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Tax change boosts SGI earnings

The high-end computer maker reports a net profit of $10.3 million for its most recent quarter, boosted into the black by a $30 million tax refund.

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Stephen Shankland
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SGI reported a net profit of $10.3 million for its most recent quarter, boosted into the black by a $30 million tax refund, the high-end computer maker said Monday.

The Mountain View, Calif.-based company's revenue decreased from $510 million to $314 million for the quarter ended March 29. The company did benefit from government and defense spending, Chief Executive Bob Bishop said in a statement.

The net profit compared with a net loss of $141 million, or 74 cents per share, for the same quarter a year ago.

Excluding the tax gain and restructuring charge, SGI had a loss of 5 cents per share, Chief Financial Officer Jeffrey Zellmer said in an interview. That's within the guidance the company gave in January--somewhere between a loss of 9 cents per share and a profit of 1 cent per share--but less than the loss of 2 cents per share that analysts surveyed by First Call had projected.

The tax gain was a one-time benefit that resulted from a change in tax law signed by President George W. Bush, Zellmer said. The change allowed SGI to "go back and recoup some income taxes we paid in the mid-1990s," he said.

Offsetting the tax gain was a $11 million restructuring charge, the company said. The company increased its cash supply from $120 million in the previous quarter to $172 million.

SGI, whose specialty is in high-end computers that can help engineers visualize complex phenomena such as computer models of car crashes or airplane aerodynamics, tried in the 1990s to enter the broader market but was thwarted by business troubles and fierce competition from Sun Microsystems, IBM, Hewlett-Packard and Compaq Computer.