SCO posts Q2 Loss, Gets $11k from Linux 459
Paul Hands sent us linkage to SCOs Q2 Financials. "The highlights are that SCOX only collected $11k (yes, K) for that much-discussed license for EV1 and other Licensees. Cost of that $11k was well over $4M.
Overall, revenue was just over $10M, and they made a net loss applicable to common stockholders of $14,959,000, or $1.06 per diluted common share." Update According to the SCO conference call, this isn't accurate.. their Linux extortion income will be listed in the Q3 financials.
And the best bit is... (Score:4, Insightful)
Re:And the best bit is... (Score:5, Funny)
Re:And the best bit is... (Score:5, Funny)
Re:And the best bit is... (Score:5, Funny)
Ah, then obviously they're listing the gross goodwill. I doubt they have any net goodwill at all.
"Goodwill" (Score:5, Informative)
Goodwill is a term of art in accounting. There's a brief summary on Wikipedia [wikipedia.org]. Essentially, "goodwill" is the magic dark matter of accounting that is used to explain whither otherwise inexplicable money goes and whence it comes. For instance, say one of your company's buildings appraised for $1 million but somebody else bought it for $2 million. That goes down as $1 million of "goodwill" so that the numbers balance out. Conversely, if someone else's building appraised for $2 million but he sold it to you for $1 million, that's another example of $1 million of goodwill on your books.
Hint relevant to this situation: it applies to securities as well.
Re:"Goodwill" (Score:4, Informative)
E.g. if you spend $1m on advertising and your reputation goes high (your company has higher value), you estimate how higher the value is and account: $1m off your bank account (assets) to advertising (expenses), the value increase (say $2m) to goodwill (assets) and some revenue account.
However, what SCO did is quite opposite, they had to lower the goodwill and increase their expenses by the same value. This is done when your real reputation goes so low that it's evident it does not have the same value as in accounting.
This is good, because managers can perhaps better understand what is going on when they see SCO lowering their goodwill.
(Sorry for my english, some of the terms may not be right but the main idea is.)
Re:"Goodwill" (Score:5, Informative)
Re:"Goodwill" (Score:5, Insightful)
I'm no accountant [slashdot.org], so take all this with a grain of salt, but -- in the US, advertising costs must be expensed, not capitalized. (International practice is definitely different regarding capitalization of research, for example, and advertising may be similar where you are.)
You're both kind of right, but his explanation that goodwill accounts for the difference between acquisition cost and fair value is much closer to the definition under US GAAP than your model of companies continuously changing their balance sheets to reflect their popularity. Again, internationally YMMV.
(So no -- it's not like SCO's accountants said "We suck, everyone hates us, revise the books!")
Re:"Goodwill" (Score:5, Informative)
Goodwill is a perceived value that is higher than book value. For example, you decide you want to expand your web hosting business. A friend of yours is also in the web hosting business, but wants to move on to another career and sells his business to you. Now he has done a lot of work and his customers really like doing business with his company. So when he sells his business to you, he wants more than the book value of his assets because he has built a loyal customer base that will become yours along with his business assets. The difference between the book value of his company, and what you actually have to pay him for it, goes into your accounts as goodwill so that you can depreciate it like any other asset.
It's not that accounting is odd or a black art, it's that you don't understand that every dollar has to be accounted for and properly categorized.
Re:"Goodwill" (Score:4, Insightful)
I submit, however, that modern accounting does defy common sense. "Depreciating goodwill like any other asset"...
Good Lord. Accountants have invented their own laws of time and space. I found out the other day that you can depreciate an appreciating asset.
I wouldn't call accounting a black art exactly... it's more a series of tricks and diversions designed to legally conform to (while still evading) a badly designed tax code.
Re:And the best bit is... (Score:5, Insightful)
Would that not be perfect.
Thanks! (Score:5, Funny)
** Thank You, SCO!!! **
Linux users in the future will be able to take pride in your accomplishments in making businesses lose their fear of some company trying to do what you did and costing them money, while at the same time pushing awareness of Linux as a real alternative to proprietary products and companies which pursue legal whims like this.
Comment removed (Score:5, Insightful)
Re:Thanks! (Score:4, Insightful)
So Joe's heard of Linux now, but that doesn't matter. The important guy is Corporate Mike who's trying to cut costs and increase reliability. That's the guy MS is worried about keeping.
