SCO Gets $50 Million Infusion As BayStar Capital Takes Stake

SCO CEO Darl McBride said the deal is good for shareholders and the Lindon, Utah company, whose market capitalization has improved significantly since it filed a multi-billion lawsuit against IBM last spring.

While Linux advocates are incensed by SCO's legal efforts, SCO shareholders have seen a ripe return on their investment as result of the company enforcing its Unix licensing right, McBride said.

The same 2.9 million SCO shares purchased this week for $50 million were valued at $4 million a year ago, the CEO noted on a conference call.

McBride also said the company's launch of its SCOsource Unix licensing program has tripled its cash reserves over the past year.

Not bad for a year's work: McBride, a former Novell executive who has served as CEO for PointServe and SBI took the reigns at SCO last July.

"We believe profits are good and we're working to deliver the value for our company and shareholders," he said. "We made great progress in a year."

However, McBride & Co. have fast become the arch-enemy of the open source community because of his monumental legal challenge against IBM - and the Linux community at large - which alleges that IBM illegally donated SCO's Unix code to the Linux kernel.

The company has since sent letters to thousands of IBM's Linux customers threatening legal action if they do not license SCO's Unix source code.

The IBM case isn't expected to reach trial for a few years. During the conference call, McBride said the company remains open to settlement with IBM but will continue to enforce its Unix IP rights on any corporate customers running Linux. The company isn't planning to sue any more software vendors for the time being, but is on the hunt for non-compliant corporation using its Unix source code, the CEO claimed.

"We don't see anything on the horizon that is troubling to us at this time," McBride said. "We have concern about user licenses and license contracts.. those are the areas we're investigating."

In the meantime, only one vendor, Hewlett Packard, has stepped in and promised its Linux customers and partners full indemnifications should SCO's legal claims prevail. Red Hat filed a counterclaim to the IBM suit as a way to protect its wide Linux customer base.

However, SCO's potential claims against either IBM or customers are unenforceable until a court upholds its claims against IBM. SCO, which filed another claim to have Red Hat's counterclaim thrown out, is expected within the next few weeks or month, McBride said.