SCO Group

SCO Group, Inc.
Public
IndustryOperating system software
FoundedLindon, Utah (Caldera, 1994)
HeadquartersLindon, Utah, United States
Key people
  • Ralph Yarro III, Chairman
  • Darl McBride, CEO (2002–2009)
  • Ken Nielsen, CFO
  • Ryan E. Tibbitts, General Counsel
  • Jeff Hunsaker, President of SCO Operations Inc
  • Ransom Love, Founder (Caldera)
  • Doug Michels, Founder (SCO)
  • Larry Michels, Founder (SCO)
ProductsUnixWare, OpenServer, Me Inc. Mobility Products, SCO Mobile Server, HipCheck
RevenueDecrease $15.6 million USD (2008)
Decrease ($8.7 million) USD (2008)
Number of employees
63 (2009)
Websitewww.sco.com

SCO, The SCO Group, The TSG Group, Caldera Systems, and Caldera International are the various names of an American software company that became known for acquiring the Santa Cruz Operation's Server Software and Services divisions, and UnixWare and OpenServer technologies, and then, under CEO Darl McBride, pursuing a series of legal battles known as the SCO-Linux controversies.

The company was part of the Canopy Group, but became independent in March 2005, after the settlement of a lawsuit between the Noorda family and a chairman of the group, Ralph Yarro, also former CEO of the Canopy Group. As part of the settlement, Canopy transferred all of its shares to Yarro.[1][2] Later on, Caldera International changed its name to "SCO" and then to "The SCO Group" to reflect that change in focus.

In January 2004, their website, www.sco.com, was attacked by the Mydoom computer virus, which took down the website for 2 weeks using a DDoS attack.[3]

In September 2007, SCO filed for Chapter 11 bankruptcy protection.[4] In April 2011, UnXis, Inc. (currently Xinuos) bought The SCO Group, Inc. operating assets and intellectual property rights after having been approved by the bankruptcy court in Delaware. The SCO Group, Inc. then renamed itself TSG Group, Inc.[5][6] In August 2012, TSG Group, Inc. filed to convert from Chapter 11 bankruptcy protection to Chapter 7 stating "There is no reasonable chance of rehabilitation".[7] On June 14, 2013, Judge David Nuffer ruled on SCO v. IBM motions, granting SCO's motion for reconsideration and reopening the case.[8][9]

History

The Santa Cruz Operation (SCO)

Santa Cruz Operation (SCO) was a software company based in Santa Cruz, California which was best known for selling three UNIX variants for Intel x86 processors: Xenix, SCO UNIX (later known as SCO OpenServer), and UnixWare. In his book The Art of Unix Programming, Eric Raymond calls SCO the "first UNIX company".[10] Prior to this UNIX vendors were either computer hardware manufacturers or telephone companies.

In 1993, SCO acquired two smaller companies and developed the product line that was named Tarantella. In 2001, SCO sold its rights to UNIX and the related divisions to Caldera Systems.[11] After selling its UNIX interests, SCO retained only its Tarantella product line, and therefore changed its name to Tarantella, Inc.

Caldera Systems, Caldera Holdings, Caldera International

Caldera, Inc. based in Utah, was founded in 1994 by Bryan Sparks[12] and Ransom Love,[13] receiving start-up funding from Ray Noorda's Canopy Group. Its main product was Caldera Network Desktop, a Linux distribution mainly targeted at business customers and containing some proprietary additions. Caldera, Inc. later purchased The Linux Support Team Software GmbH and its LST Linux distribution. LST was made the basis of their following product Caldera OpenLinux.

Caldera, Inc. inherited a lawsuit against Microsoft when it purchased DR-DOS from Novell in 1996. This lawsuit related to Caldera's claims of monopolization, illegal tying, exclusive dealing, and tortious interference by Microsoft.

