Here are the numbers from SCO's press release. According to the conference call, they have $7 million in cash left to operate SCO after this quarter. They spent $4.3M in legal fees this quarter. They project $3M per quarter going forward.
But take a look at their accounts payable. It seems to have taken quite a jump. Why? Not paying bills? The press release says they have placed $5M in escrow, in connection with their litigation. I remember from Dion Cornett's 11/8 OSWS that $5M in escrow is for the lawyers, travel expenses, witness fees, etc.
"Revenue declined to $10.08 million from $24.3 million."
TheStreet.com's Ronna Abramson says SCO's 4Q loss "tripled on a sharp drop in sales":
"Lindon, Utah-based SCO reported a loss of $6.5 million, or 37 cents a share, in the fourth quarter. That compared with a loss of $1.6 million, or 12 cents a share, in the same period a year earlier.
"The loss includes a $2.7 million restructuring charge.
"Revenue fell more than 50% to $10.1 million from $24.3 million a year earlier. . . .
"Legal news has been the primary driver of the stock, which has fallen about 77% from a 52-week high of 19.31. The company has drawn its share of investors betting against it, with the short interest at 53% as of Nov. 8. Shares of SCO Group fell 33 cents, or 6.8%, to close Tuesday at $4.51."
All in all, this isn't the moon.
The SCO Group Announces Fourth Quarter and Fiscal 2004 Results
LINDON, Utah, Dec 21, 2004 /PRNewswire-FirstCall via COMTEX/ -- The SCO Group, Inc. (Nasdaq: SCOX), owner of the UNIX operating system and a leading provider of UNIX-based solutions, today reported results for its fiscal fourth quarter and year ended October 31, 2004.
Revenue for the fourth quarter of fiscal year 2004 was $10,075,000 as compared to $24,290,000 from the comparable quarter of the prior year. The decrease in revenue in the fourth quarter of fiscal year 2004 from the comparable quarter of the prior year was primarily due to a decrease in SCOsource licensing revenue to $120,000 from $10,316,000 and from continued competitive pressures on the Company's UNIX products and services.
The net loss attributable to common stockholders for the fourth quarter of fiscal year 2004 was $6,516,000, or ($0.37) per diluted common share, as compared to a net loss attributable to common stockholders of $1,568,000, or ($0.12) per diluted common share for the comparable quarter of the prior year. Included in the net loss attributable to common stockholders for the fourth quarter of fiscal year 2004 were charges related to a restructuring of continuing operations, reductions in force and dispositions of long-lived assets totaling $2,702,000.
"Fourth Quarter achievements demonstrate continued progress at SCO," said Darl McBride, president and CEO, The SCO Group. "The management team has maintained its commitment to operate our core UNIX business profitably. With the benefit of additional efficiency improvements now in place, we expect the UNIX business will generate cash during fiscal year 2005. During the fourth quarter we also completed an agreement to cap the legal fees relating to the pending contract and intellectual property litigation. The combination of these two positive actions positions us well to pursue our strategy to protect our contractual and intellectual property rights on behalf of our customers, employees and shareholders."
For fiscal year 2004, revenue was $42,809,000 compared to revenue for fiscal year 2003 of $79,254,000. For fiscal year 2004, the net loss attributable to common stockholders was $16,227,000, or ($1.07) per diluted common share, compared to net income attributable to common stockholders of $5,304,000, or $0.34 per diluted common share. Cash and available-for-sale securities were $31,449,000 at October 31, 2004. In addition, $5,000,000 was placed in an escrow account and is classified as a component of restricted cash as of October 31, 2004. This cash will be used to pay for certain expenses associated with our intellectual property litigation.
UNIX Business Highlights
The fourth quarter of fiscal year 2004 marked the third consecutive quarter of stable revenue for the UNIX business. The Company's management team continued to make operating improvements in this business to help it generate positive cash flow in fiscal year 2005. Additionally, the Company anticipates releasing the next version of its OpenServer product, code-named Legend, during the first half of 2005. This product will mark the culmination of a significant product development effort and reinforces the Company's investment in its ongoing UNIX business.
