Silicon Graphics, Inc. (commonly initialised to SGI, historically sometimes referred to as Silicon Graphics Computer Systems or SGCS) was a manufacturer of high-performance computing solutions, including computer hardware and software, founded in 1981 by Jim Clark. Its initial market was 3D graphics display terminals, but its products, strategies and market positions evolved significantly over time.
Initial systems were based on the Geometry Engine that Clark and Marc Hannah had developed at Stanford University, and were derived from Clark's broader background in computer graphics. The Geometry Engine was the first very-large-scale integration (VLSI) implementation of a geometry pipeline, specialized hardware that accelerated the "inner-loop" geometric computations needed to display three-dimensional images.
SGI was headquartered in Sunnyvale, California; it was originally incorporated as a California corporation in November 1981, and reincorporated as a Delaware corporation in January 1990. In April 2009, SGI filed for Chapter 11 bankruptcy protection and announced that it would sell substantially all of its assets to Rackable Systems, a deal finalized on May 11, 2009, with Rackable assuming the name "Silicon Graphics International".
Known for 17 years as Silicon Graphics Inc., SGI is one of the leading manufacturers of graphics computer systems, workstations, and supercomputers. Its history may be described as an exemplary, perhaps even archetypal, Silicon Valley success story, until lower-priced competitors and inept production methods resulted in heavy losses in the late 1990s. Founded by a high school dropout turned college professor, Silicon Graphics capitalized on pioneering technology in 3-D computer graphics to create products used in a wide variety of professions, including engineering, chemistry, and film production. The company combined technological prowess with shrewd management to produce explosive growth; within a decade of its founding, it had entered the Fortune 500.
The story of Silicon Graphics began in 1979, when James Clark, an electrical engineering professor at Stanford University, assembled a team of six graduate students to study the possibilities of computer graphics. Within two years, Clark's team developed a powerful semiconductor chip, which they called the Geometry Engine, that would allow small computers to produce sophisticated three-dimensional graphics simulations previously the domain of large mainframes. Clark patented the Geometry Engine, and in 1982 he and his team left Stanford to found Silicon Graphics.
Silicon Graphics International Corp., formerly Rackable Systems Inc., incorporated in December 2002, is a provider of clustered computing and storage, high-performance compute and storage, and data center technologies integrated with a choice of software, customer support services and professional services. It develops, markets and sells a range of low cost, mid-range and high-end computing servers and data storage, as well as differentiating software. It sells data center infrastructure products purpose-built for large-scale data center deployments. In addition, it provides global customer support and professional services related to its products. The Company groups its products into six categories: Scale Up Servers, Scale Out Servers, Workgroup Servers, Data Storage Systems, Software and Data Center Infrastructure. On May 8, 2009, the Company completed the acquisition of all of the assets of Silicon Graphics, Inc. On February 23, 2010, the Company completed the acquisition of substantially all the assets of Copan Systems, Inc.
The Company offers compute servers using its Rackable half-depth rackmount design, enabling back-to-back mounting for higher server density and improved thermal management. It also offers compute servers using its CloudRack tray-based. Data center products include ICE Cube, a modular data center, which augments or replaces traditional brick-and-mortar facilities and MobiRack for mobile, all-in-one data center capabilities for field deployments. Its products and services are used by the scientific, technical and business communities to solve data-intensive computing, data storage and management problems. Its servers and data storage solutions are based on the Intel Xeon processors, industry standard graphics processors, and the Linux or Microsoft Windows operating systems. Its servers include products sold under the Altix Supercomputer, Altix ICE Clusters, CloudRack, and Rackable Rackmount server brand names. Its data storage solutions are sold under the SGI InfiniteStorage and COPAN brand names.
Scale Up Servers
SGI Altix UV targets high-end supercomputing, large-scale databases and data analytic environments. SGI Altix UV leverages Intel Xeon x86 processors to deliver the shared memory supercomputer. Altix UV enables scaling from 32 to 2,048 processing cores with architectural provisioning for up to 262,144 cores, while supporting up to 16 terabytes of global shared memory in a single system image (SSI). Altix 450 and 4700 are the Company’s prior-generation Intel Itanium processor based scale-up supercomputing systems. Altix 450 scales from 2 to 38 processors (4 to 76 cores) and up to 864 gigabytes of globally addressable memory. Altix 4700 scales from 2 to 512 sockets (4 to 1024 cores) and up to 128 gigabytes of globally addressable memory. Both models are supported by a technical computing solution stack running on industry-standard Linux operating systems with the choice of Novell SUSE LINUX Enterprise Server or Red Hat Enterprise Linux Advanced Server operating systems.