In August 1998, the original Caldera, Inc. company split into two daughter companies named Caldera Systems, Inc. and Caldera Thin Clients, Inc. Caldera Systems took over the Linux business, while Caldera Thin Clients took over the DOS and embedded business.[14] The shell company Caldera, Inc., remained responsible for the lawsuit only.

Microsoft reached a settlement in January 2000 with Caldera, Inc., after which Caldera, Inc. stopped its operation. The payments involved in this settlement were later revealed inadvertently to be $280 million during the Novell v. Microsoft antitrust lawsuit as documented on Groklaw.[15][16]

Caldera Systems reincorporated in Delaware on March 2, 2000[17] and completed an IPO of its common stock. By way of a temporary Caldera Holdings, Inc., the company reorganized in August 2000.

On 2 August 2000,[citation needed] Santa Cruz Operation announced that it would sell its Server Software and Services Divisions, as well as OpenServer and UnixWare, to Caldera Systems, Inc., proprietary operating systems for PCs that would be expected to compete directly with Linux. In March 2001, Caldera Systems became Caldera International, Inc. (CII), and the SCO purchase was completed in May 2001.[citation needed]

In 2002, Caldera International joined with SuSE Linux (now SUSE), Turbolinux and Conectiva to form United Linux in an attempt to standardize Linux distributions.[18]

Later that year, CEO Ransom Love left the company and was replaced by Darl McBride, and the company changed its name to The SCO Group in August 2002.

Caldera International's name-change to The SCO Group created some confusion between The SCO Group (formerly known as Caldera International) and Tarantella (formerly known as SCO). The company described here is The SCO Group (formerly Caldera International). Although generally referred to simply as "SCO" up to 2001, the parent company is sometimes referred to as "old SCO" or "Santa Cruz" to distinguish it from "The SCO Group" to whom the U.S. trademark "SCO" was transferred.[19]

Legal battles

In or around 2003, SCO began to claim that Linux "contained SCO's UNIX System V source code and that Linux was an unauthorized derivative of UNIX".[20] SCO filed suit against IBM for an unprecedented US$1 billion and demanded that Linux end-users pay license fees. Microsoft bolstered SCO's financial situation in 2003 by purchasing a license to UNIX technology and by helping to arrange funding.[21] A new division called SCOsource was created to license the company's intellectual property (IP). These claims provoked outrage among Linux users, who denied that Linux had copied SCO's intellectual property. Linux distributor Red Hat filed suit against SCO in Delaware. Novell, from whom SCO claimed to have acquired its UNIX IP, announced that it had not sold the copyrights to SCO and that it retained them. In response, SCO sued Novell for slander of title in Utah, home state of both SCO and Novell.

Subsequently, the SCO Group sued two former customers (AutoZone and DaimlerChrysler). In SCO v. AutoZone, SCO claimed that AutoZone violated SCO copyrights by using Linux. In SCO v. DaimlerChrysler, SCO claimed that DaimlerChrysler breached its UNIX license contract by inappropriately using derivative works of UNIX and by refusing to respond to requests for certification of compliance by SCO. SCO's suit against DaimlerChrysler was dismissed in 2004.

Decline

After announcing its legal claims against various Linux users and vendors (see SCO-Linux controversies), the company suspended sales and development of its Linux related products. Attention was shifted to the UnixWare and OpenServer UNIX products previously acquired from the Santa Cruz Operation.

On February 17, 2005, the SCO Group issued a press release that stated their stock may soon be delisted from the NASDAQ stock exchange for failing to issue an annual 10-K report in a timely manner as required by U.S. Securities and Exchange Commission regulations.[22] In late April 2005, after complying with the filing requirements, the NASDAQ switched trading of the SCO Group from "SCOXE" (which denotes a listing which may be delisted soon) back to their original "SCOX" stock symbol.

