<PAGE>
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ________________

                                    FORM 10-Q


     X     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15  (D)
     -
                     OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000


          TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15  (D)
                     OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

         FOR THE TRANSITION PERIOD FROM _____________ TO _______________

                      ____________________________________

                         COMMISSION FILE NUMBER 0-21484

                              THE SANTA CRUZ OPERATION, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN THIS CHARTER)


          CALIFORNIA                              94-2549086
 (State  or  other jurisdiction of               (I.R.S. Employer
   incorporation  or  organization)              Identification  No.)


          400  ENCINAL  STREET,  SANTA  CRUZ,  CALIFORNIA    95060
       (Address  of principal executive office)               (Zip Code)


        Registrant's telephone number, including area code (831) 425-7222



Indicate  by  check  mark whether the registrant (1) has filed all reports to be
filed  by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to  file such reports), and (2) has been subject to such filing requirements for
the  past  90  days.
Yes      X        No
        --


   The number of shares outstanding of the registrant's common stock as of March
                            31, 2000 was 35,811,143.

================================================================================




<PAGE>



                         THE SANTA CRUZ OPERATION, INC.

                                    FORM 10-Q

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                TABLE OF CONTENTS

PART  I.  FINANCIAL  INFORMATION
<TABLE>
<CAPTION>
     ITEM  1.     FINANCIAL  STATEMENTS                                       PAGE
                                                                              ----
<S>                                                                            <C>
  A)  CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999 . . . . . . .1

  B)  CONSOLIDATED BALANCE SHEETS
        AS OF MARCH 31, 2000 AND SEPTEMBER 30, 1999  . . . . . . . . . . . . . .2

  C)  CONSOLIDATED STATEMENTS OF CASH FLOWS
        FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999  . . . . . . . . . . . 3

  D)  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 4

  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
       RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .7

  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . 11

PART II.  OTHER INFORMATION

  ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . .12

  ITEM 6.    EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

</TABLE>



<PAGE>

Part I.  Financial Information
Item I.  Financial Statements


THE  SANTA  CRUZ  OPERATION,  INC.

CONSOLIDATED  STATEMENTS  OF  OPERATIONS
(In  thousands,  except  earnings  per  share)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                              THREE MONTHS ENDED      SIX MONTHS ENDED
                                                                 MARCH 31,                  MARCH 31,
                                                            --------------------  --------------------
                                                               2000      1999        2000       1999
     (UNAUDITED)          (UNAUDITED)
------------------------------------------------------------------------------------------------------
<S>                                                         <C>        <C>        <C>        <C>
NET REVENUES                                                $ 35,542   $ 55,738   $ 89,195   $108,444
COST OF REVENUES                                              10,257     12,744     22,089     24,824
------------------------------------------------------------------------------------------------------
    GROSS MARGIN                                              25,285     42,994     67,106     83,620
------------------------------------------------------------------------------------------------------
OPERATING EXPENSES:
  Research and development                                    11,632     10,678     22,210     20,858
  Sales and marketing                                         23,723     23,993     49,022     47,325
  General and administrative                                   4,672      4,688      8,508      8,484
  Restructuring charges                                        5,887          -      5,887          -
------------------------------------------------------------------------------------------------------
    Total operating expenses                                  45,914     39,359     85,627     76,667
------------------------------------------------------------------------------------------------------
    OPERATING INCOME (LOSS)                                  (20,629)     3,635    (18,521)     6,953
OTHER INCOME (EXPENSE):
  Interest income, net                                           592        498      1,192      1,074
  Other income (expense), net                                    908        446      1,745        436
------------------------------------------------------------------------------------------------------
    Income (loss) before income taxes                        (19,129)     4,579    (15,584)     8,463
  Income taxes                                                   680        735      1,350      1,515
------------------------------------------------------------------------------------------------------
    NET INCOME (LOSS)                                        (19,809)     3,844    (16,934)     6,948
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
  Unrealized gain (loss) on available-for-sale
    equity securities                                        (34,198)         -     21,665          -
  Foreign currency translation adjustment                        (79)      (597)       (78)      (853)
------------------------------------------------------------------------------------------------------
    COMPREHENSIVE INCOME (LOSS)                             $(54,086)  $  3,247   $  4,653   $  6,095
------------------------------------------------------------------------------------------------------
    EARNINGS (LOSS) PER SHARE:
         Basic                                              $  (0.56)  $   0.11   $  (0.48)  $   0.20
         Diluted                                            $  (0.56)  $   0.11   $  (0.48)  $   0.20
------------------------------------------------------------------------------------------------------
    SHARES USED IN EARNINGS (LOSS) PER SHARE CALCULATION:
         Basic                                                35,596      34,339     35,154     34,550
         Diluted                                              35,596      35,394     35,154     35,294
------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
                                        1
<PAGE>

THE  SANTA  CRUZ  OPERATION,  INC.

