SCO's hectic year closes with layoffs

It's been a busy and emotional treadmill for former Unix powerhouse The Santa Cruz Operation in the last year.

For two straight quarters, the company's revenues and earnings have been sinking. There have been buyout rumours and even rumours of the firm's demise. In the marketplace, SCO's core Unix products have been losing market share to Linux.

Then in August, there was the announcement that the company was changing its direction and selling its server software and professional services divisions to Linux rival Caldera Systems of Orem, Utah, for $US120 million in cash and stock. A short time later, SCO announced it would be changing its name to Tarantella, to better reflect its new core business, its Tarantella Web-enabling software line.

Last week, the company announced it is laying off 19 per cent of its staff, or about 190 workers, as it prepares for the Caldera acquisition.

It's been quite a trip, said company CEO Doug Michels in an interview on Friday.

"In a way, it's a huge relief to have gotten through to this point where now we can start looking forward," Michels said. "We've really done the hard work, the painful work, the traumatizing kind of work."

"Everyone's been on pins and needles waiting to get to this stage," he said. "We've done that now. There's no more agony to go through. We've got the teams in place and the opportunities are out there."

The laid-off workers will get outplacement services from the company, Michels said, as well as severance packages and other assistance.

Bill Claybrook, an analyst with the Aberdeen Group in Boston, said SCO's problems have been well-known in the industry for about two years. "They're probably glad it's over," he said.

The layoffs are a natural step in the progression of the company's recent changes, he said.

SCO said it will take a one-time charge estimated to be between $5 million and $6 million as a result of the layoffs.

The company's fiscal third-quarter earnings and revenue were down substantially from 1999, apparently putting the company under pressure to make its recent moves.

Third-quarter revenue was $27 million this year, compared with $57.1 million last year in the same period. The net loss for the third quarter this year was $19.2 million, or 54 cents per share, compared with $4.5 million, or 32 cents per share, in the same quarter last year.

SCO had dominated the Unix-on-Intel market for several years with its OpenServer and UnixWare products. But it had been hurt by the rise of Linux. In March, SCO reorganised into three independent business, a move that was widely interpreted by analysts as a possible prelude to the sale of one or more of the company's divisions.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about Aberdeen GroupCalderaCaldera SystemsIntel

Show Comments