On April 23, 2007, SCO received a second delisting notice from NASDAQ. This was triggered by the active bid price of company stock, at closing, being less than $1 for 30 consecutive trading days. To regain compliance with continued listing requirements, the company must maintain a closing bid price greater than or equal to $1 for at least 10 trading days.[23] The stock regained compliance on June 12, 2007.[24]

Bankruptcy

Shortly after Judge Dale Kimball's ruling on August 10, 2007, SCO Group filed for reorganization on September 14, 2007, under Chapter 11 of the United States Bankruptcy Code.[4]

SCO was delisted from NASDAQ on December 27, 2007, due to its bankruptcy filing.[25]

On February 14, 2008, SCO filed a memorandum of understanding between it and Stephen Norris Capital Partners (SNCP).[26] Under the proposed deal, subject to Bankruptcy Court confirmation, SNCP would pay SCO up to $100 million (including a $95 million loan at LIBOR + 17 percentage points). If the restructuring had been confirmed, SCO would have exited Chapter 11, gone private, and repaid all creditors (including Novell and IBM) in full. SNCP would then have received a controlling interest in SCO. A joint press release stated that SNCP's business plans for SCO include both "unveiling new product lines" and "see[ing] SCO's legal claims through to their full conclusion."[27] The proposal was abandoned two months later.[28]

On January 12, 2009, SCO filed a new reorganization plan with the bankruptcy court.[29]

On May 5, 2009, the U.S. Trustee's office, through its counsel Joseph J. McMahon, Jr., filed a motion in the SCO bankruptcy proceeding to convert the SCO's Chapter 11 to a liquidation under Chapter 7.[30]

On June 15, 2009, Darl McBride announced during the liquidation hearing that they had come to an agreement with Gulf Capital Partners for funding to pay off the debts and continue its litigation against IBM and others, through the sale of its UNIX division.[31][32]

On August 5, 2009, Judge Gross ordered the appointment of a Trustee according to Chapter 11 by the U.S. Trustee's office.[33] On August 25, 2009, Edward Norman Cahn, was named as Chapter 11 trustee for SCO's cases.[34]

On October 14, 2009, SCO Group announced that the company had terminated CEO Darl McBride's contract.

Following the appointment of the Chapter 11 trustee, on October 14, 2009, the SCO Group announced that the company has eliminated the Chief Executive Officer and President positions, consequently terminating Darl McBride's position,[35][36] and that the remaining members of the current management team, including Chief Operating Officer, Jeff Hunsaker, Chief Financial Officer, Ken Nielsen and General Counsel, Ryan Tibbitts, will continue to work closely with the Chapter 11 trustee and his advisors.[37] Jeff Hunsaker left SCO on November 13, 2009-11-13. SCO stated that they intended to hire him temporarily as a consultant.[38]

On September 16, 2010, the SCO Group announced that it was “pursuing a sale of substantially all of the assets of its UNIX(R) business, including certain UNIX system V software products and related services”,[39] and requested that interested parties show “financial wherewithal to close on the transaction on or before October 5, 2010 at 5:00 p.m.”,[39] but as of December 2010, no announcement of any actual sale had been made.

Since May 2010, SCO Group has repeatedly cancelled its Bankruptcy hearings—as of December 2010, their next scheduled hearing is January 18, 2011.[40][41]

On January 26, 2011, the SCO Group announced that UnXis Inc. has been selected to purchase their software product business.[42] The terms of sale are to be submitted to the bankruptcy court, where SCO’s Chapter 11 case is also pending, for approval on March 2, 2011. The original date of the hearing has been postponed by two weeks.

On April 5, 2011, the U.S. Securities and Exchange Commission temporarily halted trading on SCO stock in response to SCO's failure to make required periodic filing for over two years.[43]

On April 11, 2011, UnXis completed the purchase of its operating assets.[44] The SCO Group's litigation rights against IBM and Novell did not transfer to UnXis.

SCO filed amendments to their certificates of incorporation on April 15, 2011. The SCO Group, Inc. was renamed TSG Group, Inc., and SCO Operations, Inc. became TSG Operations, Inc.[6]

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