It's my opinion that SCO is doing everything wrong. In addition to the horrific, self-inflicted damage to its reputation, the licensing-lawsuit strategy is delivering a one-two punch to SCO's bottom line. Efforts to license Linux cost SCO $3.4 million in the first quarter. That's right, one-third of total revenue was wiped out. The payback? Twenty thousand dollars. That's not a typo. I know guys who make that much mowing lawns for a summer. Moreover, the balance sheet already currently lists $8 million in liabilities to legal firms. That number is likely to increase with the company's new lawsuit against AutoZone (NYSE: AZO).

With declining revenues, increasing losses, and an expensive and damaging litigation policy, SCO looks like one of the best short candidates I've seen in a while.