SGI ANNOUNCES STEPS TO ACCELERATE TURNAROUND
Strategic Partnerships Will Narrow Focus, Expand Market Reach
MOUNTAIN VIEW, Calif., Aug. 10 /PRNewswire/ -- SGI (NYSE: SGI) today unveiled the next phase of its plan to better position the company for sustainable profitability and growth. The company will more tightly focus its business through a series of strategic alliances and restructuring actions. The plan accelerates SGI's transition from a vertically integrated company to one committed to broadening its market reach by leveraging its technology through strategic partnerships with industry leaders. "Over the past 18 months we have made great strides in sharpening company focus and streamlining operations," said Rick Belluzzo, chairman and CEO. "The growth and profitability shown in our most recent quarterly results indicate we're headed in the right direction. Our next step is to unlock some of our great proprietary technologies and allow them to flourish in mainstream markets, which I am convinced is the best way to create a leadership position for SGI and greater value for our stockholders. The directions that we are announcing today and in the coming months will leverage our strengths, align us with industry leaders, make SGI technology pervasive in important emerging markets and allow us to realize further operating efficiencies."
SGI announced the following actions as part of this restructuring: * The formation of a separate business unit to manage SGI's Visual
Workstation line of Windows NT(R) platform-based workstations. SGI said
it has reached a preliminary understanding with another computer systems
company to form a joint venture to assume the further development and
distribution of this product line. Terms for this venture have not been
finalized. * The formation of a business unit to manage SGI's Cray(R)-branded product
family and future vector-based products. SGI is in discussions with
potential partners to assume the operation of this business, which will
carry forward the current product roadmap of vector-based solutions to
be developed in conjunction with SGI's next-generation ccNUMA-based
server products. * SGI announced further details of its previously announced alliance with
NVIDIA Corporation. Under the alliance the two companies will work
together on next-generation graphics products and an SGI graphics
engineering team will transfer to NVIDIA. The arrangement will allow SGI
to extend its leadership in the highest performance graphics systems
while at the same time taking advantage of technology and process
developments in the volume graphics ASIC market. * The creation of a business unit targeted at emerging opportunities for
broadband Internet systems. * The planned spinoff of SGI's MediaBase media streaming application,
engineering team and technology to a newly formed company with venture
capital backing, in which SGI will hold a significant minority stake. * The formation of a strategic relationship with VERITAS(R) Software
Corporation to extend and enhance the file system and other system
software on the IRIX(R) and Linux(R) platforms. * The formation of an alliance with NEC Corporation with respect to the
marketing of high-performance systems in the Japanese market. Further
details of this arrangement will be provided in an announcement in
Tokyo on Aug. 19. "This strategy enables us to place a priority on Internet computing opportunities," said Belluzzo. "The emergence of the broadband Internet over the next several years, together with the growth of Linux and other open source technologies, will create huge opportunities for SGI as a result of our leadership in high-bandwidth computing architectures and our established franchise with content providers. We will put significant resources into the pursuit of these opportunities. "The SGI that emerges from these alliances will be somewhat smaller than it is today, but it will be designed to focus on the technologies and markets where we add the most value, to respond more quickly to emerging trends and opportunities, and to put increased resources into serving our major customers. It also reflects our commitment to growth and profitability from the outset," Belluzzo said.
As a result of these alliances and related reductions in marketing, sales and administrative personnel, SGI's worldwide workforce is expected to be reduced by 1,000 to 1,500 employees. Additional reductions in SGI headcount will occur as a result of the transfer of businesses to partners.
Statements in this press release are forward-looking statements under the federal securities laws, including the statements relating to strategic focus and business objectives; restructuring activities including alliances and partnerships; and the company's projected future financial performance. These forward-looking statements are not a guarantee of future performance, and are subject to risks, uncertainties and other important factors that could cause actual results or activities to differ materially. In particular, the company's actual financial results will be different due to the inherent nature of projections and may be better or worse than projected. Given these uncertainties, the reader should not place any reliance on these forward-looking statements. These forward-looking statements also represent the company's estimates and assumptions only as of the date that they were made. The company expressly disclaims a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this press release to reflect events or circumstances or changes in expectations or the occurrence of anticipated events.
Certain of the arrangements described in this press release represent preliminary, non-binding understandings and there is no assurance that the company will be able to reach definitive agreements or to consummate those agreements. In addition to the factors set forth in the company's filings with the SEC (www.sec.gov), the following factors could also affect the forward-looking statements: the timely development, production and release of server and graphics products; the acceptance of the Linux operating system and related products by markets and customers; the emergence of robust market opportunities for broadband Internet technologies and products, and the company's ability to gain a strong market position in this sector; the ability of the company to manage a complex set of engineering, marketing and distribution relationships, including its ability to manage collaborative relationships and to extend and leverage open source technologies; the ability of the company to implement its restructuring activities with the desired effect on operating expenses and minimal impact on revenue opportunities; and the impact of competitive markets, products and pricing.
SGI provides a broad range of high-performance computing and advanced graphics solutions that enable customers to understand and conquer their toughest computing problems. Headquartered in Mountain View, Calif., with offices worldwide, the company is located on the Web at www.sgi.com.
NOTE: SGI and the SGI logo are trademarks of Silicon Graphics, Inc. Cray is a registered trademark of Cray Research, L.L.C., a wholly owned subsidiary of Silicon Graphics, