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SGI falls far short of 1Q estimates

Silicon Graphics (NYSE: SGI) lost more than five times as much as analysts predicted in the first quarter.

After market close Wednesday, the maker of graphics workstations reported a fiscal first quarter loss of $68 million, or 37 cents per share, not including restructuring costs and other one-time charges. First Call's survey of 14 analysts predicted a loss of 7 cents per share.

First quarter revenues fell to $585 million, down 5 percent year-over-year and down 29 percent from the fourth quarter.

"We are disappointed with the results and the temporary loss of momentum that has resulted from the recent management transition", said Robert Bishop, chairman and CEO.

Questions have swirled around SGI over the last couple of months since the surprise departure of Rick Belluzzo as head of the company. At the time, Bishop insisted SGI remained on track for profitability by year's end.

SGI recorded $145 million in the third quarter to pay for restructuring moves that include more than 1,000 job cuts. Including that expense, SGI lost $213 million, or $1.17 per share. "We are continuing to execute the turnaround plan announced in mid-August and have made solid progress in the past few months," Bishop said. "I remain confident that by continuing to simplify our business we will be able to improve our execution and return to growth and profitability."

The company's cost of revenue totaled $441.3 million, including $86 million related to write-offs of inventory and support costs for Windows NT workstations, a product line which SGI is turning over to a joint venture.

Shares of SGI rose 3/8 to 10 in Wednesday's regular trading prior to the quarterly report.>