The Lindon-based software company, best known for its ongoing federal lawsuit against IBM over the purported release of SCO's Unix code into the freely distributed Linux operating system, recorded $7.42 million in revenue and a net loss of $3.58 million, or 17 cents per share.

For third quarter 2005, SCO registered $9.35 million in revenue and $2.37 million and 13 cents in losses.

SCO, which is seeking $5 billion in damages from IBM, reported spending $2.3 million in legal expenses for the quarter ending July 31, compared with $3 million for the same period last year.

President and CEO Darl McBride blamed stiff competition in the operating systems arena for his company's mounting losses but insisted SCO's Unix products line is getting some traction in the marketplace.

The company also is optimistic about prospects for its relatively new Me Inc. mobile services products, he said.

SCO stock closed Wednesday at $2.24 per share, down a penny.

- Bob Mims