SCO event reflects year of upheaval

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Author: Alison Eastwood
Date: Sept. 13, 1993
From: Computing Canada(Vol. 19, Issue 19)
Publisher: CEDROM-SNi, Inc.
Document Type: Article
Length: 887 words

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Santa Cruz Operation Inc Pres and CEO Lars Turndal addresses 2,000 SCO Forum attendees and discusses the Unix operating system vendor's reorganization, stock performance record and revenue turnaround. Turndal emerged from a period of managerial difficulties as a strong executive with a firm course of planning. He reorganized the Unix system vendor into three units aimed at medium business markets, enterprise computing customers and branch information systems users. Although he apologized for SCO's poor market performance since its initial public offering in May 1993, he blamed much of the problem on the confusing criteria of financial analysts. Meanwhile, SCO reports revenue growth, with income for the initial three quarters of 1993 surpassing the year-earlier periods by a margin of $131 million to $115 million. SCO is also engaging in a number of strategic alliances that it expects to boost its sales in the coming fiscal periods.

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Trio of Canadians were among 2,000 at the Forum.

SANTA CRUZ, Calif. -- It's been a year of upheaval for desktop Unix vendor Santa Cruz Operation Inc. (SCO).

In December, president and founder Larry Michels stepped down to clear himself of sexual harassment charges. Swedish-SCO high-flyer Lars Turndal accepted the position of president and chief executive officer, moved to Santa Cruz and began restructuring the business. The 14-year-old company went public in May. In July, chairman Jim Harris, who'd filled in until Turndal's appointment, died after a long-term illness. This triggered a drop in shareholder confidence, and stock prices continued to lag. They'd only risen by 50 cents in the first place - an unusual ocurrence among recent software industry public offerings.

None of this showed on the faces of SCO executives when the time came to host the annual SCO Forum at the University of California, Santa Cruz, last month. Turndal's opening words on the first day of the four-day conference were: "As the man said falling off the 10th storey of a building, passing the sixth floor: 'So far, so good.'"

The outward signs were good. SCO, which owns the dominant share of the desktop Unix market with its SCO Unix, Open Desktop and Xenix operating systems, announced alliances with hardware and software vendors including AST, Computer Associates, Lotus, Informix and Ingres.

Turndal has formed a new services group and reorganized the company to focus on three market segments: "medium business systems"; branch information server; and, enterprise computing. SCO's first three quarters fiscal 1993 showed revenues at $131 million (U.S.), up from $115 million (U.S.) for the same period last year.

But Turndal's message belied his casual manner. The 2,000-plus delegates received what amounted to a public apology for SCO's poor stock performance. However, Turndal said he won't change SCO to suit the financial community because, as he later told Computing Canada, "their reading of the marketplace is different from day to day.... I think they confuse everyone."

SCO's problem, according to Turndal, is that analysts compare its performance, unfavorably, with Microsoft's. Predictably, Microsoft was mentioned throughout the conference. Vendors and analysts agreed Unix's forte will not be the desktop. Co-founder Doug Michels, executive vice-president and chief technical officer, said in his opening speech that about two-thirds of the desktops in offices will run some version of Windows.

This apparently alarmed some delegates because, three days later, Michels backtracked. "I gave the number in a frenzy to make predictions," he reassured the audience. "I don't mean in anyway to say we're not excited about Unix on the desktop, but we don't think it's going to beat Windows."

Turndal agreed. "Why should we hit someone where they are strongest? Why not work with them?" SCO has endorsed Sunselect's Windows Application Binary Interface and Public Windowing Interface, which lets Microsoft applications run directly on Unix systems.

The two top executives may agree on Microsoft but otherwise, they're near-opposites. Michels led the Common Open Software Environment (COSE) initiative in March, designed to unite vendors in developing a common look and feel on different Unix versions.

Turndal's take on COSE is les enthusiastic. "I don't believe in this consortium. We were in one before - ACE (Advanced Computing Environment)," which failed. The 'unity' concept is valid, he allowed, but if vendors' sole purpose is to unite against Microsoft's Windows NT, COSE "loses its own purpose."

Neither do Michels and Turndal share the same business outlook. "Entrepreneurs built this company," stated Turndal. "I think they have a problem focusing. They always have new odeas." While he doesn't want to stamp out Michels' spirit, Turndal is determined to rid SCO of its bad habits and find out "what is culture, what is real, and what is excuses."

That's partly why he's restructured SCO to combine sales and marketing. "It was all over the place." The product business unit wanted to add features and the engineers wanted to take out features so they could deliver on time. Turndal couldn't deliver on time. Turndal couldn't decide who was right. "I'm not technical. So what did I do" I put the same hat over them."

He has no plans to restructure the Canadian operation. "We have very skilled people (there)," specifically on the development systems side.

In the U.S., despite the challenges, "I know now that I have the right organization," said Turndal. "If it doesn' work," he added, tongue in cheek, "I don't have the right people."

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Gale Document Number: GALE|A14442436