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 (in thousands) October 31, October 31, 2004 2003 Assets: 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 Liabilities: 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 Operating expenses: 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