Already delisted? (Score:3, Interesting)
They're not in the newspaper stocks listings...
Re:Already delisted? (Score:5, Informative)
Re:And the best bit is... (Score:3, Interesting)
Wouldn't it be awesome if, once this company is reduced to ashes, IBM were to buy them out for only a million or two (chump change for IBM). They would finally own ALL of the rights to Unix. Then, they could open-source the whole thing! THAT would be cool!
Not so fast... (Score:5, Interesting)
There is a theory out there stating that Sun's attempt to open source Solaris is just a ruse, so as to pump up whatever is left of SCO's credibility.
Sun: "We are going to GPL Solaris".
SCO: "No you can't, we own Unix and the license you bought from us does not allow you to GPL Solaris".
Sun: "Oh, that's right. You own Unix, and that's why we paid for a license. Silly us."
If IBM somehow becomes the owner of SCO's IP (whatever that may prove to be), they could possibly remove the SCO "obstacle" to Solaris/GPL and therefore call Sun's bluff. In that case, Sun would just make some other excuse for declining to GPL Solaris (probably blaming Novell). It would be fun to watch, but not quite so much fun as seeing the "For Sale or Lease" sign at SCO headquarters or Darl's resume on monster.com.
Re:And the best bit is... (Score:5, Informative)
Re:And the best bit is... (Score:5, Funny)
The worst, slimiest, crookedest bit (Score:5, Informative)
This sure smells like the minority owners (Canopy) are bleeding cash out of a publicly-traded company (SCO) by selling it a loser.
Canopy has done stuff like this before. When one of their companies goes bankrupt, they (Canopy) wind up with the assets that matter, whether or not the company was publicly traded. They do this by making sure that the company that is going under owes Canopy money, so that Canopy is a creditor at bankruptcy time.
In other words:
1. Create a private company (company A).
2. Take company A public. Company A now has lots of money.
3. Create another private company (company B).
4. Sell company B to company A.
5. Profit!
But wait, there's more...
6. Make sure company A owes you money.
7. Let company A go bankrupt.
8. Using the assets that you get back from the bankruptcy, go to step 1!
You varmints! It's Yosemite Darl! (Score:5, Funny)
Now let's all sing with Darl (while reading the SCO finances)
Re:You varmints! It's Yosemite Darl! (Score:5, Funny)
I put up a fixed copy of that photo here [penguinhosting.net].
Bad cowboys who rustle cattle then try to blame someone else for it shouldn't go around wearing white hats.
Re:You varmints! It's Yosemite Darl! (Score:3, Funny)
Er, wait a minute......
Re:You varmints! It's Yosemite Darl! (Score:4, Informative)
"We went out one day and our Unix cows were missing," McBride said he told his father in trying to explain the case to him. "We looked in the Linux pen, and there's a bunch of them in there that have our brand on them . . . in this case the copyright. Someone took our cows and we want 'em back -- it's as simple as that."
Yeehaw!
Re:You varmints! It's Yosemite Darl! (Score:5, Insightful)
"We went out one day and noticed that no one was buying our cows because everyone was getting free cows. So we went over to where the free cows were and accused the free cow people of stealing our cows because they had horns and udders just like our cows. We want $699 per cow. Then it turned out that the cows aren't related but we had a showdown with the IBM boys because they had bought our cows in the past and had made bells for them and they were putting similar bells on the free cows. In the meantime it turns out that our cows don't actually belong to us, but to Mr Novell, who pays us to look after them -- it's as simple as that."
Re:You varmints! It's Yosemite Darl! (Score:4)
Re:You varmints! It's Yosemite Darl! (Score:5, Funny)
No improvements forecasted (Score:5, Interesting)
What's next? CNET gets a "Cease & Desist" letter from SCO because the company's name was used in this story?
Re:No improvements forecasted (Score:3, Funny)
Re:No improvements forecasted (Score:5, Funny)
Nah, Slashdot is next because their users are expressing negative opinions that haven't been proven in court and they are the reason for the decline of SCOX stock.
Unauthorized listing: (Score:5, Insightful)
By listing the Company's common stock on the Exchange, market manipulators sought to benefit from an "arbitrage" loophole that none of the present regulations was designed to close.