<TABLE>
<CAPTION>
                                                                  MARCH 31,     SEPTEMBER 30,
CONSOLIDATED BALANCE SHEETS                                          2000           1999
(In thousands)                                                            (UNAUDITED)
----------------------------------------------------------------------------------------------
<S>                                                              <C>           <C>
  ASSETS
  Current assets:
    Cash and cash equivalents                                    $    20,295   $       33,683
    Short-term investments                                            28,042           29,161
    Receivables, net                                                  25,652           32,309
    Available-for-sale equity securities                              30,625                -
    Deferred tax assets                                                1,989            1,202
    Other current assets                                               5,874            6,310
----------------------------------------------------------------------------------------------
      Total current assets                                           112,477          102,665
----------------------------------------------------------------------------------------------
  Property and equipment, net                                         11,705           12,234
  Purchased software and technology licenses, net                      8,112           10,431
  Long-term deferred tax assets                                       12,365            6,623
  Other assets                                                         6,984            7,331
----------------------------------------------------------------------------------------------
        TOTAL ASSETS                                             $   151,643   $      139,284
----------------------------------------------------------------------------------------------
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
    Trade accounts payable                                       $     7,304   $        7,482
    Royalties payable                                                  4,431            7,217
    Income taxes payable                                               3,229            1,983
    Deferred income taxes                                             11,600                -
    Accrued expenses and other current liabilities                    30,779           32,314
    Deferred revenues                                                  9,905            8,856
----------------------------------------------------------------------------------------------
      Total current liabilities                                       67,248           57,852
----------------------------------------------------------------------------------------------
  Long-term lease obligations                                          1,227            2,332
  Long-term deferred revenues                                          1,546            2,571
  Other long-term liabilities                                          5,600            6,191
----------------------------------------------------------------------------------------------
      Total long-term liabilities                                      8,373           11,094
----------------------------------------------------------------------------------------------
  SHAREHOLDERS' EQUITY
    Common stock, no par value, net, authorized 100,000 shares
      Issued and outstanding 35,811 and 34,346 shares                107,232          106,201
    Accumulated other comprehensive income                            21,995              408
    Accumulated deficit                                              (53,205)         (36,271)
----------------------------------------------------------------------------------------------
      Total shareholders' equity                                      76,022           70,338
----------------------------------------------------------------------------------------------
        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY               $   151,643   $      139,284
----------------------------------------------------------------------------------------------
</TABLE>
             See accompanying notes to consolidated financial statements.
                                        2
<PAGE>

THE  SANTA  CRUZ  OPERATION,  INC.

CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
(In  thousands)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                                     SIX MONTHS ENDED
                                                                         MARCH 31,
------------------
2000         1999
   (UNAUDITED)
----------------------------------------------------------------------------------------
<S>                                                               <C>         <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                               $ (16,934)  $  6,948
  Adjustments to reconcile net income (loss) to net cash
       provided by  (used for) operating activities -
    Depreciation and amortization                                     6,124      6,392
    Exchange (gain) loss                                               (190)         8
    Non-cash restructuring charge                                     5,887         --
  Changes in operating assets and liabilities -
    Receivables                                                       6,628     (5,676)
    Other current assets                                                351      2,308
    Other assets                                                      1,328      1,335
    Royalties payable                                                (2,787)     2,012
    Trade accounts payable                                             (152)       364
    Income taxes payable                                              1,295        965
    Accrued expenses and other current liabilities                   (6,743)     2,413
    Deferred revenues                                                     9     (3,086)
----------------------------------------------------------------------------------------
        Net cash provided by (used for) operating activities         (5,184)    13,983
----------------------------------------------------------------------------------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                              (2,526)    (2,921)
    Purchases of software and technology licenses                      (433)    (1,875)
    Sales of short-term investments                                  11,725     18,173
    Purchases of short-term investments                             (10,606)   (15,673)
    Investments in other assets                                      (2,869)       (62)
----------------------------------------------------------------------------------------
        Net cash used for investing activities                       (4,709)    (2,358)
----------------------------------------------------------------------------------------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Payments on capital leases                                       (1,580)    (1,755)
    Net proceeds from sale of common stock                           11,331      1,320
    Repurchases of common stock                                     (12,786)    (6,335)
    Other long-term liabilities                                        (493)      (227)
----------------------------------------------------------------------------------------
        Net cash used for financing activities                       (3,528)    (6,997)
----------------------------------------------------------------------------------------
  Effects of exchange rate changes on cash and cash equivalents          33       (765)
----------------------------------------------------------------------------------------
  Change in cash and cash equivalents                               (13,388)     3,863
  Cash and cash equivalents at beginning of period                   33,683     23,758
----------------------------------------------------------------------------------------
  Cash and cash equivalents at end of period                      $  20,295   $ 27,621
----------------------------------------------------------------------------------------
  SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid-
    Income taxes                                                  $       5   $    668
    Interest                                                            135        249
      Non-cash financing and investing activities-
    Unrealized gain on available-for-sale equity securities       $  29,124   $     --
    Assets acquired under capital leases                                 20         --
---------------------------------------------------------------------------------------
</TABLE>
             See accompanying notes to consolidated financial statements.
                                        3
<PAGE>

THE  SANTA  CRUZ  OPERATION,  INC.

NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS


1.     BASIS  OF  PRESENTATION

In  the  opinion  of  management,  the  accompanying  unaudited,  consolidated
statements  of operations, balance sheets and statements of cash flows have been
prepared in accordance with generally accepted accounting principles and include
all  material  adjustments  (consisting  of  only  normal recurring adjustments)
necessary  for  their  fair  presentation.  The financial statements include the
accounts  of  the  Company  and its wholly owned subsidiaries after all material
intercompany  balances  and  transactions  have  been  eliminated.  The Notes to
Consolidated  Financial  Statements  contained in the fiscal year 1999 report on
Form10-K  should  be  read  in  conjunction  with  these  Consolidated Financial
Statements.  The  consolidated  interim  results  presented  are not necessarily
indicative of results to be expected for a full year.  Certain reclassifications
have  been  made  for  consistent  presentation.  The September 30, 1999 balance
sheet  was  derived  from  audited  financial  statements,  and  is included for
comparative  purposes.


