[Nottingham] Sun's financial support for SCO (12% of SCO's revenue)

[Robert Davies]

lwn.net has a subscriber article (available for all in a week) analysing SCO's 
financial statement known as a 10Q, a couple of things are of interest.

Firstly on defence of law suits outside US restraining SCO :

"Pursuit and defense of the above-mentioned matters will be costly, and 
management expects the costs for legal fees and related expenses may be 
substantial. The ultimate outcome or potential effect of the Company's 
results of operations or financial position as a result of the 
above-mentioned matters is not currently known or determinable. 

The end result is that the limited countermeasures taken against the company 
so far are being felt. The "risk factors" section of the filing also has this 
statement: 

We are informed that participants in the Linux industry have attempted to 
influence participants in the markets in which we sell our products to reduce 
or eliminate the amount of our products and services that they purchase. They 
have been somewhat successful in those efforts and will likely continue. 

In other words, SCO is discovering the costs involved in angering its 
customers. "


Secondly the rogues gallery of SCO licensees :

"Sun and Microsoft

 Of course, SCO's customer base is shifting; a large part of its revenue comes 
from exactly two companies: Sun Microsystems and Microsoft. 

SCO's previous quarterly filing had noted that the "second SCOsource licensee" 
(being Sun Microsystems) had received, as part of its deal, a warrant 
allowing it to buy 210,000 shares of SCO stock at $1.83 each. Subsequently, a 
second warrant for 12,500 shares has been issued to Sun, at the same $1.83 
price. There is still no explanation of why SCO stock is being issued to Sun. 
Most software licensing agreements do not include this sort of equity 
component. 

Sun, which was responsible for 12% of SCO's revenue over the quarter, still 
owes $2.5 million on its licensing deal. That money is to be paid by the end 
of November. "


Perhaps those of you, who have a Sun sales contact, might like to make their 
views known on Sun's financial support of SCO through this licensing, and 
furthermore point out the long term damage to Unix's credibility, SCO's 
arbitary actions and threats have done, particularly the "revocation of AIX 
Unix license".

Rob