SGI may see better numbers soon
Hampered by transitions in workstations and servers, Silicon Graphics is expected to post a loss of 30 cents per share for its third-quarter results.
- Shankland covered the tech industry for more than 25 years and was a science writer for five years before that. He has deep expertise in microprocessors, digital photography, computer hardware and software, internet standards, web technology, and more.
Analysts earlier had expected the company to post a loss of 7 cents per share, according to a consensus compiled by First Call. But many analysts on Wall Street lowered their estimates when SGI warned on March 31 that losses would be deeper than expected.
However, the company's next quarter may bring better news.
Analysts project that SGI will earn 2 cents per share for the fourth quarter, which would be the company's first profitable quarter since 1997. However, the profit wouldn't be enough to meet the company's previous goal of a third and fourth quarter in the black.
SGI has gained some Hollywood fame by providing the technology to create computer graphics as seen in the movies Jurassic Park and, more recently, The Matrix. Yet SGI of late has been emphasizing more ordinary server products and higher-volume Intel chips.
Manufacturing problems with its new Visual Workstations--the first models in the company's computer line based on Microsoft Windows NT and Intel chips--have stung SGI. In addition to falling behind demand, the company experienced delays in rolling its new R12000 chip in its Origin server line.
Silicon Graphics has been working on incorporating Intel chips since Rick Belluzzo moved from Hewlett-Packard last year to become SGI's chief executive. But Intel's 64-bit chips have been delayed until 2000, and the company has extended its own chip lifetime into the middle of the next decade.
Another changing element is in the operating systems the company uses. While SGI has begun shipping Windows NT machines, the firm also will ship and support Linux machines this year. Linux is a Unix-like operating system that has been embraced by several major computer technology companies, including IBM, Compaq Computer, Dell, SAP, Oracle, and HP.
SGI said it will also release some technology from its own brand of Unix, called Irix, into the open-source community. The strategy is not to give away the company crown jewels, but rather to encourage the adoption of technology where SGI is strong.
The company also announced yesterday that it sold its Chippewa Falls, Wisconsin, integrated circuit operations to Minnesota-based Union Semiconductor Technology, based in Minnesota.
Financial terms of the deal were not disclosed, but USTC will take over four buildings totaling 140,000 square feet. All the SGI employees will be offered jobs at USTC, the company said, and SGI will lease back parts of two of the buildings.