Scale Out Servers
Rackable servers consists of industry-standard rackmount compatible form factors and are available in both half-depth and standard-depth form factors. Its flagship half-depth servers are high-density, rack-mounted systems designed for large-scale data center environments. This line of servers utilizes its half-depth, back-to-back chassis design to increase physical server density, reducing floor space requirements. It provides a range of power and heat management techniques that enable its servers to operate at these density levels. These servers also provide configurable components, front-facing cable connections for improved serviceability and remote management functionality either based on its Roamer or industry-standard IPMI-based technologies. Its standard-depth servers consist of several models marketed under the Rackable and Altix XE brands. These models leverage reseller and OEM relationships from companies, such as SuperMicro Computer, Inc. The standard-depth servers offer a range of add-in card or disk drive expansion options than what can be accommodated in its half-depth offerings. They are also used in conjunction with its other scale-up and scale-out computing systems as management nodes.
Sold as a rack-level solution, CloudRack C2 cabinets support up to 38 trays, a coverless form factor that yields a high degree of flexibility and server density while conforming to industry-standard hot-aisle/cold-aisle data center environments. In addition to improved serviceability due to easy access to server components, the tray form factor enables CloudRack to be optimized for use of open-standard components at the motherboard, processor, Dynamic Random Access Memory (DRAM) and disk drive level. Altix ICE 8400, with its blade design and quad data rate InfiniBand interconnect, is its primary scale-out solution for large technical computing clusters.
Workgroup Servers
Introduced in March 2010, Origin 400 is an integrated workgroup blade system that features compute and storage area network (SAN) storage functionality, making it ideal for remote offices and small to medium-sized enterprises. Origin 400 delivers differentiated enterprise features, such as virtualization capabilities that provide maximum flexibility and eliminate the need to over invest in hardware. Extensive software certifications, including VMware, Linux, SAP, Microsoft Windows, Microsoft Exchange and Microsoft SQL Server, ensure suitability for a large number of applications. Octane III is the Company’s personal supercomputer. Octane III is suited for workplace environments and supports a range of distributed technical computing applications.
Data Storage Systems
The Company’s InfiniteStorage product line consists of direct attached storage (DAS), SAN and network-attached storage (NAS) solutions. Its expansion bunch of disk (EBOD) products are available in both half-depth and full depth configurations in order to maximize density, performance and capacity, depending on its customer needs. Leveraging its server expertise and adding high performance input/output (I/O) capabilities, the Storage Server line-up is composed of both half-depth and full-depth servers. Its Entry Level redundant array of independent disk (RAID) products are focused on delivering a high price/performance ratio. Its InfiniteStorage 4000 series of RAID systems meets the reliability, availability and serviceability requirements for Enterprise data storage needs.
Introduced in May 2010, the InfiniteStorage Select Product (SP) line was introduced to meet the need of heterogeneous environments and the need to integrate tightly with common enterprise applications. Its InfiniteStorage 6120 and 15000 are designed to meet the high-performance and capacity requirements found in high-performance compute (HPC) workloads. The Company offers two distinct NAS solutions: File Serving solution, which is a scalable file serving solution focused on performance and serving networks, such as InfiniBand and NAS line of network file solutions, which is focused on data protection requirements.
Software
The Company’s software stack for technical computing runs on standard, unmodified distributions of Novell SLES or Red Hat Enterprise Linux server operating systems. It also sells and supports Novell SLED, Red Hat Enterprise Linux Desktop, Microsoft Windows Server 2008 and 2008 R2, Microsoft HPC Server 2008, and Microsoft Windows 7 on selected systems. It also certifies selected servers for use with VMware ESX. SGI Management Center provides a consistent management interface and workflow for all SGI systems. SGI ProPack for Linux improves performance and provides additional capabilities for developers of technical computing applications on all of its systems supported on standard Linux distributions. SGI Tempo is cluster management software, which enables administrators to install, configure, provision and manage an SGI Altix ICE from a single rack to thousands of nodes. Its CXFS software provides no-compromise data sharing, improved workflow and reduced costs in data-intensive environments.