OMG! (Score:5, Funny)
Now, if we can only link them to terrorists, we can torture them.
Re:Unauthorized listing: (Score:4, Informative)
As far as I can tell, naked short selling just means that you make a short sale but don't have the securities to back it up.
Market manipulation means that you deliberately try to affect the value of a price through your actions. Even if they are harmful to SCO's stock, I don't see why naked short sales of SCO necessarily represent an attempt to manipulate the market. In the case of SCO, it may just mean that people believe they know that it will go down further because of SCO's business practices (I sure am) and want to profit from their knowledge, but that they can't make a short sale any other way.
Re:Unauthorized listing: (Score:4, Interesting)
Re:No improvements forecasted (Score:5, Funny)
Holy crap! NetWare is a UNIX derivative! Now there's one outta left field!
Re:No improvements forecasted (Score:3, Funny)
Re:No improvements forecasted (Score:4, Informative)
Um, dude, NetWare is definately not a UNIX derivative. (Though at one time, you could run NetWare under UNIX. Remember UNIXWare?) They did steal a lot of low-end business from UNIX vendors, especially at the low-end. My comment was meant as a joke. (Who'da thunk it would be modded "Informative"?)
Darl's Cease & Desist Blunder (Score:5, Informative)
" it turns out that EVERY SINGLE company listed on NASDAQ is traded on the 'unofficial regulated market' at Berlin-Bremen.
Note that Darl, during the call, said that these were "unregulated" markets, which is clearly not the case."
"About Berlin-Bremen Stock Exchange: Like all other German exchanges the Berlin-Bremen Stock Exchange is separated in three market segments: Official Market; Regulated Market and Unofficial Regulated Market. Special significance is attributed to the Unofficial Regulated Market at the Berlin-Bremen Stock Exchange. With more than 8,000 national and international companies admitted the Unofficial Regulated Market unparalleled -- both in terms of size and diversity. .. All companies listed on the NASDAQ, NYSE, and several OTCBB companies are listed on the Unofficial Regulated Market of the Berlin-Bremen Stock Exchange, giving investors the largest choice of American stocks in Europe."
Re:No improvements forecasted (Score:5, Interesting)
>
> What's next? CNET gets a "Cease & Desist" letter from SCO because the company's name was used in this story?
Actually, there's something more ornery going on than that.
A lot of US companies are popping up on German exchanges without the companies' knowledge or consent. It's a cheezy hack to get around US securities laws. Google for "naked short selling german exchange".
When you sell shares short, your broker is supposed to lend those shares to you so that you can sell them. (When you cover the short, you buy the shares on the open market and hand them back over to your broker). To sell a stock short without borrowing shares is called "naked short selling", and has been against NASDAQ regs for a while. As of April, more regulations went into effect in to prevent the practice.
The underlying principle is that you can't sell what doesn't exist. That's why your broker has to have some of those shares kicking around and be willing to loan them to you. If you can sell shares that don't exist, you can use that capability to manipulate the market in either direction.
Although I think SCO (the company) isn't worth a load of foetid dingo's kidneys, I wouldn't want to have a position in SCOX (the stock) either way - and that goes double given the ludicrously small float and high potential for manipulation.
But for once -- probably for the first and last time in their corporate history -- the litigious bastards who make up SCO are actually doing the right thing when they ask these exchanges to delist them.
How much longer can this last? (Score:3, Insightful)
Re:How much longer can this last? (Score:3, Insightful)
Re:How much longer can this last? (Score:3, Insightful)
That's probably true.
Of course, then you have another problem. Who's going to wind up with the Unix IP rights after SCO's demise?
Depending on how their assets are liquidated, someone even worse than Darl and Co. could get hold of them.
Be careful what you wish for, you just might get it.
Watch... (Score:5, Funny)
Well, they got.. (Score:5, Funny)
If they have Q2 losses... (Score:5, Funny)
SCO dead pool (Score:3, Interesting)
Re:SCO dead pool (Score:5, Funny)
Keeps going and going and going and.. (Score:3, Informative)
Ohhhh boy. Better get comfortable people, there's going to be yet more SCO stories for a while.
