September 2, 2004

Commentary: What does SCO Group hope to accomplish by taking its show on the road?

Author: Chris Preimesberger

It's an election year. What do politicians who are falling behind in the polls usually do when their backs are to the proverbial wall? They take their case to the people. Where else can they go?
Now it looks like some businesses are taking this idea to heart. When sales are dipping, market sentiment is against you, and your stock price continues to dwindle, what should you do? Take your case to the people. So this must be why the SCO Group is taking its show on the road.

That's right. The embattled Lindon, Utah-based software company that sincerely wants to believe it will defeat IBM, Novell, Red Hat, and other potent client/foes in various courts of law over a number of copyright lawsuits announced Tuesday that it lost another $7.4 million last quarter (the company has lost $16.8 million in the first three fiscal quarters of 2004, and its stock price has tailspun from $20 to $3.73).

Curiously, it followed up today with an announcement that it had lined up a two-week-long, 12-city road show to "communicate directly all of the benefits and advantages of upcoming products that can improve our customer's businesses. SCO is committed to getting out in the field with our partners and customers," said Jeff Hunsaker, Senior Vice President and General Manager of SCO's UNIX Division.

(Note: The singular "customer's" in the previous line was taken directly from the SCO press announcement. We believe that SCO Group meant "customers'," and that it indeed has more than one customer. But we're not completely sure of that, either. SCO Group does not talk about its customers to the media.)

Hmmm. According to the most recent financial report, the company's SCOSource licensing revenue ($678,000, up from a paltry $11,000 in Q2) in the most recent quarter came from only two companies. At Tuesday's press conference, SCO chief financial officer Bert Young said he could not name either customer for some reason. How many current customers do they expect to see on this trip? Two? I'm still waiting a response from SCO on that question.

Now, let's look at this strategy objectively for a moment. SCO Group, which makes no bones about the fact that it is in the litigation business, is going out, being proactive, and trying to sell itself to new and current customers.

Excuse me? What company in its right mind is going to book valuable corporate time at a live infomercial for SCO Group, an organization that thinks nothing of turning around and suing its own customers? Would you want to become a new customer?

Well, there might be one reason to go to one of the SCO meetings. Curiousity -- to see these people in person, in order to believe that they're for real. And they are.


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