During the fourth quarter, the Company launched a new version to its collaboration product, SCOoffice Server 4.1, which has been gaining acceptance in various markets throughout the world. In addition, the Company launched its SCO Marketplace initiative targeted to third-party developers who wish to participate with the Company in development projects that will benefit and enhance future SCO products.
On November 4, 2004 the Company filed a Form 8-K with the Securities and Exchange Commission indicating it had finalized an amended engagement agreement with the law firms representing the Company in its current litigation. The revised engagement agreement limits the Company's attorneys fees after September 1, 2004 associated with its intellectual property litigation to approximately $31 million (other than contingency fees) and will enable the Company to finance the litigation through to its conclusion, including any necessary appeals. The revised engagement agreement will also lower the Company's ongoing quarterly costs associated with its intellectual property litigation. . . .
Condensed Consolidated Balance Sheets
October 31, October 31,
Cash and cash equivalents $19,693 $64,428
Restricted cash 8,283 2,025
Available-for-sale securities 11,756 4,095
Accounts receivable, net 6,638 9,282
Other current assets 1,870 2,450
Total current assets 48,240 82,280
Property and equipment, net 649 1,148
Goodwill and intangibles, net 5,413 10,452
Other assets 1,098 1,072
Total assets $55,400 $94,952
Accounts payable $7,854 $1,978
Accrued payroll and accrued expenses 7,224 8,506
Accrued compensation to law firms 7,956 10,556
Deferred revenue 4,877 5,501
Derivative related to Series A
convertible preferred stock -- 15,224
Other current liabilities 4,916 3,347
Total current liabilities 32,827 45,112
Long-term liabilities 343 508
Minority interest -- 145
Convertible preferred stock -- 29,671
Stockholders' equity 22,230 19,516
Total liabilities and stockholders' equity $55,400 $94,952
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
Three Months Ended Year Ended
October 31, October 31,
2004 2003 2004 2003
Products revenue $8,296 $12,012 $35,352 $45,028
Services revenue 1,659 1,962 6,628 8,380
SCOsource licensing revenue 120 10,316 829 25,846
Total revenue 10,075 24,290 42,809 79,254
Cost of products revenue 857 729 3,221 4,405
Cost of services revenue 861 1,346 4,134 6,354
Cost of SCOsource licensing
revenue 4,257 5,288 19,743 9,163
Total cost of revenue 5,975 7,363 27,098 19,922
Gross margin 4,100 16,927 15,711 59,332
Sales and marketing 3,086 5,971 17,038 24,392
Research and development 2,445 2,870 10,612 11,012
General and administrative 1,833 1,705 8,308 6,230
Compensation to law firms -- 8,956 -- 8,956
Restructuring and other 2,486 -- 2,486 498
Amortization of intangibles 593 895 2,566 3,190
Write-down of investment -- 250 -- 250
Loss on impairment of
long-lived assets 216 164 2,355 164
Stock-based compensation 51 277 919 1,204
Total operating expenses 10,710 21,088 44,284 55,896
Income (loss) from
operations (6,610) (4,161) (28,573) 3,436
Equity in income (loss)
of affiliates (4) 109 111 (62)
Other income, net 223 2,886 6,507 2,827
Income (loss) before
income taxes (6,391) (1,166) (21,955) 6,201
Provision for income taxes (125) (279) (1,395) (774)
Net income (loss) (6,516) (1,445) (23,350) 5,427
Dividends on convertible
preferred stock -- (123) 7,123 (123)
Net income (loss)
applicable to common
stockholders $(6,516) $(1,568) $(16,227) $5,304
Basic net income (loss)
per common share $(0.37) $(0.12) $(1.07) $0.43
Diluted net income (loss)
per common share $(0.37) $(0.12) $(1.07) $0.34
Weighted average basic
common shares outstanding 17,436 13,371 15,155 12,261
Weighted average diluted
common shares outstanding 17,436 13,371 15,155 15,679