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SGI restructures after losses

SGI restructures after losses

Silicon Graphics (SGI) is spilling red ink, changing the guard in its executive suite, and laying off as many as 1000 workers, but the fate of the graphics innovator hinges on stopping the flow of business to Intel-based Windows NT boxes.

"SGI is being pushed into a very high-end niche that gets smaller and smaller over time," said Dave Jones, a financial analyst at California Technology Stock Letter.

The word among experts is that SGI should follow Intergraph and Data General and drop its proprietary architecture entirely in favour of Wintel systems. Such a move would leave Sun Microsystems as the lone holdout from Intel hardware in the high-end workstation market.

SGI has announced the departure of chairman and CEO Ed McCracken, a 13-year veteran of the company, and plans to cut 700 to 1000 jobs from its worldwide workforce.

The measures will cost $US50 million for restructuring.

SGI also has a plan to adjust its business model to the burgeoning NT market, said spokesperson John Thompson. It will begin by delivering Intel-based workstations that run Windows NT next year.

Unit growth

"The Unix market is growing a little, while the engineering and technical workstation growth areas are in NT," Thompson said.

"There is a need to be in both Unix and NT."

Additionally, SGI will focus sales and marketing efforts more on the commercial arena, targeting large enterprises that move large amounts of data across servers, according to Thompson.


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