Dollars and Jens
Tuesday, December 09, 2003
Linux Lawsuit Update
SCO Group Hit by Double Whammy:
After trading as low as $15.10 intraday Monday, SCO shares closed down $1.32, or 8%, at $15.27.The earnings delay has to do with an accounting recharacterization. It's a bad signal for SCO investors, but I don't plan to make too much of it unless it's corroborated by something else.
Two events from Friday were feeding the selloff. First, SCO lost a motion asking IBM for source code. The court also ruled SCO must provide the code relevant to the case to IBM within the next 30 days.
In its suit, Lindon, Utah-based SCO has charged that IBM breached a contract with SCO by misappropriating SCO's Unix code in IBM's Linux business.
"We are pleased that the court has indicated that it will compel SCO to finally back up its claims instead of relying on marketplace FUD, or fear, uncertainty and doubt," IBM spokesman Mike Darcy said in a prepared statement Monday.
The legal setback may prove temporary for SCO, however. SCO spokesman Blake Stowell said the company will have the opportunity to argue again in Jan. 23 that IBM also should produce source code.
The judge's order compelling SCO to produce its code was "absolutely not a surprise to us at all," Stowell said. "We were sure at some point we would need to be more specific, and this was that point."
