German Linux seller SuSE expects to be profitable in the second quarter of 2004, Chief Executive Richard Seibt told CNET News.com in an interview Wednesday., meanwhile, expects that its abandonment of the Linux market and efforts to enforce Unix intellectual property claims will lead to revenue growth.
The two companies formerly were, under which SCO and two other companies agreed to use SuSE's version of Linux in an attempt to make Linux relationships easier for other computing companies. Through the arrangement, SuSE hired about 15 SCO Linux programmers and was paid for each copy of the software shipped.
The companies since then have parted ways in their Linux plans, but not in their hopes for success.
"We will generate cash...starting in the third quarter," SuSE's Seibt said. Because SuSE's maintenance and support contracts generate revenue over several quarters, "I would guess that profitability is in the second quarter of 2004," he said.
SuSE is hoping to profit in particular from a potential contract in its own backyard, under which the city of Munich plans tofor employees now using Microsoft Windows.
Profitability, a, hasn't been easy for Linux companies to achieve. SuSE's top rival, for the quarter ended Nov. 30, 2002, but the quarter after that.
MandrakeSoft, based in Paris but with most of its sales in North America, hasand is under . has .
SCO, formerly Caldera International, made a go at selling Linux--including ain 2000. But SCO has all but abandoned that in favor of selling Unix products it acquired from the Santa Cruz Operation. It filed a lawsuit , has claimed Unix code was and earlier this month withdrew its own Linux product.
Dropping the Linux product will help the company's business, Chief Executive Darl McBride said in a conference call Wednesday.
"It represented less than 2 percent of our revenue for the quarter," McBride said. By diverting the roughly 50-person Linux sales staff to join their 50 Unix sales colleagues, SCO expects more money out of Unix sales, McBride said.
In addition, revenue from itsshould begin arriving in 2004. SCOx is part of an effort to rebuild Unix products that the company acknowledges have languished. "No doubt we lost some ground on it during the time we were chasing the Linux dream," McBride said.
SCO warned in a filing that its, but the company revealed Wednesday that it doesn't have to bear the brunt of much of its legal costs. To pursue its case against IBM, SCO hired high-profile attorney David Boies, famous for his antitrust victory over Microsoft as well as his loss in the vote-counting controversy representing Al Gore in the 2000 presidential election.
SCO's legal costs are being paid under a contingency arrangement, McBride said. In such cases, lawyers typically are paid not by the hour, but with a percentage of whatever money they can win for their clients in the case.
The company's SCOsource effort to increase revenue from Unix licenses accounted for $8.3 million of its $21.4 million in revenue for its quarter ended April 30. That SCOsource revenue included aand another Unix license by an as-yet undisclosed company.
SCO expects revenue of $19 million to $21 million for its current quarter, and McBride said SCOsource is again expected to account for about a third of that.
SCO is in negotiations to buy two smaller companies that will bolster its SCOx plan, McBride said. Acquisitions have become easier because of the company's increasing stock price, he added. The company's stock climbed from $4.75 on May 16, to a high on $8.89 on May 22, shortly after SCO announced the Microsoft license deal.
But that stock price dropped Wednesday after , which sold Unix technology to a company that eventually sold it to SCO,of Unix intellectual property ownership. SCO's stock dropped $2.11, or 24 percent, to close at $6.60.