After reading all the filings, I don't think the SCO (newSCO) version of history we read in their 2nd Amended Complaint against IBM quite matches what I found. For starters, it appears oldSCO was not doing so well financially prior to the alliance with IBM.

First, here is the paragraph from the filing mentioning Project Monterey:

ITEM 5. OTHER EVENTS.

On October 26, 1998, The Santa Cruz Operation, Inc., a California corporation (the "Company"), and International Business Machines Corporation, a New York corporation ("IBM"), entered into a Joint Development Agreement (the "Agreement") which provides for the licensing to IBM of certain operating system technology, the licensing from IBM of certain operating system technology and the cooperation between the parties for the development of a UNIX operating system designed to operate on the 64-bit Intel architecture ("IA-64"). The full text of the press releases announcing the Agreement are set forth in Exhibits 99.1 and 99.2 attached hereto and are incorporated in this report as if fully set forth herein.

Notice that there were two parts to the deal? It wasn't just a deal to develop a UNIX operating system for the future 64-bit Intel architecture. There was an immediate licensing of some AIX technology to oldSCO, which is clearly stated in the press releases, below. And when you compare oldSCO's financials pre- and post- this announcement, you will find they went from declines¹ and a net loss² to an upsurge in revenues³, so I can't help but think they benefited from the Project Monterey announcement and the association with IBM right away, even though eventually it was clear that Linux was taking over the market they had hoped to reach with the second part of the agreement. [On the footnotes, you can jump back and forth by clicking on the footnote number.]

Reading the SEC filings makes it so clear that oldSCO was all about working well with Microsoft. Microsoft at the time was a shareholder (12.3%) in Santa Cruz. But the world changed. You first find Linux mentioned in oldSCO's filings as a competitor in 1998 ("Over the past months competition from companies selling versions of the Linux Operating System has increased.") and in 1999 they started offering Linux services themselves. ⁴ The world was changing and even oldSCO had to change to meet it. This is before IBM is accused of throwing its support to Linux, by the way. So oldSCO viewed Linux as business competition prior to IBM's 2000 Linux announcement that got newSCO in such a flutter, to hear them tell it. So much for SCO's Linux-was-a-bicycle analogy and only a hobbyists' operating system prior to IBM's involvement.

I also found this intriguing sentence: "In fiscal year 1996, SCO acquired the UnixWare(R) product line and UNIX system technology from Novell, Inc." Product line? Technology? That's all they got? There is a mention of "core intellectual property", however, in one filing, see below, which leaves it a toss-up in my mind as to which is correct and what exactly Novell sold to oldSCO.

I also found these telling paragraphs in a 10K for the fiscal year ending September 30, 1998, the Annual Report :

SCO believes, however, that UNIX technology is only the beginning of the solution, and that considerable value must be added to the basic technology in order to create a family of products that solve complex customer requirements for business critical servers. Business and government organizations are increasingly demanding adherence to standards-based open systems to protect their computing investment and avoid reliance on a single vendor's hardware or software. For such customers, the proprietary implementations of the UNIX System that dominate the technical and scientific workstation market are unacceptable. These proprietary versions of UNIX systems run on hardware architectures that are expensive relative to PCs, are tied to the proprietary hardware of particular vendors and have failed to meet the increasing demand for hardware-independent, Intel CPU-based systems. Business and government organizations also require broad availability of third-party applications software so that they can use predefined solutions and, to the extent possible, avoid having to develop custom applications. . . .

6) PROVIDING TRUE OPEN SYSTEMS PRODUCTS

Because customers are increasingly reluctant to be restricted to a single computer vendor, the Company has designed its software products to support industry-accepted open systems standards. Open systems are those systems which conform to established industry standards such as I20, XPG-4, Spec 1170, DCE and OSF/Motif(R) from The Open Group, POSIX(R) from IEEE, Federal Information Processing Standard (FIPS) from the National Institute of Standards (NIST), and Internet standards. SCO continuously works with standards organizations such as The Open Group to assure continued conformance to open systems standards. Industry standards may be established by organizations composed of vendors, by government agencies, by academic institutions, or by market acceptance. Industry standards typically are based on specifications which allow competing implementations. Because these standards are open, competitors can readily access the technology to include in their products. . . .

In December of 1995, SCO purchased the UNIX Systems technologies from Novell, Inc. and is now a primary driving force behind this open systems platform. . . .