Re:Keeps going and going and going and.. (Score:3, Funny)
Not by my calculations. It should only take another four months [yahoo.com] or so.
article. (Score:5, Informative)
Link to the realease on the SCO's site [sco.com]
SCO nees to work a bit harder (Score:5, Funny)
From SCO Keeps SinkingThu Motley Fool [yahoo.com]
"Management blamed the slow sales on a "lack of SCOsource licensing revenue." SCOsource is the Linux users' shakedown program. Apparently, no one is paying up. It took in $11,000 last quarter. That's not a typo. President and CEO Darl McBride paid more lip service to "increasing shareholder value," but you really have to wonder about the viability of his vision when his firm's most engrossing initiative brings in less money than the guys who mow lawns in my neighborhood."
rofl :)
Replay available already (Score:3, Informative)
sco.penguinman.com [penguinman.com]
Re:SCO nees to work a bit harder (Score:4, Funny)
extortion just doesn't pay like it used to.
This might be Modded Funny, But... (Score:5, Funny)
"Our revenue for the second quarter was consistent with our expectation and we also incurred significant expenses for the impairment of goodwill and intangibles and for the exchange of our Series A-1 Convertible Preferred Stock. Both of these charges negatively impacted our second quarter results," said Darl McBride, President and CEO. "As the company looks forward to the last two quarters of fiscal year 2004 we are committed to increasing shareholder value through profitable operations and increasing cash flow from our UNIX division as well as remaining focused on our intellectual property lawsuits and licensing strategies."
Sometimes you don't even have to try to make a funny post, because the dialogue you'd put in Darl's mouth is actually less funny than his own idiotic ramblings.
My favorite quote (Score:5, Insightful)
"A legal victory looks highly unlikely, and even if a decision went SCO's way, the probable remedy would not be money for SCO, but a rewrite for Linux, something the open-source community would accomplish in the blink of an eye."
Re:My favorite quote (Score:5, Funny)
At 5 bucks a share, with almost nothing available to short, SCO isn't worth much of your investing effort. But it's definitely worth watching, if only as an example of the way a company can be run into the ground, taking investors along.
I guess they stopped short of recommending
They've lost another quarter... (Score:4, Funny)
15 copies (Score:5, Funny)
Go SCO!
John.
Re:15 copies (Score:5, Funny)
Re:15 copies (Score:5, Funny)
No one is scared anymore (Score:5, Interesting)
In any case the ploy was a success - the goal was never to increase SCO revenue, but to bolster the stock price so execs could sell. The issue now is whether this will be investigated as a pump-and-dump scam that Darl and co knew from the outset had no basis in law. Don't scoff Darl - you still may end up in the cell block with Worldcom and Enron execs.
Re:No one is scared anymore (Score:5, Insightful)
Shocked! (Score:5, Funny)
Maybe we should ask him...
Bill, what do you think?
Weird... (Score:5, Funny)
Hope Darryl clarified on this during their 11am EDT conference today.
Re:Weird... (Score:3, Funny)
That would be this bit: We're talking about some serious impairment going on here -- over a million pounds worth of impairment, in fact -- and it's had a seriously negative impact on their goodwill with everyone except their drug dealer.
Text is wrong, this quarter does not include EV1 (Score:5, Informative)
Re:Text is wrong, this quarter does not include EV (Score:3, Funny)
It is a shame... (Score:3, Interesting)
The Motley Fool (Score:5, Interesting)
Remember, these aren't techies talking about the technical merits of the case. These are financial guys commenting about SCO's quality as an investment. It nice to see someone other than technical folk scoffing at this sideshow.
Re:The Motley Fool (Score:3, Interesting)
Thanks for the pointer to the article. My fave quote:
Ouch. Not even recommended for a short-sell anymore. Nothing left but cash-burn.
Remember to turn out the lights on your way out. Leave the keys at the night desk.
Even more than that (Score:3, Interesting)
EV1 revenue (Score:4, Interesting)
Not nearly enough (Score:3, Interesting)
Err... (Score:5, Funny)
I think they'd be better off if they fired all their lawyers and put the rest of their money into lotto tickets.