Data Center Infrastructure
ICE Cube includes density levels of up to 46,080 processing cores in a forty feet-by-eight feet container, or up to 29.8 petabytes of storage and is used for data centers facing power and space limitations. MobiRack is a line of mobile, all-in-one data center cabinets designed for field deployments.
The Company competes with Dell Inc., Hewlett-Packard Company, International Business Machines Corporation, Oracle Corporation, EMC Corporation, NetApp Inc. and Hitachi Data Systems, Inc.
After posting a profit of $78.6 million on revenues of $3.66 billion for fiscal 1997 (ending June 30), Silicon Graphics experienced mounting losses in fiscal 1998. During the first quarter the company lost $55.5 million on revenues of $768 million, and CEO Ed McCracken and Executive Vice-President Gary Lauer resigned.
Silicon Graphics' losses were caused by several factors. More than half of Silicon Graphics' sales came from shrinking markets such as Unix workstations and supercomputers, whose sales were being undercut by less expensive machines running industry standard Windows NT on Intel processors. Silicon Graphics also had a poor operations record, with numerous product delays, production shortfalls, and a lack of controls.
Richard Belluzzo was brought in from Hewlett-Packard, where he was second in command, to take over as CEO and president, effective January 1, 1998. He immediately took steps to turn the company around and address its most immediate problems. Costs were trimmed in a corporate restructuring that involved laying off 700 to 1,000 employees, nearly ten percent of Silicon Graphics' workforce. Two factories that manufactured printed circuit boards were sold, and Silicon Graphics' operating structure was simplified by reducing its 26 profit-and-loss centers to five product groups.
Belluzzo recognized that Silicon Graphics would have to take steps to meet the competition its higher-end proprietary workstations were experiencing from industry standard machines running on Windows NT. Silicon Graphics entered into a strategic alliance with Microsoft to produce a low-priced Visual Workstation for Windows NT that would cost around $3,400 for introduction in fiscal 1999.
Belluzzo also divested some of Silicon Graphics' non-core business assets. In July 1998 a previously planned spinoff of MIPS Technologies Inc. was completed, raising more than $70 million for Silicon Graphics, which retained an 85 percent interest in MIPS. Also sold were a number of applications software research groups, and the company terminated its investment in its Cosmo software business.
Fiscal 1998 (ending June 30) was a poor year for Silicon Graphics due to market conditions, poor operational execution, and missed opportunities. The company reported a net loss of $460 million on declining revenues of $3.1 billion. Restructuring and other one-time charges amounted to $206 million.
In October 1998 Silicon Graphics entered into a joint venture with Real 3D Inc. of Orlando, Florida, to codevelop and market advanced computer graphics technology worldwide. Silicon Graphics took a ten percent stake in Real 3D for an estimated $30 million. Real 3D, which was spun off by Lockheed Martin Corporation in 1996, had been a smaller-scale competitor to Silicon Graphics in providing graphics systems for higher priced computer workstations. As part of the venture the two companies agreed to a royalty-sharing licensing agreement and gave up their longstanding patent infringement litigation.
For the first six months of fiscal 1999 Silicon Graphics posted a net loss of $87 million on revenues of $1.6 billion. Belluzzo's plan to turn Silicon Graphics around included driving sales up through the introduction of lower-priced visual workstations and finding new applications for its high-end supercomputers. His plan to revamp Silicon Graphics' operations included outsourcing production of Silicon Graphics' computers and cutting the company's operating budget by $200 million. He was also attempting to change Silicon Graphics' corporate culture through a "Get Serious" campaign.
In April 1999 Silicon Graphics Inc. changed its name to SGI as part of a new worldwide corporate identity strategy that reflected the breadth and depth of the company's products and services. The strategy included three sub-brands: SGI servers and workstations, Silicon Graphics visual workstations, and Cray supercomputers. The three sub-brands consolidated previously ill-defined product lines. It was hoped that the new branding strategy would reposition SGI and its products and services in the marketplace.
Still, SGI faced several obstacles in its search for profitability. Rival computers were offering vastly improved performance as sales of Cray supercomputers were plummeting at a 40 percent annual rate. Entering the Windows NT market would require more rapid production cycles, something SGI had not shown it could accomplish. As a competitor in the Windows NT market, SGI would also be subject to delays associated with the introduction of new versions of Windows NT and Intel processors. Given SGI's operating results for the first half of fiscal 1999, Belluzzo and SGI appeared to have their work cut out for them.
