SGI takes charges
Silicon Graphics posted its first-quarter results, posting a net loss of $22 million for the period ending September 30.
The combined revenue of SGI and subsidiary Cray Research was $766 million, compared to an estimated combined revenue of $758 million for the same quarter a year ago. The loss totaled 13 cents per share, compared to per-share earnings of 33 cents in the first quarter.
SGI attributed the loss to the posting of several one-time charges and to customer anticipation of new products, including a charge for product recalls. SGI had to replace all 10,000 of the R10000 microprocessors shipped between March and July because its supplier, NEC, had provided chips that were damaged by a manufacturing error that could shut down a computer without warning. That alone led to a charge of $10 million.
SGI also said that customers were delaying orders in anticipation of new products announced earlier this month. The company introduced four new product families, ranging from $6,000 workstations to supercomputers. With fewer orders, inventory levels rose, and SGI took a charge of $15 million to compensate, according to Stan Meresman, SGI's chief financial officer.
"In an ideal world, we would introduce one family of products per quarter, but our customers expect us to be leading the technology charge," said Gary Lauer, SGI's vice president of world trade. "This is the first time we've actually built and shipped a product before it was announced, so we're very enthused about the prospects for business with the new technology."