SCO CEO: Even if court bids fail, we will survive

The SCO Group  believes it will still have a viable business even if the company loses its courtroom battles, according to the vendor's CEO. In support of that claim, he said that SCO's Unix business is profitable and the company is due to shed its heavy financial burden from legal fees come January 2006.

"When we started this and people asked me that question ['What happens if you don't win in court?'] I said, 'As a company, we're screwed,'" Darl McBride, SCO CEO and president said in an interview Friday. "Today, I don't believe that to be the case. We've got a cap on our legal expenses and our Unix business is profitable. If you put that together, you've got long-term sustainability."

McBride was speaking to IDG News Service in advance of the company's reseller SCO Forum event in Las Vegas taking place through Tuesday this week.

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The SCO Group  believes it will still have a viable business even if the company loses its courtroom battles, according to the vendor's CEO. In support of that claim, he said that SCO's Unix business is profitable and the company is due to shed its heavy financial burden from legal fees come January 2006.

"When we started this and people asked me that question ['What happens if you don't win in court?'] I said, 'As a company, we're screwed,'" Darl McBride, SCO CEO and president said in an interview Friday. "Today, I don't believe that to be the case. We've got a cap on our legal expenses and our Unix business is profitable. If you put that together, you've got long-term sustainability."

McBride was speaking to IDG News Service in advance of the company's reseller SCO Forum event in Las Vegas taking place through Tuesday this week.

By January 2006, SCO will have spent close to $40 million in legal fees, according to McBride. However, once the company has made its January payment, it will then have paid in full for legal services "in perpetuity," he said. At that point, SCO's balance sheet will no longer be weighed down by legal expenses, which have typically been on the order of $2 million or more per quarter.

Back in August 2004, SCO announced it had worked out a deal with its lawyers to cap the company's legal costs at $31 million.

SCO has lawsuits in place against Novell, IBM, AutoZone and DaimlerChrysler.

In its slander of title lawsuit filed against Novell in January 2004, SCO argues that it owns the rights to the Unix and UnixWare copyrights and is seeking damages from what it claims are Novell's false representations about owning the operating systems' source code. SCO's claim on the Unix source code forms the basis of the company's assertion that Linux contains SCO intellectual property, which it has been pursuing in court, filing suit against IBM.

SCO filed suit against Daimler Chrysler for its alleged violations of its Unix software agreement with SCO. The company also filed against AutoZone alleging that AutoZone violated SCO's Unix copyrights by running versions of Linux that contained code from SCO's Unix source code.

Red Hat Inc. is suing SCO for allegations relating to its Linux claims, including trade libel and deceptive practices, but the judge in that suit has stayed the case pending the outcome of the SCO vs. IBM lawsuit.

Discovery is continuing in the SCO vs. IBM case, with SCO's legal team preparing for the deposition of IBM Chairman and CEO Sam Palmisano, according to McBride. The latest move in SCO's case against AutoZone was SCO's submission in May summarizing its discovery findings.

While McBride wouldn't comment specifically on SCO's ongoing legal cases, he did fire back against Novell's recent filing where the company suggested SCO is fast running out of money. "It's a little bit of a tennis match [back and forth]," he said. "Novell has tried to dismiss the case twice." Using a baseball analogy, he continued, "Novell's two strikes already on the last two attempts, now they seem to be swinging wildly." SCO's attorneys should be responding soon to Novell's filing, according to McBride.

"I don’t spend a lot of time worrying about it [the litigation], McBride said. "If it takes a year or 10 years, we’ll have our day in court when we get there."

McBride insisted that within SCO, the vast majority of its employees are focused on the company's technology, not its litigation. He estimates the company employs under 200 staff and has development centers in Murray Hill, N.J., Scotts Valley, Calif., and Lindon, Utah in the U.S. and in Delhi, India.

The IDG News Service is a Network World affiliate.