Principal Subsidiaries: Silicon Graphics Ltd. (United Kingdom); Nihon Silicon Graphics K.K. (Japan); Silicon Graphics Ltd. (Hong Kong, People's Republic of China); Cray Research, Inc.; MIPS Technologies Inc.
Principal Divisions: Consumer Products Division; Strategic Software Division; Visual Systems Group; Alias/Wavefront; Supercomputing Group.
OVERALL
Beta: 1.65
Market Cap (Mil.): $597.75
Shares Outstanding (Mil.): 30.99
Annual Dividend: --
Yield (%): --
FINANCIALS
SGI.O Industry Sector
P/E (TTM): -- 13.45 21.01
EPS (TTM): 1.10 -- --
ROI: -20.31 15.25 16.02
ROE: -35.97 17.15 17.63
Statistics:
Public Company
Incorporated: 1982 as Silicon Graphics Inc.
Employees: 10,286
Sales: $3.1 billion (1998)
Stock Exchanges: New York
Ticker Symbol: SGI
NAIC: 334111 Computers Manufacturing; 334119 Other Computer Peripheral Equipment Manufacturing; 51121 Software Publishers
Name Age Since Current Position
Ronald Verdoorn 60 2006 Chairman of the Board
Mark Barrenechea 45 2007 President, Chief Executive Officer, Director
James Wheat 52 2008 Chief Financial Officer, Senior Vice President
Maurice Leibenstern 49 2007 Senior Vice President, General Counsel, Corporate Secretary
Anthony Carrozza 55 2008 Senior Vice President of Sales
Jennifer Pratt 49 2009 Senior Vice President of Human Resources
Richard Rinehart 51 2010 Senior Vice President - Services
Timothy Pebworth 44 2008 Vice President, Chief Accounting Officer, Corporate Controller
Gary Griffiths 60 2004 Director
Hagi Schwartz 48 2004 Director
Charles Boesenberg 62 2006 Director
Michael Hagee 66 2008 Director
Douglas King 68 2008 Director
Address:
2011 North Shoreline Boulevard
Mountain View, California 94039
U.S.A.
Initial systems were based on the Geometry Engine that Clark and Marc Hannah had developed at Stanford University, and were derived from Clark's broader background in computer graphics. The Geometry Engine was the first very-large-scale integration (VLSI) implementation of a geometry pipeline, specialized hardware that accelerated the "inner-loop" geometric computations needed to display three-dimensional images.
SGI was headquartered in Sunnyvale, California; it was originally incorporated as a California corporation in November 1981, and reincorporated as a Delaware corporation in January 1990. In April 2009, SGI filed for Chapter 11 bankruptcy protection and announced that it would sell substantially all of its assets to Rackable Systems, a deal finalized on May 11, 2009, with Rackable assuming the name "Silicon Graphics International".
Known for 17 years as Silicon Graphics Inc., SGI is one of the leading manufacturers of graphics computer systems, workstations, and supercomputers. Its history may be described as an exemplary, perhaps even archetypal, Silicon Valley success story, until lower-priced competitors and inept production methods resulted in heavy losses in the late 1990s. Founded by a high school dropout turned college professor, Silicon Graphics capitalized on pioneering technology in 3-D computer graphics to create products used in a wide variety of professions, including engineering, chemistry, and film production. The company combined technological prowess with shrewd management to produce explosive growth; within a decade of its founding, it had entered the Fortune 500.
The story of Silicon Graphics began in 1979, when James Clark, an electrical engineering professor at Stanford University, assembled a team of six graduate students to study the possibilities of computer graphics. Within two years, Clark's team developed a powerful semiconductor chip, which they called the Geometry Engine, that would allow small computers to produce sophisticated three-dimensional graphics simulations previously the domain of large mainframes. Clark patented the Geometry Engine, and in 1982 he and his team left Stanford to found Silicon Graphics.
