transformation from software pioneer into heat-seeking litigation missile continues apace.
The Lindon, Utah, company on Tuesday laid out the terms of a big pay package it is granting to the firm of attorney-for-all-seasons David Boies to lead its efforts to defend the company's patent portfolio, which it believes gives it a stake in the Linux operating system. The cost to the company's balance sheet -- including a charge related to the legal effort's financing -- will be around $17 million.
The former Santa Cruz Operation has this year managed to turn its stock into a lottery ticket on the outcome of a brutal patent dispute with
over the guts of Linux, which it claims incorporate a protected version of Unix. It sold a $50 million convertible note last month to fund the effort and has seen its stock vault from around a buck in February to Monday's close of $13.65.
Boies, most recently in the news when he was brought in to clean up
accounting mess, has been on SCO's payroll since at least August.
Using the money from the note sale, SCO has agreed to pay Boies' firm, Boies, Schiller & Flexner, and other lawyers $1 million cash and 400,000 SCO shares. The company will take a charge of $8.96 million in the fourth quarter, comprising a noncash expense of $7,956,000 related to the cash and stock transfer. The company will expense another $8.7 million to cover the coversion premium on the note sale itself.
"As part of the expanded scope, the firm has been engaged to support SCO regarding issues relating to copyrighted Unix code incorporated into Linux without authorization or appropriate copyright notices," the company said in Tuesday's release. "Code that has been identified includes Unix System V code as well as copyrighted code included in the 1994 settlement between Unix Systems Laboratories Inc. and Berkeley Software Design Inc. SCO acquired this code and associated copyrights in 1995 from Novell."
SCO also said it expects fourth-quarter revenue of $22 million to $25 million, in line with previous guidance.