SCO Group Hit by Double Whammy

In a press release Friday, SCO said it was performing a valuation of the conversion feature associated with the issue, which will not affect revenue or cash. SCO reiterated its prior guidance for fourth-quarter revenue ranging from $22 million to $25 million.

Although such delays can raise red flags, one buy-side source, who asked that his name not be used, said he believed the reason was legitimate. "I don't think there's any funny business going on," he said.

The source, who holds SCO shares, suggested a "market effect" was also pushing the stock down, with investors taking profits in small-cap tech names that have enjoyed a strong run this year. SCO shares have soared in the past 12 months, trading as high as $22.29 in mid-October vs. a low under $1.50 a year ago, while drawing a whopping 21.6% short interest as of Nov. 10.

But on some level, SCO has turned its stock into a lottery ticket on the outcome of its controversial suit against IBM. On Monday, investors were rethinking the worth of those tickets.