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SGI sees Origin of profit in 4Q

Servers gave Silicon Graphics Inc. (NYSE: SGI) strength in the fourth quarter to blow past analyst estimates and report a profit two quarters ahead of expectations.

In fiscal fourth quarter results released after market close Wednesday, the Mountain View, Calif.-based manufacturer of workstations, servers, and supercomputers posted net income of $22 million, or 12 cents a share, not including one-time investment gains. First Call's survey of 13 analysts had predicted a per share loss of 5 cents.

Fourth quarter revenue increased to $829 million, up 7 percent year-over-year and up almost 34 percent sequentially. SGI saw particular strength in its line of Origin servers. "Our Origin business is benefiting from a field focus on servers, a consistent product roadmap, and more competitive microprocessor performance," said Rick Belluzzo, chairman and CEO.

Product sales rose 6.9 percent year-over-year, to $662.4 million from $619.8 million. Services revenue gained 8 percent over the same period, to $166.2 million from $153.8 million. Wednesday's report marks a sharp turnaround from recent disappointments, including the previous quarter, when the company ran into problems getting new products to market.

SGI earned $136 million from selling shares when a secondary offering was held for its MIPS Technologies subsidiary. Including that income, SGI earned 81 cents a share.

Shares of SGI were unchanged at 16 in Wednesday's trading prior to the earnings release. Of 16 analysts surveyed by Zack's Investment Research, 12 maintain the equivalent of "hold" ratings on SGI, and four have "moderate buy" advisories on the stock.>