2. RESTRUCTURING  CHARGE

During  the second quarter of fiscal 2000, the Company announced and completed a
restructuring  plan,  which  resulted in a one-time charge of $5.9 million.  The
charge  included  a  reduction  in  headcount  of  approximately  70  employees,
write-offs of certain acquired technologies, write-offs of certain fixed assets,
and  elimination of non-essential facilities.  Of the $5.9 million, $4.6 million
related  to cash expenditures and $1.3 million related to non-cash charges.  The
Company  has  determined  that  it will restructure its business operations into
three  independent divisions, each with a separate management team and dedicated
development,  marketing  and sales organizations - the Server Software Division,
the  Tarantella  Division  and  the Professional Services Division.  The Company
believes  this  reorganization creates independent focused teams that can pursue
revenue in their respective markets and is effective April 1, 2000.  The Company
believes  that  as a result of creating these independent, focused organizations
the  Company  will  be  better  able to control and measure the success of these
businesses.   The  restructuring  charge  related  to cash expenditures included
$3.6  million  for  severance  costs and $1.0 million for facilities costs.  The
majority  of  the  reduction  in force was in product development for the Server
Software  Division.  The  Company  anticipates that the majority of the payments
will  be  made  by  the  end  of  fiscal  2000.

The  restructuring  charge  payable  can  be  summarized  as  follows:

<TABLE>
<CAPTION>
                               Reduction
(In thousands)                  in Force   Facilities   Technology   Other   Total
-----------------------------  ----------  -----------  -----------  ------  ------
<S>                            <C>         <C>          <C>          <C>     <C>
Restructuring charge accrued   $    3,574  $     1,052  $       667  $  594  $5,887
                               ==========  ===========  ===========  ======  ======
</TABLE>

3.     SEGMENT  INFORMATION

For  the  quarter  ended March 31, 2000, the Company reviewed performance on the
basis  of  geographical segments.  The Company used analysis of segment revenues
and  gross margin in order to make preliminary decisions of resource allocation.
The  accounting  policies  used by each segment comply with the policies used in
the  consolidated  financial  statements.  Each segment  markets  the Company's
software  products  to  companies  in  a  number  of  industries  including
telecommunications,  manufacturing  and  government  bodies.  These products are
either  sold  directly  by  each  segment's sales force or are sold to end users
through  distributors  or  OEMs.  Revenue  is allocated to segments based on the
location from which the sale is satisfied.  Beginning April 1, 2000, the Company
will  review  performance  based  on  its  three divisions - the Server Software
Division,  the  Tarantella  Division  and  the  Professional  Services Division.

                                        4
<PAGE>
The following table presents information about reportable segments for the three
month  and  six  month  periods  ended  March  31, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>


      Three  Months  Ended   Six  Months  Ended
             March  31,            March  31,

                           2000      1999       2000     1999
                          -------  --------  --------  ---------
    (unaudited)
<S>                       <C>      <C>       <C>       <C>
Net Revenues:
  United States           $17,386  $24,347   $ 36,590  $ 46,565
  Canada/Latin America      1,373    3,211      4,126     6,372
  EMEIA                    14,339   23,336     40,101    45,683
  Asia Pacific              2,272    4,895      5,419     9,691
  Corporate Adjustments       172      (51)     2,959       133
                          -------  --------  --------  ---------
Total net revenues        $35,542  $55,738   $ 89,195  $108,444
                          =======  ========  ========  =========


Gross Margin:
  United States           $11,332  $19,136   $ 24,309  $ 35,761
  Canada/Latin America      1,008    1,071      3,002     3,224
  EMEIA                    10,889   18,718     32,371    36,628
  Asia Pacific              1,885    4,120      4,466     8,008
  Corporate Adjustments       171      (51)     2,958        (1)
                          -------  --------  --------  ---------
Total gross margin        $25,285  $42,994   $ 67,106  $ 83,620
                          =======  ========  ========  =========
</TABLE>

4.     EARNINGS  PER  SHARE  (EPS)  DISCLOSURES

The  Company  calculates earnings per share in accordance with the provisions of
Statement  of  Financial  Accounting  Standards No. 128 (SFAS 128), Earnings Per
Share.  SFAS  128  requires  the  presentation of basic and diluted earnings per
share.  Basic  EPS  is  computed  by  dividing  income  available  to  common
shareholders by the weighted average number of common shares outstanding for the
period.  Diluted  EPS is computed giving effect to all dilutive potential common
shares  that  were  outstanding  during  the  period.  Dilutive potential common
shares  consist  of  the incremental common shares issuable upon the exercise of
stock  options  for  all  periods.  Basic  and  diluted  earnings per share were
calculated  as  follows during the three month and six month periods ended March
31,  2000  and  1999:

<TABLE>
<CAPTION>
                                                     March 31,             March 31,
                                               2000          1999        2000       1999
                                              ----------  ----------  ---------  ----------
(unaudited)
<S>                                             <C>      <C>         <C>         <C>
Basic:
  Weighted average shares                        35,596       34,339    35,154    34,550
                                               =========  ==========  =========  ========
  Net income (loss)                            ($19,809)  $    3,844  ($16,934)   $6,948
                                               =========  ==========  =========  ========
  Earnings (loss) per share                      ($0.56)  $     0.11    ($0.48)    $0.20
                                               =========  ==========  =========  ========

Diluted:
  Weighted average shares                         35,596       34,339    35,154    34,550
  Common equivalent shares from
stock options and warrants                             0        1,055         0       744
                                                ---------  ----------  ---------  -------
Shares used in per share calculation              35,596       35,394    35,154    35,294
                                                =========  ==========  =========  =======
  Net income (loss)                             ($19,809)  $    3,844  ($16,934)  $ 6,948
                                                =========  ==========  =========  =======
  Earnings (loss) per share                       ($0.56)  $     0.11    ($0.48)  $  0.20
                                               ==========  ==========  =========  =======

Options outstanding at 3/31/00 and at 3/31/99
  not included in computation of diluted
  EPS because the exercise price was greater
  than the average market price.                    495         2,328       519     5,925

