March 2, 2004 4:01 PM PST

SCO delays Linux user lawsuit announcement

By Stephen Shankland
Staff Writer, CNET News

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The SCO Group plans to begin legal action against Linux users Tuesday--likely two separate companies--but an announcement of the names won't come until Wednesday, the company said.

The Lindon, Utah-based company plans to announce its legal target Wednesday morning, shortly before its conference call regarding its financial results for the first quarter of fiscal 2004, spokesman Blake Stowell said.

"We'll have at least one suit that's filed today before the end of the day," Stowell said Tuesday, with two suits more likely. "There is a high possibility we will be announcing two."

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SCO Chief Executive Darl McBride said Monday that the company planned to talk about the suits Tuesday, but Stowell said the company needed more time to prepare the announcement.

SCO, which owns a disputed amount of Unix intellectual property, inherited the agreements by which inventor AT&T and its successors licensed the operating system to IBM, Sun Microsystems, Hewlett-Packard, Silicon Graphics, numerous universities and others. SCO has sued IBM for more than $5 billion in damages, alleging Big Blue violated its Unix contract by moving Unix technology to Linux that it should have kept secret.

McBride outlines SCO?s lawsuit strategy Darl McBride, CEO, SCO Group

IBM denies wrongdoing and has countersued SCO for patent infringement. Meanwhile, Novell, a previous Unix owner, claims it owns the Unix copyrights, forcing SCO to sue to establish ownership, and Linux seller Red Hat has sued SCO to try to establish that Linux doesn't violate SCO copyrights or trade secrets.

SCO argues that companies should pay for a SCO intellectual property license to use Linux without fear of legal action--a license that costs $699 for a single-processor server. On Monday, EV1Servers.net became the first company to acknowledge signing up for the program.

SCO has declined to identify which companies it has targeted for lawsuits, but it has said the first two will be aimed at companies that hold Unix licenses. Google, which uses thousands of Linux servers to power its search engine, is not the target of the initial suits, Stowell added.

McBride said Monday that the company has about $64 million in cash--plenty to pay for extensive legal actions.

SCO plans to announce further financial details Wednesday. First Call, which surveys financial expectations, said the lone analyst reporting earnings expectations for the company expected a loss of 22 cents per share for the quarter. Two analysts weighed in with revenue projections of $10 million and $14.4 million, First Call spokesman Chuck Hill said.

SCO was unprofitable last quarter but would have been in the black if not for a $9 million payout to its attorneys, led by David Boies of Boies, Schiller & Flexner.

In December, SCO said it expected revenue between $10 million and $15 million.

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