The Lindon, Utah-based SCO Group Inc. (SCOX) , a provider of Unix software technology and mobile services, announced that it has filed for bankruptcy as it is facing potential financial and legal challenges. Along with the company, its subsidiary, SCO Operations Inc., has also filed petition for reorganization under Chapter 11 of the United States Bankruptcy Code.
It is to be noted that SCO Group had sued users of the Linux open-source operating system, including the Armonk, New York-based International Business Machines Corp. (IBM), claiming that Linux was an "unauthorized derivative" against its Unix software, for which received license from Novell. But the Court had rejected the lawsuit, saying that the Unix copyright still belonged to Novell Inc. (NOVL)
SCO Group specified that it intends to maintain all its normal business operations throughout the reorganization proceedings. Subject to court approval, the company said it will use the cash flow from their consolidated operations to meet their capital needs during the reorganization process.
The company said it has also filed a series of first day motions in the Bankruptcy Court to ensure that it will not have any interruption in maintaining its commitments to its customers.
For the second quarter of 2007, SCO Group recorded net loss of $1.14 million or $0.05 per diluted common share, compared to a net loss of $4.69 million or $0.22 per diluted common share in the same period last year. Revenue for the second quarter declined to $6.01 million from $7.12 million in the comparable quarter of the prior year. The company had attributed decrease in revenue to continued competitive pressures on its UNIX products and services and the improvement in net loss to reduced legal costs and operating expenses.
Darl McBride, President and chief executive of the SCO Group, stated, "Chapter 11 reorganization provides the Company with an opportunity to protect its assets during this time while focusing on building our future plans"
SCOX closed Friday's trading session at $0.37, losing 28 cents or 43.08%. IBM closed the day's session at $115.13, whereas NOVL closed yesterday's session at $7.36.
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