Options outstanding at 3/31/00 and at 3/31/99
  not included in computation of diluted
  EPS because their inclusion would have
  an anti-dilutive effect.                          10,462       ----    10,438      ----
</TABLE>
                                        5
<PAGE>

5.     COMPREHENSIVE  INCOME

The  components of other comprehensive income for the three and six months ended
March  31,  2000  and  1999  are  as  follows  (in  thousands):

<TABLE>
<CAPTION>
Three  Months  Ended     Six  Months  Ended
      March  31,             March  31,
2000          1999        2000       1999
----          ----        ----       ----
                                                           (unaudited)
<S>                                           <C>        <C>      <C>         <C>
Net income (loss)                             ($19,809)  $3,844    ($16,934   $6,948
Other comprehensive income (loss):
   Foreign currency translation adjustment         (79)    (597)        (78)    (853)
   Unrealized gain (loss) on equity security   (47,730)      --      29,124       --
   Gross tax benefit (provision) on             19,011       --     (11,600)      --
      unrealized loss/gain
   Reversal (provision) of deferred
      tax valuation allowance                   (5,479)      --       4,141       --
                                              ---------  -------  ----------  -------
Total comprehensive income (loss)             ($54,086)  $3,247   $   4,653   $6,095
                                              =========  =======  ==========  =======
</TABLE>

6.     RECENT  ACCOUNTING  PRONOUNCEMENTS

In  March  2000,  the  Financial  Accounting  Standards Board (FASB) issued FASB
Interpretation  No.  44,  Accounting  for  Certain  Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25.  This interpretation has
provisions  that  are  effective  on  staggered dates, some of which began after
December  15,  1998  and others that become effective after June 30, 2000.   The
adoption  of  this interpretation did not and will not have a material impact on
the  Company's  financial  statements.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  No.  101  (SAB 101), Revenue Recognition in Financial Statements.  SAB
101  provides  guidance  for  revenue  recognition  under certain circumstances.
Management  does not believe the adoption of SAB 101 will have a material impact
on  the  Company's  financial  statements.

In  December 1998, the Accounting Standards Executive Committee issued Statement
of  Position  98-9  (SOP  98-9),  Modification  of  SOP  97-2  Software  Revenue
Recognition.  SOP  98-9  amends  SOP  97-2  to  require that an entity recognize
revenue for multiple element arrangements by means of the "residual method" when
(1)  there  is vendor-specific objective evidence ("VSOE") of the fair values of
all  the  undelivered  elements that are not accounted for by means of long-term
contract  accounting,  (2)  VSOE of fair value does not exist for one or more of
the  delivered  elements,  and  (3) all revenue recognition criteria of SOP 97-2
(other  than  the  requirement  for  VSOE  of  the  fair value of each delivered
element)  are satisfied.  The provisions of SOP 98-9 that extend the deferral of
certain  paragraphs  of  SOP  97-2  became  effective  December 15, 1998.  These
paragraphs of SOP 97-2 and SOP 98-9 were effective for transactions entered into
for  fiscal  years  beginning after March 15, 1999.   Retroactive application is
prohibited.  The  adoption  of SOP 98-9 did not have a significant impact on the
Company's  financial  statements.

In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No.  133 (SFAS 133), Accounting for Derivative
Instruments  and  Hedging Activities, which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement  of financial position and measure those instruments at fair value. In
June  1999,  the FASB issued Statement of Financial Accounting Standards No. 137
(No.  137),  Accounting  for  Derivative Instruments - Deferral of the Effective
Date  of SFAS Statement No. 133.  SFAS 137 defers the effective date of SFAS 133
until  June  15,  2000.  Management  does  not believe this will have a material
effect on the Company's financial statements. The Company will adopt SFAS 133 as
required  for  its  first  quarterly  filing  of  fiscal  year  2001.



                                        6
<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

In  addition  to  historical  information  contained herein, this Discussion and
Analysis  contains  forward-looking  statements.  These statements involve risks
and  uncertainties  and  can  be  identified  by  the  use  of  forward-looking
terminology  such  as "estimates," "projects," "anticipates," "plans," "future,"
"may,"  "will,"  "should,"  "predicts,"  "potential,"  "continue,"  "expects,"
"intends,"  "believes,"  and  similar  expressions.  Examples of forward-looking
statements  include  those  relating to financial risk management activities and
the  adequacy  of  financial  resources  for  operations.  These  and  other
forward-looking  statements  are  only  estimates  and  predictions.  While  the
Company  believes  that  the  expectations  reflected  in  the  forward-looking
statements are reasonable, the Company's actual results could differ materially.
Readers  are  cautioned  not  to  place  undue reliance on these forward-looking
statements,  which reflect management's expectations only as of the date hereof.
The  Company  undertakes  no  obligation  to publicly release the results of any
revision  to  these  forward-looking  statements,  which  may be made to reflect
events  or  circumstances  after the date hereof or to reflect the occurrence of
unanticipated  events.

RESULTS  OF  OPERATIONS

NET  REVENUES
Net  revenues  for  the three months ended March 31, 2000 decreased 36% to $35.5
million  from  $55.7  million  in  the  same period in fiscal 1999.  For the six
months  ended  March  31, 2000, net revenues decreased 18% to $89.2 million from
$108.4  million for the six months ended March 31, 1999.  The decline in revenue
performance  was  worldwide  across  most  geographies  and  is  attributable to
continued  customer  delays  due  to  Year  2000  issues as well as other market
factors.  No  one  customer  accounted  for more than 10% of net revenues in the
second  quarter  ended  March  31, 2000 or in the same period in the prior year.

International  revenues continue to represent a significant portion of total net
revenues  comprising  51%  of the revenues for the second fiscal quarter of 2000
and  56%  for  the  same  quarter  in  fiscal  1999.

