11 June 2004 SCO, the small Unix software firm that claims its intellectual property has been copied into Linux, suffered a big drop in revenue in its last quarter amid growing turmoil at the company.

SCO’s revenue fell by half on last year, with second-quarter sales falling from $21.4 million to just $10.1 million. It also turned a $4.5 million profit last time into a $15 million loss, making it SCO’s third consecutive quarterly loss.

The company also confirmed that it had cut 10% of its workforce during the quarter in an attempt to return to profitability.

SCO posted a decline in all three of its markets – products, services and licensing.

But the performance of its highly controversial ‘SCOsource’ intellectual property division, which claims IBM has stolen the company’s secrets and is suing some corporate users of Linux, will have caused most embarrassment for SCO management. The company said it spent $4.4 million on legal fees and yet brought in just $11,000 in new licences.

The company said its cash reserves were down to $61 million by the end of the quarter, although executives insisted the company was financially stable.

The publication of the results came shortly after one of its shareholders, BayStar Capital, which is unhappy with SCO’s strategic direction, finally reached an agreement to sell most of its shares for $13 million in cash.

Darl McBride, SCO’s president and CEO, said the BayStar transaction had adversely affected the financial results.