BitTorrent of SCO Conference Call today. (Score:4, Informative)
Ok here is the Bittorrent of the SCO Conference Call today in mp3 format.
http://sco.penguinman.com [penguinman.com]Litigation? (Score:5, Interesting)
Some people say that SCO are only attacking IBM this time in an attempt to be bought out. In fact I just found this, an open statement by Darl that he would welcome IBM buying SCO to make the problem go away: SCO's CEO says buyout could end Linux fight [computerworld.com]. I think that settles it. SCO doesn't want to win in court they don't even want to go to court, they just want to scare IBM into buying them out.
Stock down 9% already (Score:5, Insightful)
The stock has been around $5 ± 0.50 for weeks. You can't short a NASDAQ listed stock when the price is below $5, so the bears drop out at that point. Trading volume has been down for weeks. SCO's concern with being listed on some additional exchanges may be that they have different rules on short positions, allowing shorting at lower price points.
The full numbers from this quarter aren't out yet, so it's hard to figure out when they run out of cash. It looks like they have three to six quarters of cash left at their current burn rate, but that's a rough estimate. Unless they get new financing, it looks like they won't make it to the IBM trial date in 2005.
At this point, the remaining stockholders who think SCO has a case against IBM might well ask why SCO wants additional delay. SCO can't afford much more delay.
From the... (Score:5, Funny)
This is SCO we're talking about, they can make anything up!
Just like to point out... (Score:5, Insightful)
Now, stock is at $4 and from the looks of things could easily drop back down to $2.
Hype over. The put up or shut up phase where people assumed they had a case is over. They must have known there was a point where the stock price couldn't be inflated any more by innuendo and "maybe sorta" proof, so I'm wondering why they'd continue down this path?
McBride blames IBM, Novell for SCO's fiscal woes (Score:5, Funny)
This morning, however, McBride had to face the music with shareholders during the Unix vendor's quarterly earnings call, where he reported sharply reduced earnings and sparse revenue from its licensing business.
McBride put the blame squarely on his rivals for raising doubts in the minds of potential licensees about the legitimacy of SCO's ownership of System V Unix. SCO alleges that IBM illegally contributed Unix code to the Linux kernel and has levied a $5 billion suit against Big Blue.
Do NOT support SCO!!! (Score:5, Insightful)
I am very happy to read that SCO has made such a large net loss. This is not because support for Linux as much as it is because I do not support the type of business practice employed by SCO.
I strongly believe that companies have a duty not only to their owners, but also to their customers, suppliers, and even to their competitors. The last one, the duty to competitors, is a duty to compete based on a better products and services, better marketing, better pricing, a better overall customer experience, etc.
I think that, while litigation is sometimes necessary, most issues can be settled outside of the court system in a mutually beneficial way, or at least in a way that minimizes the damages to all parties involved. Further, litigation and other legal actions (lobbying for legislation, etc.) should not be employed as a source of profit for a company, but only to solve legitimate problems.
In the case of SCO, I think they have thrown all good business practices out the window, while embracing litigation as a potential source of profit. Essentially, instead of elevating themselves by making sound decisions and consistently improving themselves, they are trying to become elevated by pushing others down. Kind of like the "everything is relative" argument - if you push someone down, then you could say that you have elevated yourself even though you stayed in the same place. This is what SCO is trying to do, and it is not beneficial to anybody except, if they manage to pull it off, themselves. This is a very egoistic and self centered company with no desire to make anything of value. And companies like this should not be supported.
For those reasons, I am glad that SCO had these losses, and I hope that investors pull their investments, new investors don't buy SCO stock, and potential customers go elsewhere. This evil company should not be supported by anybody.
Not to mention that I strongly believe that there is no legal issue of any SCO code being copied into other software. In fact, I believe quite the opposite: Either:
Wrong Link (Score:3, Funny)
What will happen to Unix? (Score:3, Interesting)
Though I have to imagine the government couldn't *possibly* agree to this, can you imagine them selling the rights to Microsoft? Because of all the insanity this company has been willing to wallow in, I can't, for one, imagine them selling the rights to some benevolant organization; I'd think they'd rather do something to screw Linux over "just one more time".
Come on folks, Let's help!! (Score:5, Funny)
SCO is not like m$. Every few days they have a new exciting story' some believable and some not, but what will we do when they're gone? I shudder at losing my sole internet entertainment and so far, you readers have been very stingy with your money. SCO has come up with a lot of ideas for emergency funding, but none seem to be working well.