Silicon Graphics International Corp., formerly Rackable Systems Inc., incorporated in December 2002, is a provider of clustered computing and storage, high-performance compute and storage, and data center technologies integrated with a choice of software, customer support services and professional services. It develops, markets and sells a range of low cost, mid-range and high-end computing servers and data storage, as well as differentiating software. It sells data center infrastructure products purpose-built for large-scale data center deployments. In addition, it provides global customer support and professional services related to its products. The Company groups its products into six categories: Scale Up Servers, Scale Out Servers, Workgroup Servers, Data Storage Systems, Software and Data Center Infrastructure. On May 8, 2009, the Company completed the acquisition of all of the assets of Silicon Graphics, Inc. On February 23, 2010, the Company completed the acquisition of substantially all the assets of Copan Systems, Inc.
The Company offers compute servers using its Rackable half-depth rackmount design, enabling back-to-back mounting for higher server density and improved thermal management. It also offers compute servers using its CloudRack tray-based. Data center products include ICE Cube, a modular data center, which augments or replaces traditional brick-and-mortar facilities and MobiRack for mobile, all-in-one data center capabilities for field deployments. Its products and services are used by the scientific, technical and business communities to solve data-intensive computing, data storage and management problems. Its servers and data storage solutions are based on the Intel Xeon processors, industry standard graphics processors, and the Linux or Microsoft Windows operating systems. Its servers include products sold under the Altix Supercomputer, Altix ICE Clusters, CloudRack, and Rackable Rackmount server brand names. Its data storage solutions are sold under the SGI InfiniteStorage and COPAN brand names.
Scale Up Servers
SGI Altix UV targets high-end supercomputing, large-scale databases and data analytic environments. SGI Altix UV leverages Intel Xeon x86 processors to deliver the shared memory supercomputer. Altix UV enables scaling from 32 to 2,048 processing cores with architectural provisioning for up to 262,144 cores, while supporting up to 16 terabytes of global shared memory in a single system image (SSI). Altix 450 and 4700 are the Company’s prior-generation Intel Itanium processor based scale-up supercomputing systems. Altix 450 scales from 2 to 38 processors (4 to 76 cores) and up to 864 gigabytes of globally addressable memory. Altix 4700 scales from 2 to 512 sockets (4 to 1024 cores) and up to 128 gigabytes of globally addressable memory. Both models are supported by a technical computing solution stack running on industry-standard Linux operating systems with the choice of Novell SUSE LINUX Enterprise Server or Red Hat Enterprise Linux Advanced Server operating systems.
Scale Out Servers
Rackable servers consists of industry-standard rackmount compatible form factors and are available in both half-depth and standard-depth form factors. Its flagship half-depth servers are high-density, rack-mounted systems designed for large-scale data center environments. This line of servers utilizes its half-depth, back-to-back chassis design to increase physical server density, reducing floor space requirements. It provides a range of power and heat management techniques that enable its servers to operate at these density levels. These servers also provide configurable components, front-facing cable connections for improved serviceability and remote management functionality either based on its Roamer or industry-standard IPMI-based technologies. Its standard-depth servers consist of several models marketed under the Rackable and Altix XE brands. These models leverage reseller and OEM relationships from companies, such as SuperMicro Computer, Inc. The standard-depth servers offer a range of add-in card or disk drive expansion options than what can be accommodated in its half-depth offerings. They are also used in conjunction with its other scale-up and scale-out computing systems as management nodes.
Sold as a rack-level solution, CloudRack C2 cabinets support up to 38 trays, a coverless form factor that yields a high degree of flexibility and server density while conforming to industry-standard hot-aisle/cold-aisle data center environments. In addition to improved serviceability due to easy access to server components, the tray form factor enables CloudRack to be optimized for use of open-standard components at the motherboard, processor, Dynamic Random Access Memory (DRAM) and disk drive level. Altix ICE 8400, with its blade design and quad data rate InfiniBand interconnect, is its primary scale-out solution for large technical computing clusters.
Workgroup Servers
Introduced in March 2010, Origin 400 is an integrated workgroup blade system that features compute and storage area network (SAN) storage functionality, making it ideal for remote offices and small to medium-sized enterprises. Origin 400 delivers differentiated enterprise features, such as virtualization capabilities that provide maximum flexibility and eliminate the need to over invest in hardware. Extensive software certifications, including VMware, Linux, SAP, Microsoft Windows, Microsoft Exchange and Microsoft SQL Server, ensure suitability for a large number of applications. Octane III is the Company’s personal supercomputer. Octane III is suited for workplace environments and supports a range of distributed technical computing applications.
