SGI hints it may beat earnings forecasts

The maker of computer workstations says it expects to report operating second-quarter results "just short of break even."

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SGI, the embattled server and workstation vendor, said in a preliminary earnings statement today that sales of its products have been going better than expected.

Based on preliminary calculations, SGI said that it expects to report earnings from operations of approximately $640 million for the quarter ended Dec. 31. That is still down 15 percent from the $685 million from the same period a year ago, but the company said it should be able to report results "just short of break even."

Depending on just how close the company comes to break even, the results could far exceed Wall Street expectations. Based on analyst estimates compiled by First Call in October of last year, analysts have been expecting losses of around 11 cents per share.

"Our strong revenue forecast for the December quarter demonstrates the progress we are making in stabilizing our business environment," Bob Bishop, chairman and chief executive officer, said in a statement.

Amidst what is ostensibly good news for the company is the departure of SGI's chief financial officer, Steve Gomo. Gomo is resigning and will be replaced by Betsy Rafael, who served previously as SGI's controller.

SGI spent much of 1999 in turmoil as the company struggled during what seemed like a continuous restructuring and the departure of its high-profile CEO, Rick Belluzo, last August.

For the first quarter of fiscal 2000, SGI got off to a bad start, announcing a net loss of $68 million for the quarter ending September 30, or 37 cents per share. Wall Street analysts were expecting a loss of only 7 cents a share.

The company expects to announce its actual results for its fiscal second quarter on Jan. 24.