Investors Abandon SCO

Scott Reeves

December 1, 2006

Investors fled SCO Group’s stock on Friday, voting with their feet after a federal judge gutted its lawsuit against IBM.

In mid-morning trading, SCO Group traded at $1.36, down 64 cents, or 32%.

Last month, SCO Group asked U.S. District Court Judge Dale Kimball in Salt Lake City to reinstate claims against International Business Machines. SCO Group argued that there was no evidence it had withheld information it was required to disclose.

On Thursday, the judge said SCO Group had provided no evidence to support its claim that IBM took code from Unix, which SCO claims to have some copyrights, and added it to Linux. (See: " SCO Gets TKO'ed" [ ] ) and " Dumb and Dumber" [ ] )

The judge's decision is good news for Red Hat, Novell, IBM and Hewlett-Packard, which have built thriving businesses around Linux open-source software.

Unix was developed by the old AT&T, and the company allowed the system to be copied, leading to multiple versions, some of which effectively leaked into the public domain.

In the early 1990s, Linus Torvalds, then a college student in Helsinki, wrote a version of the program from scratch that he called Linux. Torvalds posted Linux on the Internet, allowing others to copy and improve upon it, and the system became popular, giving a boost to the nascent open-source software concept. Companies can make money by packaging and supporting open-source programs, but they cannot use copyright law to prevent the software from being duplicated.

Last month, Microsoft, whose Windows operating system directly competes with Linux, signed a deal [ ] with Novell to make the two programs work well together. As part of that arrangement, Microsoft will resell Novell’s version of Linux, ending years of hostility towards the system.

Copyright 2006