SCO reported net profits of $974,000, or 3 cents a share, for the quarter ending March 31, compared with profits of $2.9 million, or 8 cents a share, a year ago. Wall Street had adjusted its expectations to net profits of 4 cents a share after the company said earlier this month it would not meet anlaysts' expectations of 13 cents a share.
Revenues rose to $54 million for the quarter, up slightly from $50.7 million a year ago.
Prior to the announcement the company attributed its drop in profits to weak European sales and a rise in research and development spending.
SCO had generally seen its revenues grow for the past six quarters, and saw its profits flatten out at $4 million in the last two quarters.
Spending on Gemini, which combines the company's OpenServer and UnixWare platforms, and Tarantella, its client integration technology, was ramped up in order to bring the products to market faster.
Analysts had previously noted that SCO's products and channels are undergoing transition and that SCO's Unix software would have a tough time competing against the Windows NT operating system.
The company said its newly named chief financial officer, John Luhtala, is reviewing its operations and restructuring its expenses.