Data Storage Systems
The Company’s InfiniteStorage product line consists of direct attached storage (DAS), SAN and network-attached storage (NAS) solutions. Its expansion bunch of disk (EBOD) products are available in both half-depth and full depth configurations in order to maximize density, performance and capacity, depending on its customer needs. Leveraging its server expertise and adding high performance input/output (I/O) capabilities, the Storage Server line-up is composed of both half-depth and full-depth servers. Its Entry Level redundant array of independent disk (RAID) products are focused on delivering a high price/performance ratio. Its InfiniteStorage 4000 series of RAID systems meets the reliability, availability and serviceability requirements for Enterprise data storage needs.
Introduced in May 2010, the InfiniteStorage Select Product (SP) line was introduced to meet the need of heterogeneous environments and the need to integrate tightly with common enterprise applications. Its InfiniteStorage 6120 and 15000 are designed to meet the high-performance and capacity requirements found in high-performance compute (HPC) workloads. The Company offers two distinct NAS solutions: File Serving solution, which is a scalable file serving solution focused on performance and serving networks, such as InfiniBand and NAS line of network file solutions, which is focused on data protection requirements.
Software
The Company’s software stack for technical computing runs on standard, unmodified distributions of Novell SLES or Red Hat Enterprise Linux server operating systems. It also sells and supports Novell SLED, Red Hat Enterprise Linux Desktop, Microsoft Windows Server 2008 and 2008 R2, Microsoft HPC Server 2008, and Microsoft Windows 7 on selected systems. It also certifies selected servers for use with VMware ESX. SGI Management Center provides a consistent management interface and workflow for all SGI systems. SGI ProPack for Linux improves performance and provides additional capabilities for developers of technical computing applications on all of its systems supported on standard Linux distributions. SGI Tempo is cluster management software, which enables administrators to install, configure, provision and manage an SGI Altix ICE from a single rack to thousands of nodes. Its CXFS software provides no-compromise data sharing, improved workflow and reduced costs in data-intensive environments.
Data Center Infrastructure
ICE Cube includes density levels of up to 46,080 processing cores in a forty feet-by-eight feet container, or up to 29.8 petabytes of storage and is used for data centers facing power and space limitations. MobiRack is a line of mobile, all-in-one data center cabinets designed for field deployments.
The Company competes with Dell Inc., Hewlett-Packard Company, International Business Machines Corporation, Oracle Corporation, EMC Corporation, NetApp Inc. and Hitachi Data Systems, Inc.
After posting a profit of $78.6 million on revenues of $3.66 billion for fiscal 1997 (ending June 30), Silicon Graphics experienced mounting losses in fiscal 1998. During the first quarter the company lost $55.5 million on revenues of $768 million, and CEO Ed McCracken and Executive Vice-President Gary Lauer resigned.
Silicon Graphics' losses were caused by several factors. More than half of Silicon Graphics' sales came from shrinking markets such as Unix workstations and supercomputers, whose sales were being undercut by less expensive machines running industry standard Windows NT on Intel processors. Silicon Graphics also had a poor operations record, with numerous product delays, production shortfalls, and a lack of controls.
Richard Belluzzo was brought in from Hewlett-Packard, where he was second in command, to take over as CEO and president, effective January 1, 1998. He immediately took steps to turn the company around and address its most immediate problems. Costs were trimmed in a corporate restructuring that involved laying off 700 to 1,000 employees, nearly ten percent of Silicon Graphics' workforce. Two factories that manufactured printed circuit boards were sold, and Silicon Graphics' operating structure was simplified by reducing its 26 profit-and-loss centers to five product groups.
Belluzzo recognized that Silicon Graphics would have to take steps to meet the competition its higher-end proprietary workstations were experiencing from industry standard machines running on Windows NT. Silicon Graphics entered into a strategic alliance with Microsoft to produce a low-priced Visual Workstation for Windows NT that would cost around $3,400 for introduction in fiscal 1999.
Belluzzo also divested some of Silicon Graphics' non-core business assets. In July 1998 a previously planned spinoff of MIPS Technologies Inc. was completed, raising more than $70 million for Silicon Graphics, which retained an 85 percent interest in MIPS. Also sold were a number of applications software research groups, and the company terminated its investment in its Cosmo software business.
