SGI buys assets of CEO's former employer

Deal with Linux Networx gives Silicon Graphics added high-performance cluster technology.

Silicon Graphics has rebounded enough from its financial woes to expand through acquisition, announcing last week that it has acquired the assets of high-performance cluster maker Linux Networx.

And SGI CEO Robert "Bo" Ewald certainly knew what he was buying. Prior to taking the top job at SGI last April, Ewald was chairman and CEO of Linux Networx.

SGI said it acquired software, patents and other technology from Linux Networx in a stock-swap deal that closed today and is aimed at further advancing SGI's high-performance computing offerings. The purchase price wasn't disclosed.

"Linux Networx has a lot of expertise in clustering software, and that is going to be helpful to SGI," said Steve Conway, an analyst at IDC.

Joan Roy, senior director of marketing at SGI, said the company is acquiring the "substantial" assets of Linux Networx. Roy described that vendor as a pioneer in its implementation of high-performance clusters.

"They have intellectual property that is very interesting to us," she said. For instance, she cited systems management software that will fit in with SGI's existing product line.

Roy said SGI also is making employment offers to some of the employees at Linux Networx. According to SGI's press release, the company is looking to add personnel in areas such as software design, system optimization, application performance tuning and cluster management.

SGI emerged from Chapter 11 bankruptcy protection in 2006 after implementing a financial restructuring plan. As part of that, the company put a greater emphasis on x86-based systems and clusters.

For the quarter that ended in December, SGI reported revenue of US$90.1 million and an operating loss of US$30.8 million. But on the plus side, the company said that it booked US$100 million worth of business in the quarter, a 30 per cent gain from the previous three-month period.

In addition to the acquisition of the Linux Networx assets, SGI today announced that Oak Investments Partners and Lehman Brothers have made investments in the company. It didn't disclose the amount of the money being put in by the two firms.