True to form Santa Cruz Operation Inc CEO Doug Michels has bitten the bullet and moved to a zero-inventory model in one fell swoop. SCO says it will take a write down charge of between $13m and $16m in its forthcoming third quarter numbers to remove eight weeks inventory from shelves. In doing so SCO […]
True to form Santa Cruz Operation Inc CEO Doug Michels has bitten the bullet and moved to a zero-inventory model in one fell swoop. SCO says it will take a write down charge of between $13m and $16m in its forthcoming third quarter numbers to remove eight weeks inventory from shelves. In doing so SCO expects to lose between $17.5m and $21.1m on revenue of $25m to $29m compared to a loss of $24.6m on revenue of $31.2m in the same period last year. However that can’t obscure the fact that actual sales into the channel were $3m lower this quarter and that what SCO calls anomalous events in India – presumably problems getting currency out after the economic crisis following India’s nuclear tests – have hit the revenue stream. SCO says without the write down revenue earnings per share would have been $0.02 to $0.05 on revenue of $46.5m; the consensus of analysts’ estimates according to First Call was for a profit a profit of $0.10 per share. SCO says moving to what is effectively a just-in-time sales model enables it to match sales orders in with product out immediately. The channel will effectively stock a $4 box with a piece of paper that enables the reseller to download $396 UnixWare code via CyberSource when the product is sold. It’s a model SCO expects Microsoft, Novell and other software companies will have to move to, either lock, stock and barrel, or more likely, piecemeal. Nevertheless SCO’s still between a rock and a hard place. Its 32- bit Unix-on-Intel operating system is being upgraded with enterprise features but until Intel Corp’s 64-bit Merced processor is unleashed cannot have its mettle fully tested. In the meantime, the Unix-on-64-bit RISC vendors are making strides in the lucrative enterprise market while SCO is duking it out with Windows NT on a lower market plane. Other vendors, including Sun with Solaris x86, SGI Irix-on-Intel and the Compaq/DEC/Tandem/Sequent Bravo Unix alliance are out to eat SCO’s Unix-on-Intel lunch. SCO’s got nominal backing from Compaq, Data General, Intel, ICL and Unisys for its enterprise work but privately acknowledges its turnaround is a long-term event which hinges on scooping up large sections of the Merced server market when the processor ships. Ironically Compaq, which has previously said DEC Unix is its long-term Unix choice, is also SCO’s largest customer by a long chalk. Analysts say Compaq wouldn’t get anything more than it has now were it to buy SCO, and talks are still underway about how SCO and the Bravo Unix camp can synchronize APIs and provide some amount of compatibility for ISVs to aim at. SCO’s vaunted Java-based Tarantella technology for supporting multiple clients from a single server is also a longer term revenue opportunity. SCO hopes to have 100 clients each with 500 seats by 2000. It wii roll out new Tandem Computers-related UnixWare work next week.