COSTS  AND  EXPENSES
Cost  of revenues as a percentage of net revenues increased to 29% in the second
quarter  of  fiscal 2000 from 23% in the same period of 1999.  For the six month
periods  ended March 31, 2000 and 1999, cost of revenues represented 25% and 23%
of  net  revenues, respectively.  A significant portion of cost of goods sold is
fixed  and the decrease in revenue seriously impacted gross margin.  These fixed
costs  include  technology  and  overhead  costs.

Research  and  development  expenses increased 9% to $11.6 million in the second
quarter  of  fiscal  2000 from $10.7 million in the comparable quarter of fiscal
1999,  or  33%  and 19% of net revenues, respectively.  For the six months ended
March  31, 2000, research and development expenses increased 6% to $22.2 million
compared  to $20.9 million for the same period in 1999.  This represented 25% of
net  revenues in fiscal 2000 and 19% in fiscal 1999.    The increase in spending
was  due  to  higher  labor  costs  as  well  as  one-time  technology  charges.

Sales and marketing expenses decreased 1% to $23.7 million in the second quarter
of  fiscal 2000 from $24.0 million for the comparable quarter of the prior year.
Sales  and  marketing  expenses  represented  67%  of net revenues in the second
quarter  of  fiscal  2000  and  43% in 1999.  For the six months ended March 31,
2000,  sales  and  marketing  expenses  increased  to  $49.0 million (55% of net
revenues)  from  $47.3  million (44% of net revenues) for the same period of the
prior fiscal year.   Increased expenses due to higher staffing levels was offset
by  reductions  in  sales program costs that vary directly with sales, including
commissions  and  cooperative  advertising.

General  and  administrative  expenses remained constant at $4.7 million for the
second quarter of fiscal 2000 and 1999, representing 13% and 8% of net revenues,
respectively.  For  the  six  months  ended  March  31,  2000,  general  and
administrative  expenses  held constant at $8.5 million, or 10% of net revenues,
compared  to  $8.5  million, or 8% of net revenues, for the same period in 1999.

Non-recurring  charges  of $5.9 million incurred in the second quarter of fiscal
2000  related to a worldwide restructuring, representing 17% of net revenues for
the  quarter  ending  March  31,  2000  and 7% of net revenues for the six month
period  ending  March 31, 2000.  The charge includes a reduction in headcount of
approximately  70  employees,  write-offs  of  certain  acquired  technologies,
write-offs of certain fixed assets, and elimination of non-essential facilities.
Of  the $5.9 million, $4.6 million related to cash expenditures and $1.3 million
related  to  non-cash  charges.  The  Company  has  determined  that  it  will
restructure  its business operations into three independent divisions, each with
                                        7
<PAGE>
a  separate  management  team  and  dedicated  development,  marketing and sales
organizations  -  the  Server Software Division, the Tarantella Division and the
Professional  Services  Division.  The  Company  believes  this  reorganization
creates  independent  focused  teams that can pursue revenue in their respective
markets  and  is effective April 1, 2000.  The Company believes that as a result
of  creating these independent, focused organizations the Company will be better
able to control and measure the success of these businesses.   The restructuring
charge  related  to  cash expenditures included $3.6 million for severance costs
and  $1.0  million for facilities costs.  The majority of the reduction in force
was  in  product  development  for  the  Server  Software Division.  The Company
anticipates  that the majority of the payments will be made by the end of fiscal
2000.

Other  income  consists  of net interest income, foreign exchange gain and loss,
and realized gain and loss on investments, as well as other miscellaneous income
and  expense  items.  For the second quarter of fiscal 2000, net interest income
was  $0.6 million, compared to $0.5 million for the same quarter of fiscal 1999.
For the six months ended March 31, 2000, net interest income was $1.2 million as
compared  to  $1.1  million  for the same period in 1999.  Other income was $0.9
million  in  the second quarter of fiscal 2000, compared to $0.4 million for the
same  period  of  fiscal  1999.  For  the six months ended March 31, 2000, other
income was $1.7 million as compared to $0.4 million for the same period in 1999.
The growth in other income was due to the gain on the sale of an equity security
investment.

The provision for income taxes was $0.7 million for the second quarter of fiscal
2000  compared to $0.7 million for the same period of the prior fiscal year, and
$1.4  million  for the six months ended March 31, 2000, compared to $1.5 million
for  the  corresponding  fiscal  1999 period.  The tax provisions for the second
quarter  and  six month period of the current fiscal year reflects foreign taxes
payable.  The  tax  provisions  for  the second quarter and six month periods of
fiscal  1999  reflects foreign taxes payable and the realization of certain U.S.
deferred  tax assets for which a valuation allowance was previously established.

Net loss for the second quarter of fiscal 2000 was $19.8 million compared to net
income of $3.8 million for the same quarter in fiscal 1999.   For the six months
ended  March 31, 2000, net loss was $16.9 million compared to net income of $6.9
million  in  the  same  period  in  1999.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

The  Company's  future  operating  results  may be affected by various uncertain
trends  and  factors  which  are  beyond  the  Company's control.  These include
adverse  changes  in general economic conditions and rapid or unexpected changes
in the technologies affecting the Company's products.  The process of developing
new  high  technology  products  is  complex and uncertain and requires accurate
anticipation  of  customer  needs  and  technological  trends.  The industry has
become increasingly competitive and, accordingly, the Company's results may also
be  adversely  affected  by  the  actions  of  existing  or  future competitors,
including the development of new technologies, the introduction of new products,
and  the reduction of prices by such competitors to gain or retain market share.
The  Company's  results  of  operations  could  be adversely affected if it were
required  to  lower  its  prices  significantly.

