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VNU Net: SGI turns in sharper Q3 losses

Apr 22, 2000, 15:27 (0 Talkback[s])
(Other stories by John Geralds)

By John Geralds, VNU Net

Silicon Graphics (SGI) has reported worse than expected losses for its fiscal third quarter results, blaming the delayed introduction of new processors.

For the period ended 31 March, revenue slid nine per cent to $564m. Net loss was $18.1m or 10 cents a share, compared with a loss of $40m or 21 cents per share a year ago. Analysts polled by First Call had expected a loss of seven cents per share.

Bob Bishop, chairman and chief executive officer, said revenue for the quarter was disappointing, and claimed it was "largely attributable to the delayed introduction of the R12000 400MHz processors and the expectations of new products."

He told analysts in a conference call that SGI would have preferred more bookings and revenue, but "we took big steps to be a leaner and more focused company."

During the period the company reduced operating expenses by 17 per cent from last year, to $255m before restructuring costs. SGI also expects to gain an extra $15m from the $58m sale of its Cray supercomputer unit to Tera Computer. "We are on the way to successful execution," Bishop said.

SGI, well known for its work in visualisation and graphics, has suffered several quarters of unprofitability and is in the middle of a year long restructuring programme.

But the company promised it will begin introducing new products in the next few months that will help "fuel long-term growth and profitability." Among the products include a third generation ccNUMA architecture, new graphics subsystems for Onyx2 and Octane products, speed upgrades throughout the MIPS product line and an IA32 desktop-server product running Linux.

Bishop said SGI's primary goal is revenue growth and "we remain optimistic about the future."

But analysts believe that SGI is in a difficult position because of its delayed products and competitors, including Hewlett Packard, IBM and Sun Microsystems, are eager to steal away its business.

Sarang Ghatpande, an analyst with DH Brown Associates, said SGI is having a harder time convincing software writers to stay with the company.

Ghatpande said: "They're not sure SGI will stay in the business for the long run."

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