Fiscal 1998 (ending June 30) was a poor year for Silicon Graphics due to market conditions, poor operational execution, and missed opportunities. The company reported a net loss of $460 million on declining revenues of $3.1 billion. Restructuring and other one-time charges amounted to $206 million.
In October 1998 Silicon Graphics entered into a joint venture with Real 3D Inc. of Orlando, Florida, to codevelop and market advanced computer graphics technology worldwide. Silicon Graphics took a ten percent stake in Real 3D for an estimated $30 million. Real 3D, which was spun off by Lockheed Martin Corporation in 1996, had been a smaller-scale competitor to Silicon Graphics in providing graphics systems for higher priced computer workstations. As part of the venture the two companies agreed to a royalty-sharing licensing agreement and gave up their longstanding patent infringement litigation.
For the first six months of fiscal 1999 Silicon Graphics posted a net loss of $87 million on revenues of $1.6 billion. Belluzzo's plan to turn Silicon Graphics around included driving sales up through the introduction of lower-priced visual workstations and finding new applications for its high-end supercomputers. His plan to revamp Silicon Graphics' operations included outsourcing production of Silicon Graphics' computers and cutting the company's operating budget by $200 million. He was also attempting to change Silicon Graphics' corporate culture through a "Get Serious" campaign.
In April 1999 Silicon Graphics Inc. changed its name to SGI as part of a new worldwide corporate identity strategy that reflected the breadth and depth of the company's products and services. The strategy included three sub-brands: SGI servers and workstations, Silicon Graphics visual workstations, and Cray supercomputers. The three sub-brands consolidated previously ill-defined product lines. It was hoped that the new branding strategy would reposition SGI and its products and services in the marketplace.
Still, SGI faced several obstacles in its search for profitability. Rival computers were offering vastly improved performance as sales of Cray supercomputers were plummeting at a 40 percent annual rate. Entering the Windows NT market would require more rapid production cycles, something SGI had not shown it could accomplish. As a competitor in the Windows NT market, SGI would also be subject to delays associated with the introduction of new versions of Windows NT and Intel processors. Given SGI's operating results for the first half of fiscal 1999, Belluzzo and SGI appeared to have their work cut out for them.
Principal Subsidiaries: Silicon Graphics Ltd. (United Kingdom); Nihon Silicon Graphics K.K. (Japan); Silicon Graphics Ltd. (Hong Kong, People's Republic of China); Cray Research, Inc.; MIPS Technologies Inc.
Principal Divisions: Consumer Products Division; Strategic Software Division; Visual Systems Group; Alias/Wavefront; Supercomputing Group.
OVERALL
Beta: 1.65
Market Cap (Mil.): $597.75
Shares Outstanding (Mil.): 30.99
Annual Dividend: --
Yield (%): --
FINANCIALS
SGI.O Industry Sector
P/E (TTM): -- 13.45 21.01
EPS (TTM): 1.10 -- --
ROI: -20.31 15.25 16.02
ROE: -35.97 17.15 17.63
Statistics:
Public Company
Incorporated: 1982 as Silicon Graphics Inc.
Employees: 10,286
Sales: $3.1 billion (1998)
Stock Exchanges: New York
Ticker Symbol: SGI
NAIC: 334111 Computers Manufacturing; 334119 Other Computer Peripheral Equipment Manufacturing; 51121 Software Publishers
Name Age Since Current Position
Ronald Verdoorn 60 2006 Chairman of the Board
Mark Barrenechea 45 2007 President, Chief Executive Officer, Director
James Wheat 52 2008 Chief Financial Officer, Senior Vice President
Maurice Leibenstern 49 2007 Senior Vice President, General Counsel, Corporate Secretary
Anthony Carrozza 55 2008 Senior Vice President of Sales
Jennifer Pratt 49 2009 Senior Vice President of Human Resources
Richard Rinehart 51 2010 Senior Vice President - Services
Timothy Pebworth 44 2008 Vice President, Chief Accounting Officer, Corporate Controller
Gary Griffiths 60 2004 Director
Hagi Schwartz 48 2004 Director
Charles Boesenberg 62 2006 Director
Michael Hagee 66 2008 Director
Douglas King 68 2008 Director
Address:
2011 North Shoreline Boulevard
Mountain View, California 94039
U.S.A.