The  Company  participates in a highly dynamic industry and future results could
be  subject  to  significant volatility, particularly on a quarterly basis.  The
Company's  revenues  and  operating  results  may  be  unpredictable  due to the
Company's  shipment patterns. The Company operates with little backlog of orders
because  its products are generally shipped as orders are received.  In general,
a  substantial portion of the Company's revenues have been booked and shipped in
the  third  month  of the quarter, with a concentration of these revenues in the
latter  half  of  that third month.  In addition, the timing of closing of large
license  contracts and the release of new products and product upgrades increase
the  risk  of  quarter  to quarter fluctuations and the uncertainty of quarterly
operating  results.  The  Company's  staffing  and  operating expense levels are
based  on an operating plan and are relatively fixed throughout the quarter.  As
a result, if revenues are not realized in the quarter as expected, the Company's
expected  operating  results  and cash balances could be adversely affected, and
such  effect  could  be  substantial  and  could result in an operating loss and
depletion of the Company's cash balances.  In such event, it may not be possible
for  the  Company  to  secure  sources  of  cash  to  maintain  operations.

The Company experiences seasonality of revenues for both the European market and
the U.S. federal government market.  European revenues during the quarter ending
June 30 are historically lower or relatively flat compared to the prior quarter.
This  reflects  a  reduction  of  customer  purchases in anticipation of reduced
selling activity during the summer months.  Sales to the U.S. federal government
generally  increase  during  the  quarter  ending  September  30.  This seasonal
increase  is primarily attributable to increased purchasing activity by the U.S.
federal  government  prior  to  the close of its fiscal year.  Additionally, net
revenues  for  the  first  quarter  of  the  fiscal  year are typically lower or
relatively  flat  compared  to  net  revenues  of  the  prior  quarter.
                                        8
<PAGE>

The  overall  cost  of  revenues  may  be  affected by changes in the mix of net
revenue  contribution  between  licenses  and  services,  product  families,
geographical  regions and channels of distribution, as the costs associated with
these  revenues  may  have substantially different characteristics.  The Company
may  also  experience  a  change  in margin as net revenues increase or decrease
since  technology  costs,  service  costs  and production costs are fixed within
certain  volume  ranges.

The  Company's  results  of operations could be adversely affected if it were to
lower  its  prices  significantly.  In the event the Company reduced its prices,
the  Company's  standard  terms  for  selected  distributors  provide credit for
inventory  ordered  in the previous 180 days, such credits to be applied against
future  purchases.  The  Company,  as a matter of policy, does not allow product
returns  for  refund.  Product returns are generally allowed for stock balancing
and are accompanied by compensating and offsetting orders. Revenues are net of a
provision  for  estimated  future  stock  balancing  and excess quantities above
levels  the  Company believes are appropriate in its distribution channels.  The
Company  monitors  the  quantity  and  mix  of  its  product  sales.

The  Company depends on information received from external sources in evaluating
the  inventory  levels at distribution partners in the determination of reserves
for  the  return  of  materials  not  sold, stock rotation and price protection.
Significant  effort  has  gone  into  developing  systems  and  procedures  for
determining  the  appropriate  reserve  level.

Substantial  portions  of  the  Company's  revenues  are  derived  from sales to
customers  outside  the  United  States.  Trade sales to international customers
represented  51% and 56% of total revenues for the second quarter of fiscal 2000
and  1999, respectively.  A substantial portion of the international revenues of
the  Company's U.K. subsidiary are denominated in the U.S. dollar, and operating
results can vary with changes in the U.S. dollar exchange rate to the U.K. pound
sterling.  The  Company's  revenues  can  also  be  affected by general economic
conditions  in  the  United States, Europe and other international markets.  The
Company's  operating  strategy and pricing take into account changes in exchange
rates  over  time.  However,  the  Company's  results  of  operations  may  be
significantly  affected  in  the  short term by fluctuations in foreign currency
exchange  rates.

The  Company's  policy is to amortize purchased software and technology licenses
using the straight-line method over the remaining estimated economic life of the
product,  or  on  the  ratio  of  current  revenues  to  total projected product
revenues,  whichever is greater.  Due to competitive pressures, it is reasonably
possible  that  those  estimates  of  anticipated  future  gross  revenues,  the
remaining  estimated  economic  life  of  the  product, or both, will be reduced
significantly  in the near future.  As a result, the book value of the Company's
purchased software and technology licenses may be reduced materially in the near
future  and,  therefore,  could create an adverse impact on the Company's future
reported  earnings.

The  Company  continually  evaluates  potential  acquisition  candidates.  Such
candidates  are selected based on products or markets which are complementary to
those  of  the  Company's.  Acquisitions  involve  a  number  of  special risks,
including the successful combination of the companies in an efficient and timely
manner,  the  coordination  of  research  and development and sales efforts, the
retention  of  key  personnel,  the  integration  of  the acquired products, the
diversion  of  management's  attention  to  assimilation  of  the operations and
personnel  of the acquired companies, and the difficulty of presenting a unified
corporate  image.  The  Company's  operations  and  financial  results  could be
significantly  affected  by  such  an  acquisition.

The  Company is exposed to equity price risk regarding the marketable portion of
equity securities in its portfolio of investments entered into for the promotion
of business and strategic objectives.  The Company is exposed to fluctuations in
the  market  values  of  our  portfolio  investments.  The  Company  maintains
investment  portfolio  holdings of various issuers, types and maturities.  These
securities  are generally classified as available for sale and consequently, are
recorded  on  the  balance  sheet  at fair value with unrealized gains or losses
reported  as a separate component of accumulated other comprehensive income, net
of  tax.  Part of this portfolio includes minority equity investments in several
publicly  traded  companies,  the  values  of  which are subject to market price
volatility.  The  Company has also invested in several privately held companies,
many  of  which  can  still  be considered in the startup or development stages.
These  investments  are  inherently  risky as the market for the technologies or
products  they  have under development are typically in the early stages and may
never  materialize.  The  Company  could  lose  its entire initial investment in
these  companies.  The Company typically does not attempt to reduce or eliminate
its  market  exposure  pertaining  to  these  equity  securities.

