SGI stock falls after hard quarter
Shares drop almost 22 percent after the high-performance computer specialist reports declines in revenue and a net loss of $35 million.
- 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.
SGI's revenue dropped 17 percent from $263 million in the third fiscal quarter of 2002 to $217 million for the same quarter this year, which ended March 28. In the year-ago quarter, SGI had a net income of $10 million.
"Our first quarter was a tough quarter, with significant uncertainty, delays and deferrals that came about as war with Iraq approached, especially for large-scale projects that were near their close," although several delayed deals did close after the end of the quarter, Chief Executive Bob Bishop said in a conference call Monday.
The Mountain View, Calif.-based company has been struggling to recover from an unsuccessful expansion in the late 1990s. It's been seeking for about two years to return to its core customers that buy high-end systems for tasks such as visualizing car interior designs or simulating aerial combat. At the same time, competitors IBM, Hewlett-Packard, Sun Microsystems and Dell Computer are grappling with declines in server spending and aren't pulling any punches.
SGI had a "sharp decline" in its Japanese business in the quarter, the company said.
Visualization products also suffered. In the current quarter, though, the company will begin selling the Onyx 350, a graphics-oriented version of the Origin 350 announced a week ago. "A lower-priced Onyx is the No. 1 request we get from our customers," said Chief Operating Officer Warren Pratt, and the new Origin 350 meets that demand with a starting price below $35,000 but a design that can expand to vastly larger configurations.
SGI's Altix line, which uses Intel's Itanium processors and runs the Linux operating system, is beginning to catch on, the company said, though revenue isn't yet significant. The University of Manchester purchased a 256-processor system, Pratt said, while 128-processor machines were bought by famed astrophysicist Steven Hawking at Cambridge University, the U.S. Naval Research Laboratory, Pacific Northwest National Laboratory, the University of Leeds, Washington University and the Center for Biological Sequence Analysis in Denmark.
SGI has been working to ensure software partners support the Altix machine and is collaborating with Pacific Northwest National Laboratory to improve Linux for the systems. The company will launch a new advertising campaign to raise the profile of the new computers, Pratt added.