why does your letter come across as if you're overly keen to retain your customers? Do you really fear losing them? Are you getting that desperate?

  • Talking of The SCO Group's imminent death: what about the shedloads of money Novell claim you owe them?

  • Is it true that Admiral Yarrow appointed you captain because it's always the captain, not the admiral, who's expected to go down with the ship?

Thanks :-)

Simon G Best

---
NO SOFTWARE PATENTS - AT ALL!

[ Reply to This | # ]

McBride = Black knight from "Holy Grail"
Authored by: Anonymous on Friday, January 12 2007 @ 06:03 PM EST
It's barely a scratch! Come and fight you sissy!

[ Reply to This | # ]

"Their legal expenses should be less next year."
Authored by: greyhat on Friday, January 12 2007 @ 06:26 PM EST
Of course their expenses will be less! Next year, most of their case will be
thrown out. That should look great for their bottom line!

---
Give me the knowledge to change the code I do not accept, the wisdom not to
accept the code I cannot change, and the freedom to choose my preference.

[ Reply to This | # ]

We're Not Dead Yet
Authored by: Sunny Penguin on Friday, January 12 2007 @ 06:30 PM EST
Novell:
Here's one.
CART MASTER:
Ninepence.
SCO:
I'm not dead!
CART MASTER:
What?
Novell:
Nothing. Here's your ninepence.
SCO:
I'm not dead!
CART MASTER:
'Ere. He says he's not dead!
Novell:
Yes, he is.
SCO:
I'm not!
CART MASTER:
He isn't?
Novell:
Well, he will be soon. He's very ill.
SCO:
I'm getting better!
CUSTOMER:
No, you're not. You'll be stone dead in a moment.
CART MASTER:
Oh, I can't take him like that. It's against regulations.
SCO:
I don't want to go on the cart!
Novell:
Oh, don't be such a baby.
CART MASTER:
I can't take him.
SCO:
I feel fine!
Novell:
Well, do us a favour.
CART MASTER:
I can't.
Novell:
Well, can you hang around a couple of minutes? He won't be long.
CART MASTER:
No, I've got to go to the Robinsons'. They've lost nine today.
Novell:
Well, when's your next round?
CART MASTER:
Thursday.
SCO:
I think I'll go for a walk.
Novell:
You're not fooling anyone, you know. Look. Isn't there something you can
do?
SCO: [singing]
I feel happy. I feel happy.
[whop]
Novell:
Ah, thanks very much.
CART MASTER:
Not at all. See you on Thursday.

---
This message sent from a laptop running Fedora core 6 with Intel wireless
networking.
Everything works....

[ Reply to This | # ]

Darl I know you visit here
Authored by: Anonymous on Friday, January 12 2007 @ 06:32 PM EST
So feel free to reply.
Why have I not heard a peep about your mobile products, except from SCOG press
releases?

Do you really believe anyone is moving *TO* SCOG platforms?

[ Reply to This | # ]

    McBride Letter to Customers and Partners - We're Not Dead Yet
    Authored by: Steve Martin on Friday, January 12 2007 @ 06:35 PM EST

    Their legal expenses should be less next year.

    Yep, I'd likely go along with that.

    ---
    "When I say something, I put my name next to it." -- Isaac Jaffee, "Sports Night"

    [ Reply to This | # ]

    McBride Letter to Customers and Partners - We're Not Dead Yet
    Authored by: Anonymous on Friday, January 12 2007 @ 06:45 PM EST
    IMHO a company that needs to put out a letter like this, is in trouble, bad
    trouble and knows it.

    Tufty

    [ Reply to This | # ]

    McBride Letter to Customers and Partners - We're Not Dead Yet
    Authored by: skip on Friday, January 12 2007 @ 07:32 PM EST
    "SCO is committed to enhancing and innovating our product lines"

    Um, no. Prejudices aside, their company has spent the majority of it's cash on
    litigation. They might 'wish' they were focussed on innovation, but they aren't.
    That's just cold facts. They may be trying to 'innovate', but I feel the work
    innovate is bandied about so much it's meaningless nowadays. RMS innovated, Gary
    Kildall innovated, heck, even Dave Cutler of VMS/NT fame innovated plenty.

