The SCO Group reported a profit in its second fiscal quarter thanks in part to its recently launched initiative to more aggressively collect licensing fees for its Unix operating system software.

That initiative includes the filing of a $1 billion lawsuit against IBM that alleges IBM engaged in illegal practices to damage SCO's Unix operating system software and benefit IBM's Linux business.

SCO net income of $4.5 million, or $0.33 per share, on revenue of $21.4 million, in 2003's second fiscal quarter, ended April 30. That compares to a net loss of $6.6 million, or $0.47 per share, on revenue of $15.5 million in 2002's second fiscal quarter.

SCO reported a net loss of $724,000, or $0.06 per diluted share, on revenue of $13.5 million for its first fiscal quarter of 2003, which ended little over a week after the launch of the new licensing initiative, called SCOsource.

In 2003's second fiscal quarter, SCO, based in Lindon, Utah, generated $13.1 million in revenue from its operating systems business and $8.3 million from the SCOsource licensing initiative. SCO expects the SCOsource initiative to continue generating revenue in coming quarters. The company has over 6,000 licensees of its Unix operating system software, SCO said.

SCOsource was announced in January along with SCO's hiring of firecracker attorney David Boies and his law firm Boies, Schiller and Flexner to examine possible intellectual-property infringements against SCO.

Specifically, SCO claims all Unix flavors in use today are based on Unix System V, whose software code and licensing rights SCO owns. Novell on Wednesday issued a statement saying it didn't transfer Unix System V copyrights and patents when it sold the software to SCO in 1995. SCO countered Wednesday with a statement of its own saying it owns "contract rights" to Unix and that its lawsuit against IBM doesn't involve patents or copyrights.

In March, SCO sued IBM for $1 billion alleging misappropriation of trade secrets, unfair competition, interference with contract and breach of contract regarding the Unix software SCO has licensed to IBM. SCO charges IBM with engaging in these allegedly illegal actions to benefit its Linux business.

Since the filing of the lawsuit, SCO executives have said the company has evidence that proprietary Unix from SCO has been copied illegally into Linux software, including the Linux kernel, allegations that have made the company very unpopular in the Linux community.

The IDG News Service is a Network World affiliate.