What can we do? Well, I have a plan. It's called "SOSco" for "Save our SCO". Shortly, I will be starting up a small company to help provide "stay alive" funding for SCO, at least until their court case. Except for my salaries and actual overhead expenses, the remainder will all go to SCO. With nearly 100,000, /. readers and just a few dollars each (we will accept non USA currency also) I think we can keep things going for one or two more years. That's a small price for this kind of entertainment. Oh, I forgot! I will have to put aside enough funds for a good lawyer team just in case someone tries to sue us for using SOS (since it may have other meaning)and most likely from SCO themselves for using a derivitive of their name without their permission. Be watching daily, because this will be an exclusive story on /. as my company will depend on you readers for it's major funding.
Thanks,from the team as SOSco
lcsjk
Piercing the Corperate Veil (Score:5, Informative)
corporate america (Score:5, Insightful)
Management blamed the slow sales on a "lack of SCOsource licensing revenue." SCOsource is the Linux users' shakedown program. Apparently, no one is paying up. It took in $11,000 last quarter. That's not a typo. President and CEO Darl McBride paid more lip service to "increasing shareholder value," but you really have to wonder about the viability of his vision when his firm's most engrossing initiative brings in less money than the guys who mow lawns in my neighborhood. By the way, McBride was paid more than $1 million last year -- most of it in cash -- to preside over this impending disaster.
It really is sickening. And there seems to be no hope in sight for regulatory reform in this area, when public companies can perform goofy shit like this with impunity.
Why R&D? (Score:3, Insightful)
It's rumoured that BlueStar made the same point to SCO. I think they were right. SCO's conventional business should be in "harvest" mode right now.
Does anyone know of a reason that SCO should be investing money in R&D?
BAH HAH HAH HAH (Score:4, Informative)
Shares Outstanding: 14.42M
Float: 7.80M
Shares Short (as of 10-May-04): 4.62M
Short % of Float (as of 10-May-04): 59.27%
Shares Short (prior month): 3.95M
Bwa hah hah! What a ridiculously mismanaged company.
Can They Save thier Unix Business? (Score:5, Insightful)
I was never a SCO Unix user, but I understand it was (at one time) a repectable unix back in the day and I don't see why it can't be again with a quarterly R&D bugdet of 2.8M. If I was a serious shareholder (not a speculator) interested in growing the business, I would want to know why they don't stop wasting money on this longshot lawsuit crapshoot and start concentrating on what they themselves describe as their "core" business.
My favorite view of SCO (Score:4, Informative)
Right now it shows they've lost about 50% of their value relative to IBM over the last year. It also shows how volatile the SCO price is relative to IBM's stability. Since the lawsuit started more than a year ago, the one-year view doesn't really capture the entire story, and on the two-year view (one click away) you can see that SCO still has to fall some more to get all the way back to where they were before they started this circus. But only a little more. They're almost there.
Current price is $4.89, but I think they may get into the three dollar range next week.
A lot of this discussion involved the value of goodwill, but SCO should be more concerned about the Goodwill store. They'll need to buy "new" shirts after losing the ones they have now.
Re:I Suppose Bankruptcy (Score:3, Funny)
Re:Progress report (Score:3, Interesting)
Re:Progress report (Score:4, Funny)
Comprehensive list of anti-FOSS interests:
1. Microsoft
Re:Progress report (Score:3, Informative)
IANAL.
Re:Progress report (Score:3, Insightful)
Re:11k! (Score:3, Funny)
Is it just me or is it amusing that the story says "$11k (yes, K)"? That's "Eleven thousand dollars (yes, Kelvin)".
Re:Connections (Score:5, Informative)
What you mean to say is, you have Google:
Results for the 1 Darl McBride in Utah [google.com]:
Re:Only 11k? Am I missing something? (Score:5, Informative)
To find the $11K number, you have to dig down into the numbers below. Lining things up on Slashdot is very difficult, so I'll just paste the relevant line:
That's telling you they made $11k in the prior three months, and $31K in the prior six months, as compared to $8250 last year. In 2003, it would appear, they made all their money in Q2, 8.25 million.Re:I'l only say this once.. (Score:5, Funny)