    They are predominantly a litigation company, and one that started with the wrong
    premise, that being that IBM would buy them out to shut them up, thus saving
    them from innevitable closure. They've been such for a few years now, and it's
    not going well.

    I'm afraid that if things are so bad that even other companies are noticing how
    badly off you are fiscally, then it's time to put on the +7 boots of drain
    circlings.

    [ Reply to This | # ]

    Honored to call you our customers...
    Authored by: Anonymous on Friday, January 12 2007 @ 08:07 PM EST
    but some of you we will probably sue. Some we won't. Rest assured we'll get
    our due...yada yada yada.

    Darl, no one is listening anymore.

    [ Reply to This | # ]

    • nor is Darl. n.t. - Authored by: Anonymous on Saturday, January 13 2007 @ 05:37 PM EST
    The Safe-Harbor statement
    Authored by: hamjudo on Friday, January 12 2007 @ 09:01 PM EST
    Here is the safe-harbor statement from the 8-K.
    The letter contains forward-looking statements concerning new updates to hardware certifications for our UNIX products, our expectations that new customers are being attracted to our mobile technologies, the innovative and productive benefits of our mobile products, the anticipated Day-Timer Mobile Solution, our continuing efforts to protect our intellectual property and pursue our remaining legal claims, our expectation that our legal costs in 2007 will be less than prior years, our expectation about cash expenditures for the 2007 fiscal year, our intention to operate our UNIX business on a cash flow positive basis, and that the combination of our existing UNIX business with our new Me Inc. mobile products and services will result in improved results during the 2007 fiscal year. These forward-looking statements may not be realized and are subject to various risks and uncertainties, including those outlined in our SEC filings. We undertake no obligation to update these forward-looking statements except as required by law.

    [ Reply to This | # ]

    The View from the CEO's Office
    Authored by: The Mad Hatter r on Friday, January 12 2007 @ 10:08 PM EST


    Ah, the view from on high. It should be interesting looking at this letter in a
    year or two, and seeing whether the CEO:

    1) Needs glasses

    2) Has been doing prescription/non-prescription drugs.

    3) Has 20/20 eyesight.

    In my personal view, number 3 is not the correct answer, but time will tell.


    ---
    Wayne

    http://urbanterrorist.blogspot.com/

    [ Reply to This | # ]

    Thats right macbride its about me NOT you
    Authored by: Anonymous on Friday, January 12 2007 @ 10:45 PM EST
    this is why i choose not to use what ever sco products are there , what was eral
    funny is i saw on a torent site the SCO unix offering and what like 50 people
    grab it compared to thousands for other distros.
    Even mandrivas enterprise server was more dled, ( these torrent sites can be
    invaluable marketing tools ......)
    and i see mandriva has replaced Suse and redhat on the distro list and is #2
    nice...
    ubuntuu is of course #1.
    nice to see two very cool distros at the top.
    Back to macbride, i wonder if one day CEO's and politicians whose job is too
    HELP those they work for , will do life sentences for lies. His company is dying
    and i wonder if they dropped the suit now it would really save them any money,
    as the coutner suits would be able to just get more.
    Also a question should they be forced to bankruptcy who gets there assets 1st.
    Could novell get them ro perhaps a split between novell and IBM and say redhat?


    [ Reply to This | # ]

    No mention of SCOSource and thoughts about Shout Postcard
    Authored by: TAZ6416 on Saturday, January 13 2007 @ 05:04 AM EST
    I noticed Mr McBride didn't mention SCOSource in the letter, looks like they've given up on ever getting that $699 per Linux seat.

    Also, I had a wee look at Shout Postcard which they launched last week in Las Vegas, it's a nice wee application for sending pictures and videos from you Treo, but it dosn't really do anything that MMS hasn't been doing from the last 3 or 4 years and it only runs on two Treos, while I can see them making a few thousand dollars in sales it's not going to make a dent in the millions of dollars they're losing a quarter.
    I'm begining to think Me Inc is the escape plan, when they'll spin it off before SCO goes bust and Mr McBride will jump ship and become CEO of them.

    Jonathan

    http://www.myspace.com/stripeymiata

    [ Reply to This | # ]
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