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                                                  Filed by Caldera Systems, Inc.
                           Pursuant to Rule 425 under the Securities Act of 1933
                                 and deemed filed pursuant to Rule 14a-12 of the
                                                 Securities Exchange Act of 1934

                                          Subject Company: Caldera Systems, Inc.
                                                    Commission File No. 000-2991


August 2, 2000


Dear SCO and Caldera Systems Employees,

This morning the attached press release was given to the media announcing the
upcoming acquisition of the SCO Server Software and Professional Services
Divisions by Caldera Systems, Inc. Together we are forming a new company,
Caldera, Inc., that combines selected technologies from the leading vendors of
UNIX operating systems and Linux for Business.

By way of background, Caldera Systems is a leading provider of Linux for
Business and is headquartered in Orem, Utah, with major locations worldwide.
Caldera was founded in 1994 by President and CEO, Ransom Love. Caldera Systems
completed a successful IPO on March 17, 2000, which raised $74.9 million and has
been focused on the development, deployment and management of Linux-based
specialized servers and Internet access devices from its inception.

The Santa Cruz Operation, Inc. (SCO) is the world's leading provider of the UNIX
operating system. More than 15,000 resellers, distributors, systems integrators
and computer manufacturers around the world sell and distribute SCO products.
SCO has sales representation in more than 80 countries, with company
headquarters in Santa Cruz, California. SCO was founded in 1979 and went public
in 1993.

This acquisition is an industry-changing event. There are major upsides for both
companies and the industry overall, plus new opportunities for the employees of
each firm. In that spirit, we are eager to help you understand the motivation
leading to this action.

Though geographically diverse, the new Caldera will be a unified company in
every way. It will function as one unit. Caldera will convey an "us" mentality
and discourage efforts that cling to "theirs" and "ours" thinking. Integration
and the discovery of best practices will serve to solidify the relationships
that must exist to propel Caldera forward.

CUSTOMER AND STOCKHOLDER BENEFITS

One of the greatest benefits customers will now enjoy is a full product
spectrum, combined Linux/UNIX expertise and channel strength which no other
company has today, coupled with strong Professional Services and Support
organizations. The combination of Linux, the wave of the future, with Unix's
history of providing literally thousands of serious, fully developed business
applications, gives Caldera customers a trusted path to the future. These
applications are interchangeable on either platform, providing customers with a
banquet of alternatives. UNIX is also well established as an enterprise platform
- -- a system that allows service to either a centrally located or broadly
disbursed customer base. The Linux/UNIX combination provides a full-range
migration path from the desktop to the enterprise.

Customers report that the greatest impediment to Linux adoption is the lack of
technical support and relatively few trained professionals.

Through the formation of Caldera, those customers will be well served by our
combined synergies and capacity to provide comprehensive Professional Services,
Education and Support


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to assist them in solving and supporting their Internet and eBusiness problems.
To that end, we are embarking on an extensive education program with investors
to ensure their understanding of the business plan and philosophy that will then
be reflected in the stock price of an industry leader.

The board of directors of each company has already approved the acquisition.
Shareholders and governmental regulatory authorities must also agree in order
for it to be finalized. We anticipate final approval from all parties by
October, 2000.

EMPLOYEES

While we've attempted to address questions about the players, management,
industry and the market, you've been thinking, "How will this affect me?" "What
will happen to me?" "What's in it for me?" Please know that we are vitally
concerned about employees and retaining the high level of quality staff in both
companies. While we don't yet know what duplications exist between the groups or
what position needs will eventually be determined, we promise that employees
will be treated with respect and thoughtfulness whatever the outcome. For those
who will be leaving either organization, there will be outplacement services and
severance accommodations.

For the Tarantella Division, there are exciting times ahead. The acquisition
ensures that the division will have the cash flow required to establish
Tarantella as a major force in the industry. In addition, Tarantella will
continue to work with Chase H&Q to pursue its best financing options moving
forward. As a major OEM, reseller, and professional services partner for
Tarantella, Caldera Inc. will be an important contributor to the success of
Tarantella. The general and administrative resources of SCO will be
appropriately allocated to provide adequate coverage for all divisions going
forward.

For those of you wondering about your salary, your benefits and your job, please
be assured that the respective HR departments will convey information as soon as
it is available. As part of the integration of all Caldera Systems' and SCO
Server Software and Professional Services employees into Caldera, Inc., we have
formed an Integration Team that will be providing weekly updates.

For the great majority of employees who will remain with SCO or be a part of the
new Caldera, there will be hard work ahead and the opportunity for personal and
professional growth.Will there be challenges? Count on them. Will it be worth
it? Yes.

Welcome to the challenge!

Sincerely,

Ransom Love, President and CEO
Caldera Systems, Inc.

Doug Michels, President and CEO
The Santa Cruz Operation, Inc.


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ADDITIONAL INFORMATION AND WHERE TO FIND IT

Caldera expects to file a Registration Statement on SEC Form S-4 and Caldera and
SCO expect to mail a Joint Proxy Statement/Prospectus to stockholders of Caldera
and SCO containing information about the Acquisition. Investors and security
holders are urged to read the Registration Statement and the Joint Proxy
Statement/Prospectus carefully when they are available. The Registration
Statement and the Joint Proxy Statement/Prospectus will contain important
information about Caldera, SCO, the Acquisition, the persons soliciting proxies
relating to the Acquisition, their interests in the Acquisition, and related
matters. Investors and security holders will be able to obtain free copies of
these documents through the website maintained by the SEC at http://www.sec.gov.
Free copies of the Joint Proxy Statement/Prospectus and these other documents
may also be obtained from Caldera by directing a request through the Investors
Relations portion of Caldera's website at http://www.caldera.com or by mail to
Caldera Systems, Inc., 240 West Center Street, Orem, Utah 84057, attention:
Investor Relations, telephone (801) 765-4999, or from SCO by directing a request
through the Investors Relations portion of SCO's Web sit at HTTP://WWW.SCO.COM
or by mail to The Santa Cruz Operation, Inc., 425 Encinal Street, Santa Cruz,
California 95061, attention: Investor Relations, telephone (831) 427-7399.

In addition to the Registration Statement and the Joint Proxy
Statement/Prospectus, Caldera and SCO file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information filed by Caldera or SCO at the
SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or
at any of the SEC's other public reference rooms in New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Caldera's and SCO's filings with the SEC are also
available to the public from commercial document-retrieval services and at the
Web site maintained by the SEC at http://www.sec.gov.

Caldera, its directors, executive officers and certain other members of
management and employees may be soliciting proxies form Caldera stockholders in
favor of the issuance of common stock in the Acquisition. Information concerning
the participants in the solicitation is set forth in a Current Report on Form
8-K filed by Caldera on August 2, 2000.