Over recent years, operating systems such as GNU, Linux, FreeBSD and others developed using collaborative and "open source" techniques have gained popularity with highly technical users, and some integrators. Some of SCO's competitors may exploit this technology to build competitive products, or the market for SCO's products may be reduced by either technical users using these products or the products becoming easier to use and more stable. . . .

The Company's strategy is to offer products that conform to industry standards. Industry standards may be established by organizations composed of vendors, by government agencies, by academic institutions, or by market acceptance. Industry standards typically are based on specifications for which there can be competing implementations. Because standards are open (not proprietary), competitors can readily access the technology to include in their products, and SCO does not believe that offering products conforming to industry standards will provide SCO with a competitive advantage. . . .

In addition, SCO is working with The Open Group, a major international standards group, to support the implementation of standard application programming interfaces (APIs) that will support applications compatibility across different versions of UNIX systems. To date, SCO and other major UNIX vendors have adopted varying schedules for compliance with these API specifications, and there can be no assurance this effort will be successful. . . .

PROPRIETARY RIGHTS

The Company attempts to protect its software with a combination of copyright, trademark, and trade secret laws, employee and third-party nondisclosure agreements, license agreements, and other methods of protection. Despite these precautions, it may be possible for unauthorized third parties to copy certain portions of the Company's products or reverse engineer or obtain and use information the Company regards as proprietary. While the Company's competitive position may be affected by its ability to protect its intellectual property rights, the Company believes that trademark and copyright protections are less significant to the Company's success than other factors, such as the knowledge, ability, and experience of the Company's personnel, name recognition, and ongoing product development and support.

The Company's software products are generally licensed to end users on a "right-to-use" basis pursuant to a perpetual license. The Company licenses its products to end users primarily under "shrink-wrap" license (i.e., licenses included as part of the product packaging). Shrink-wrap licenses, which are not negotiated with or signed by individual end-user licensees, are intended to take effect upon opening of the product package. Certain provisions of such licenses, including provisions protecting against unauthorized use, copying, transfer, and disclosure of the licensed product, may be unenforceable under the laws of certain jurisdictions. In addition, the laws of some foreign countries do not protect the Company's intellectual property rights to the same extent as do the laws of the U.S. . . .

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid - . . .

Purchase of UNIX assets with common stock -- 43,773 . . .

NOTE 14 - ACQUISITIONS

UNIX ASSETS

In December 1995, the Company acquired from Novell certain assets related to UnixWare including the core intellectual property. The consideration consisted of 6,127,500 newly issued shares of non-registered common stock. Additionally, cash payments to Novell with a present value of $84 million will be paid periodically by SCO provided certain unit volumes of UNIX distribution are achieved. To date, distribution unit volume of UNIX has not reached levels which have required the Company to make cash payments to Novell. Such payments terminate at the end of calendar year 2002.

Here are the press releases that spell the point out about the two parts to the deal even more clearly. None of this should be news to newSCO's R. Duff Thompson, since he was on the Board of Directors of Santa Cruz Operation, oldSCO. Of course, newSCO tells it that he was on the Board of Tarantella. The nice thing about SEC filings, though, is they never disappear and history never gets smoothly rewritten.

***************************

EXHIBIT 99.1

PRESS RELEASE DATED 10/26/98

PRESS CONTACT:
Monika Laud, SCO
[contact info]

SCO AND IBM FORM BROAD STRATEGIC ALLIANCE

SCO'S UNIXWARE 7 BECOMES KEY MEMBER OF IBM'S NEW UNIX PRODUCT LINE; ISVS AND CUSTOMERS TO BENEFIT FROM SINGLE INDUSTRY-STANDARD UNIX PLATFORM THAT SPANS ENTIRE ENTERPRISE ENVIRONMENT

SANTA CRUZ, CA (OCTOBER 26, 1998) - SCO (NASDAQ:SCOC) today announced that it has entered into a strategic business agreement with IBM (NYSE:IBM). SCO and IBM, in collaboration with Intel and other key partners, will aggressively accelerate worldwide growth of Intel processor-based UNIX servers for the enterprise, and will deliver a single UNIX product line for today's Intel IA-32 systems and future IA-64 systems. The result will be a single product line that will run on IA-32, IA-64 and IBM microprocessor systems that range from entry- level servers to large enterprise environments.

Under the new agreement, IBM will make SCO's UnixWare 7 its 32-bit UNIX operating system for the high-volume Intel-architecture enterprise market. IBM will apply substantial resources to promote and sell the UnixWare 7 operating system worldwide, and will offer it as a member of its new UNIX product line.

In addition, IBM will contribute AIX technology to SCO's UnixWare to enhance its scalability and enterprise capability. This will complement the data-center engineering collaboration by SCO's OEM partners (Compaq, Data General, ICL and Unisys) to integrate extensive data-center capabilities into the UnixWare platform. IBM is also allocating engineering resources to ensure the availability of IBM and AIX middleware on the UnixWare platform.

Over time, SCO and IBM will increase compatibility between UnixWare and AIX, providing ISVs a single platform to port to for UNIX systems on Intel and Power processors, while giving enterprise users greater choice and opportunity in utilizing key applications.

Furthermore, SCO and IBM's 64-bit development teams are collaborating to develop a 64-bit UNIX operating system. The companies are working closely with ISVs to make it the industry-standard UNIX system on IA-64. SCO will handle general channel distribution for the jointly developed product.

"We are extremely pleased that IBM is making this strong commitment to SCO, and has taken action to immediately begin selling and supporting UnixWare 7 through its worldwide sales force," said Doug Michels, president and CEO, SCO. "And since applications are the key to the success of both a platform and its users, SCO is especially excited to be working with IBM and Intel to make it easy and attractive for ISVs to create software for a single target UNIX System environment that covers the entire range of enterprise computing."

"IBM's AIX enterprise technology when combined with UnixWare's technology and SCO's market share leadership will create the high-volume platform for Intel- based servers," said Dr. John E. Kelly III, vice president of Server Development at IBM. "With Intel's support, this platform will become the leading UNIX operating system for Intel-architecture based servers."

IBM joins other leading OEMs committed to selling UnixWare 7 into enterprise environments of all kinds. IBM will apply significant sales and marketing resources to drive UnixWare 7 volume in the enterprise.

In addition, IBM and Intel will drive a substantial ISV recruitment program designed not only to increase the number of applications available for UnixWare 7, but to also make UnixWare 7 a top tier port with all key ISVs. IBM will begin immediately by moving a broad range of IBM and AIX middleware to UnixWare 7.

"Intel strongly supports this product line as the leading UNIX for IA-32 and IA- 64," said John Miner, corporate vice president and general manager, Enterprise Servers Group, Intel Corporation. "Intel is working with IBM and SCO to make this the first UNIX port and volume leader with all ISVs."

Visit http://www.sco.com/monterey and http://www.ibm.com/servers/monterey for more information on today's announcement.

ABOUT SCO

SCO is the world's number one provider of UNIX server operating systems, and the leading provider of network computing software that enables clients of all kinds - - including PCs, graphical terminals, and NCs - to have Webtop access to business-critical applications running on servers of all kinds. SCO designed Tarantella software, the world's first application broker for network computing. SCO sells and supports its products through a worldwide network of distributors, resellers, systems integrators, and OEMs. For more information, see SCO's WWW home page.

SCO, The Santa Cruz Operation, the SCO logo, SCO OpenServer, Tarantella, the Tarantella logo, and UnixWare are trademarks or registered trademarks of The Santa Cruz Operation, Inc. in the US and other countries. UNIX is a registered trademark of The Open Group in the US and other countries. Java, Java Studio, Java Workshop, Sun, and Sun Microsystems are trademarks or registered trademarks of Sun Microsystems, Inc. in the US and other countries, and are used under license. All other brand and product names are or may be trademarks of, and are used to identify products or services of, their respective owners.

EXHIBIT99.2

PRESS RELEASE DATED 10/26/98

IBM LAUNCHES MAJOR UNIX INITIATIVE

Significant support from SCO, Sequent, Intel and OEMs

SOMERS, N.Y., October 26, 1998 . . . IBM today announced a major UNIX operating system initiative with a number of industry partners. This initiative will create a high-volume platform that will expand business opportunities for ISVs and OEMs.

As part of this initiative, a UNIX operating system will be developed for Intel's IA-64 using IBM's AIX operating system's enterprise capabilities complemented with technology from SCO's UnixWare and Sequent's PTX operating system. IBM will also transfer AIX technology to SCO's UnixWare and promote the offering in the UNIX on IA-32 market. The result will be a single UNIX operating system product line that runs on IA-32, IA-64 and IBM microprocessors, in computers that range from entry-level to large enterprise servers.

IBM will make significant investments to make this the leading UNIX operating system. IBM's investments will be directed at: porting IBM's middleware portfolio; operating system development to exploit Intel IA-32 and IA-64 and IBM's Power architecture; and investments in technical and marketing support for ISVs.

Intel is providing substantive technical and marketing support to make this operating system the leading UNIX for Intel platforms. IBM and Intel are creating a multi-million dollar ISV fund for this UNIX. This will help software companies deliver middleware tools and application programs for this UNIX environment.

In support of this initiative, IBM has forged alliances with SCO and Sequent, and has gained support from leading OEMs and ISVs.

SCO, the market share volume leader of UNIX operating systems, and IBM will collaborate to accelerate enhancements to SCO's UnixWare product for IA-32. Also, SCO and IBM will work together to co-develop and market this UNIX for the IA-64 based market.

Sequent, the leading provider of high-end, Intel-based UNIX systems, will be a co-developer, contributing its cc:NUMA technology and Intel architecture expertise.

"The combination of IBM's enterprise expertise and software, SCO's shrink-wrap UNIX expertise and channels, Sequent's system expertise on IA, and the price- performance benefits of Intel architecture will make this a high-volume UNIX leader," said John Miner, vice president and general manager of Intel's enterprise server group. "Intel strongly supports this software initiative, and will work with IBM and SCO to make this the first UNIX port for all computer manufacturers and software developers."

"We're extending into broader markets with our award-winning AIX software that delivers the reliability and security required of an enterprise-class operating system," said Bob Stephenson, senior vice president, IBM Server Group. "Working with these companies, we're capitalizing on the base of proven leadership technologies to deliver the world's best UNIX on Power microprocessor and high- volume Intel microprocessor systems."

"SCO is delighted to be at the heart of this major announcement," said Doug Michels, SCO's CEO. "It's a great opportunity to take SCO's products to a new range of enterprise customers. Customers can now deploy major applications on both 32-bit and 64-bit technology, with the volume economics of a reliable, scaleable UNIX-on-Intel. We see this collaboration with IBM -- the company that invented enterprise computing -- and Intel, as a major benefit for our customers, OEM partners, and ISVs."

"Sequent is committed to delivering our customers the industry's leading UNIX for IA-64 with the introduction of Merced-based systems. The AIX partnership provides the clear choice, combining proven technology, tremendous resources and unprecedented industry support," said Casey Powell, chairman and CEO of Sequent.

A number of computer systems manufacturers announced their plans to use the new UNIX software. They include Acer, CETIA (a subsidiary of Thomson-CSF), Groupe Bull, ICL, Motorola Computer Group, and Unisys Computer Systems.

Leading software companies announced their support for the new UNIX software. They include BEA Systems, BMC Software, Data Pro Accounting Software, Informix, Infospace, Micro Focus, Netscape, Novell, Pick Systems, PeopleSoft, Progress Software, Real World, Risk Management Technology, Software AG, SAS Institute and TakeFive.

IBM also announced it will deliver its software products, such as the DB2 database program, on the SCO UnixWare software.

UNIX is a trademark of The Open Group

All other trademarks are the property of their respective companies.

¹"Net revenues for the three months ended March 31, 1998 were $50.5 million as compared to $54.1 million for the same period in fiscal year 1997. For the six months ended March 31, 1998, net revenues decreased 11% to $98.0 million from $110.7 million in the six months ended March 31, 1997."
² "The Company reported net losses of $14.7 million, $15.2 million and $22.4 million in fiscal 1998, 1997 and 1996, respectively."
³"Net revenues for the three months ended June 30, 1999 increased 126% to $57.1 million from $25.2 million in the same period in fiscal 1998. For the nine months ended June 30, 1999, net revenues increased 34% to $165.5 million from $123.3 million for the nine months ended June 30, 1998."
⁴"The Professional Services division of SCO offers a series of Linux-related services to help enterprise customers evaluate and manage the cost, benefits and risk of Open Source technologies. These new services are part of SCO's ongoing strategy to fully support the increasingly popular network computing model, which favors heterogeneous client devices and application environments from multiple vendors."