SGI posts loss but gets new CEO

Silicon Graphics reports a second-quarter loss and flat revenue growth, but hopes to offset that gloomy news with an announcement that it has found a new chief executive.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Silicon Graphics (SGI) reported a second-quarter loss and flat revenue growth today, but hopes to offset that gloomy news with an announcement that it has found a new chief executive.

SGI is expected to announce tomorrow morning it has named the general manager of Hewlett-Packard's computer organization as its new CEO.

Richard E. Belluzzo, one of two executive vice presidents at Hewlett-Packard, will replace Edward McCracken who agreed in October to step down once his replacement was named.

The graphics workstation marker attributed its loss to $53 million in restructuring charges. The charges were the result of SGI hitting a shortfall in server sales during the previous quarter, which prompted the company to announce layoffs of up to 1,000 workers.

SGI reported a net loss of $31 million, or 17 cents a share, for its second quarter, compared with a loss of $12.8 million, or 7 cents a share, a year ago.

Excluding the acquisition and restructuring charges, SGI posted a profit of $3.4 million.

The company's revenues were flat for a second consecutive quarter, coming in at $851 million, compared with $825.3 million reported a year ago.

"Despite a set of challenging transitions, we were able to restore a degree of momentum after a disappointing first quarter,'' McCracken said in a statement. "Our server business, which grew 11 percent year over year, has the potential for stronger growth, and we are working to focus our marketing programs on the key industries and applications that will drive that growth.

We also implemented a restructuring program, which will reduce our operating expense levels beginning in the third quarter," McCracken added. "Our asset-management continues to improve, and we ended the second quarter with a cash balance of $655 million."

SGI has been working toward beefing up its server business as its bread-and-butter Unix workstations increasingly have come under pressure from other Unix competitors and workstations based on Microsoft's Windows NT and Intel processors. It has also been plagued by pricing pressure, production problems, and a decline in the company's cutting edge image.

SGI announced in December that it was teaming up with Microsoft to collaborate on a new graphics architecture for Windows and to bring 3D graphics to the desktop and other digital devices. Analysts said the deal would go a long way toward winning back SGI's status as a technology leader.

The company is also planning to bring out an Intel-based workstation for the first time later this year. SGI hopes to combine the cost economies of the Intel platform with its own powerful 3D graphics technology.