As  the  Company  determines whether its tax carryforwards will more likely than
not  be  utilized  in  the  future,  or  as  new tax legislation is enacted, the
Company's  effective  tax  rate is subject to change. Substantial amounts of the
Company's  deferred  tax  assets  for which a valuation allowance was previously
established have been recorded in the first quarter of fiscal 2000 in connection
                                        9
<PAGE>
with the unrealized gain on the Company's investment in Rainmaker Systems.  As a
result,  these  deferred  tax  assets  are  no longer available to offset future
taxable  income  and  it  is  expected  that the Company's effective tax rate in
future  quarters will increase to levels that approach U.S. statutory tax rates.
In  the  event  that  the  Company does not show sufficient profitability in the
future,  the  Company  may be required to write off portions of the net deferred
tax  assets  previously  recognized  in  income  up to the entire amount of $7.8
million.

The  Company's  continued  success  depends  to  a  significant extent on senior
management  and  other key employees.  None of these individuals is subject to a
long-term  employment  contract or a non-competition agreement.  Competition for
qualified  people  in the software industry is intense.  The loss of one or more
key  employees  or  the  Company's  inability  to  attract  and retain other key
employees  could  have  a  material  adverse  effect  on  the  Company.

The  stock  market in general, and the market for shares of technology companies
in  particular,  have  experienced  extreme price fluctuations, which have often
been  unrelated  to  the  operating  performance  of the affected companies.  In
addition,  factors  such  as  new  product  introductions  by the Company or its
competitors  may  have a significant impact on the market price of the Company's
Common  Stock.  Furthermore,  quarter-to-quarter  fluctuations  in the Company's
results  of  operations  caused  by  changes  in  customer  demand  may  have  a
significant  impact  on  the  market  price  of  the  Company's  stock.  These
conditions,  as  well as factors which generally affect the market for stocks of
high  technology  companies,  could  cause  the  price of the Company's stock to
fluctuate  substantially  over  short  periods.

The Company is aware of the issues associated with the new European economic and
monetary  union  (the  "EMU").  One  of  the  changes  resulting from this union
required  EMU  member states to irrevocably fix their respective currencies to a
new  currency,  the  Euro,  on  January 1, 1999.  On that day, the Euro became a
functional  legal  currency  within these countries.  During the next two years,
business  in  the  EMU  member  states will be conducted in both the 25 existing
national  currencies,  such  as  the Franc or Deutsche Mark, and the Euro.  As a
result,  companies operating in or conducting business in EMU member states will
need  to  ensure  that their financial and other software systems are capable of
processing  transactions  and  properly handling these currencies, including the
Euro.  The  Company  has  done  a  preliminary  assessment of the impact the EMU
formation  will  have on both its internal systems and the products it sells and
has  commenced  appropriate  actions.  The Company has not yet determined all of
the  cost  related  to addressing this issue, and there can be no assurance that
this  issue  and  its related costs will not have a materially adverse affect on
the  Company's  business,  operating  results  and  financial  condition.

LIQUIDITY  AND  CAPITAL  RESOURCES

Cash,  cash  equivalents  and short-term investments were $48.3 million at March
31,  2000, representing 32% of total assets.  The six month decrease in cash and
short-term  investments  of  $14.5  million  was  primarily  attributable to the
decrease  in  revenue and a decrease in sales linearity, resulting in lower cash
collections.  The  Company's  operating activities used cash of $5.2 million for
the  first  six  months  of  fiscal  2000, compared to $14.0 million provided by
operating activities for fiscal 1999.  Cash used for investing activities during
the  six month period was $4.7 million in fiscal 2000 and $2.4 million in fiscal
1999.  In  both fiscal 2000 and 1999 cash was used to fund purchases of property
and  equipment,  common stock repurchases and short-term investments.  Cash used
for  financing  activities  was  $3.5 million for the first six months of fiscal
2000  compared  with  $7.0  million for the same period in fiscal 1999.  In both
fiscal  2000 and 1999, proceeds from the issuance of common stock were more than
offset  by  the  Company's  stock  repurchases  and  payments  on  capital lease
obligations.

At  March  31,  2000, the Company had available lines of credit of approximately
$15.9  million  under  which  the  Company  had  $0.4  million  in  outstanding
borrowings.  The  Company  believes  that  its  existing  cash  and  short-term
investments,  funds  generated  from  operations  and  available  borrowing
capabilities  will  be  sufficient to meet its operating requirements through at
least  the  end  of  the  fiscal  year.

The  Company's  second quarter ended March 31, 2000 Days Sales Outstanding (DSO)
was  65.0  days, an increase of 22.2 days from the first quarter of fiscal 2000.

The  Company is engaged in a systematic repurchase of the Company's Common Stock
for  the  funding  of its employee stock programs.  Additionally, the Company is
authorized  to buy back up to 6,000,000 additional shares under a non-systematic
repurchase program.  As of March 31, 2000, 3,104,050 shares had been repurchased
and  retired  under  this  non-systematic  program.
                                       10
<PAGE>

As of March 31, 2000, the Company had an equity investment in Rainmaker Systems,
Inc.  having  a  fair  market  value  of  $29.6 million and a cost basis of $1.3
million.  During  the  first  quarter  of  fiscal  2000, the Company recorded an
unrealized  gain related to its investment in Rainmaker Systems, which completed
its  initial public offering during that quarter.  The fair market value of this
investment  could  fluctuate  substantially  due  to  changing stock prices.  In
connection  with Rainmaker's initial public offering, the Company has agreed not
to  sell  or  otherwise  dispose  of  any  of  its  shares until May 15, 2000 in
compliance with securities laws.  This investment is available-for-sale, and the
Company  may choose to sell a portion of this investment position in the future.

