SCO Group, which for years has claimed that Linux infringes on its Unix intellectual property, has received new funding and seems set to continue its battle against the open source operating system.
Stephen Norris & Co. Capital Partners said Thursday it and unnamed Middle Eastern partners will fund The SCO Group with up to US$100 million to take over the financially beleaguered Unix company, move it out of bankruptcy protection, complete its controversial and unsuccessful Linux litigation, and take it private.
The SCO Group's board has approved the transaction, and the company should exit bankruptcy "in the coming year", the company said. SNCP's reorganization plan "will also enable the company to see SCO's legal claims through to their full conclusion", it said.
The SCO Group sells a version of Unix that never achieved the popularity of rival products from companies such as IBM or Sun Microsystems, but it's better known in recent years for its ill-fated legal action that asserted Linux infringed its Unix intellectual property. The case largely fell apart when a court found that Novell still owned the Unix copyright.
Despite an attempt to begin a new line of mobile-computing software called Me, the company's revenue dropped steadily from US$79 million in fiscal 2003 to US$22 million in fiscal 2007, during which the company reported a loss of US$6.8 million. And last week, the company announced layoffs of 30 employees from a staff numbering about 115.
Stephen Norris, managing partner of the firm, though, was bullish on the Lindon, Utah-based company's prospects.
"We saw a tremendous investment opportunity in SCO and its vast range of products and services, including many new innovations ready or soon to be ready to be released into the marketplace," said. "We expect to quickly develop these opportunities, and to stand behind SCO's existing base of customers and partners."
The companies didn't disclose who the Middle Eastern partners are, but Norris' biography indicates he's worked with some on more than one occasion. He "acted as a principal financial adviser to Prince Al-Waleed bin Talal Al Saud of Kingdom Holding Company in structuring and negotiating the re-capitalization of Citibank" and worked on "the offer by a major Saudi Arabian investment firm for Lamborghini in Italy."
In October, The SCO Group had disclosed a plan to sell its Unix assets to New York Capital Management for up to US$36 million. It appears now that the Unix assets will remain with SCO.
"This significant financial backing is positive news for SCO's customers, partners and resellers who continue to request upgrades and rely upon SCO's Unix services to drive their business forward," said Jeff Hunsaker, The SCO Group's president and chief operating officer, in a statement.
Investing in SCO has proven difficult. One fund, BayStar Capital Management, invested US$50 million in 2003, but unwound the deal in 2004 after much bickering.
This article was first published as a blog on CNET News.com.
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