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Analysis: Bad numbers but puzzling 'optimistic' outlook for SCO Group







Analysis: Bad numbers but puzzling
'optimistic' outlook for SCO Group

Analysis: Bad numbers but puzzling
'optimistic' outlook for SCO Group
12/22/2004 01:44 AM

The SCO Group reported its quarterly profit-and-loss and business operations statements today, and -- surprise! -- the news wasn't good. Total quarterly revenue fell to $10.08 million from $24.3 million a year ago -- by any measure a steep loss of nearly 59 percent. Total year-to-date revenue nosedived about 57 percent, from $79.2 million to $42.8 million. Licensing fees -- SCO's bread-and-butter business -- dropped from $10.3 million at this time last year to a mere $120,000 this quarter -- by any measure a precipitous drop of nearly 99 percent. Cash and "cash equivalents" are down from $64 million in 2003 to $19.7 million now. That's a cash burn rate of $44 million in one year -- nearly the same amount ($50 million) as SCO's well-documented PIPE deal with BayStar Capital and the Royal Bank of Canada in October 2003. The stock value has fallen about 77 percent from a 52-week high of $19.31 to its current level of $4.51. According to CFO Bert Young, SCO Group will have only $7 million in operating cash remaining after this quarter. Yet CEO Darl McBride told a conference-call audience: "We have reason to be optimistic. Our core business is cash-positive, we've capped our legal fees, we've cut our operating costs, and we've closed the book on the BayStar (preferred stock) involvement. We're looking forward to some positive legal judgments this next year involving our IP." What is wrong with this picture?




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