RECENT  ACCOUNTING  PRONOUNCEMENTS

In  March  2000,  the  Financial  Accounting  Standards Board (FASB) issued FASB
Interpretation  No.  44,  Accounting  for  Certain  Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25.  This interpretation has
provisions  that  are  effective  on  staggered dates, some of which began after
December  15,  1998  and others that become effective after June 30, 2000.   The
adoption  of  this interpretation did not and will not have a material impact on
the  Company's  financial  statements.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin  No.  101  (SAB 101), Revenue Recognition in Financial Statements.  SAB
101  provides  guidance  for  revenue  recognition  under certain circumstances.
Management does not believe SAB 101 will have a material impact on the Company's
financial  statements.

In  December 1998, the Accounting Standards Executive Committee issued Statement
of  Position  98-9  (SOP  98-9),  Modification  of  SOP  97-2  Software  Revenue
Recognition.  SOP  98-9  amends  SOP  97-2  to  require that an entity recognize
revenue for multiple element arrangements by means of the "residual method" when
(1)  there  is vendor-specific objective evidence ("VSOE") of the fair values of
all  the  undelivered  elements that are not accounted for by means of long-term
contract  accounting,  (2)  VSOE of fair value does not exist for one or more of
the  delivered  elements,  and  (3) all revenue recognition criteria of SOP 97-2
(other  than  the  requirement  for  VSOE  of  the  fair value of each delivered
element)  are satisfied.  The provisions of SOP 98-9 that extend the deferral of
certain  paragraphs  of  SOP  97-2  became  effective  December 15, 1998.  These
paragraphs of SOP 97-2 and SOP 98-9 were effective for transactions entered into
for  fiscal  years  beginning after March 15, 1999.   Retroactive application is
prohibited.  The  adoption  of SOP 98-9 did not have a significant impact on the
Company's  financial  statements.

In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No.  133 (SFAS 133), Accounting for Derivative
Instruments  and  Hedging Activities, which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity  recognize  all  derivatives  as  either  assets  or  liabilities  in the
statement  of financial position and measure those instruments at fair value. In
June  1999,  the FASB issued Statement of Financial Accounting Standards No. 137
(No.  137),  Accounting  for  Derivative Instruments - Deferral of the Effective
Date  of SFAS Statement No. 133.  SFAS 137 defers the effective date of SFAS 133
until  June  15,  2000.  Management  does  not believe this will have a material
effect on the Company's financial statements. The Company will adopt SFAS 133 as
required  for  its  first  quarterly  filing  of  fiscal  year  2001.


ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  information  called  for  by  this  item  is  provided  under the paragraph
beginning  with  the  sentence  "The  Company  is  exposed  to equity price risk
regarding  the  marketable  portion  of  equity  securities  in its portfolio of
investments  entered  into  for  the  promotion  of  business  and  strategic
objectives,"  under  the  caption "Factors That May Affect Future Results" under
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of  Operations.





                                       11
<PAGE>


                           PART II. OTHER INFORMATION

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

The  Santa  Cruz  Operation,  Inc.  held  an  annual  meeting of shareholders on
February  22,  2000.  The following matters were approved by the shareholders by
the  votes  indicated:


<TABLE>
<CAPTION>

<S>                     <C>               <C>
MATTER                  NUMBER OF SHARES
----------------------  ----------------
                        FOR               WITHHELD
                        ----------------  ---------

ELECTION OF DIRECTORS:

Ninian Eadie                  25,959,996  5,441,833
Ronald Lachman                25,958,565  5,443,264
Robert M. McClure             25,956,921  5,444,908
Douglas L. Michels            25,956,751  5,445,078
Alok Mohan                    25,421,681  5,980,148
R. Duff Thompson              25,956,721  5,445,108
Gilbert Williamson            25,953,739  5,448,090
</TABLE>

<TABLE>
<CAPTION>
<S>                              <C>         <C>        <C>      <C>
OTHER MATTERS:                   FOR         AGAINST    ABSTAIN  NO VOTE
                                 ----------  ---------  -------  ----------

Amendment of the Company's       12,778,185  5,761,860   56,978  12,804,806
1994 Incentive Stock Option
Plan to increase the Plan share
reserve by 3,000,000 shares.

Amendment of the Company's       15,035,074  3,478,796   85,153  12,804,806
1993 Director Option Plan to
increase the Plan share reserve
 by 250,000 shares.

Amendment of the Company's       15,536,328  2,978,865   75,930  12,810,706
1993 Employee Stock Purchase
Plan to increase the Plan share
Reserve by 750,000 shares.

Ratification of                  31,331,615     42,576   27,638         -0-
PricewaterhouseCoopers, LLP
as independent certified public
accountants of the Company.
</TABLE>


ITEM  6.  EXHIBITS

(a)  Exhibits

27     Financial  Data  Schedule.


ITEMS  1,  2,  3  AND  5  ARE  NOT  APPLICABLE  AND  HAVE  BEEN  OMITTED.
                                       12
<PAGE>




                                   Signatures


Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.




                                   The  Santa  Cruz  Operation,  Inc.


     Date:  May  15, 2000                    By: /s/ Douglas L.  Michels
                                        ---------------------------------------
                                                      Douglas L. Michels
                                             President, Chief Executive Officer

  By: /s/ Jenny Twaddle
                                        ---------------------------------------
Jenny Twaddle
                                           Vice President, Corporate Controller
                                          and Acting  Chief  Financial  Officer




                                       13
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibits
<S>   <C>
 27    Financial Data Schedule.
</TABLE>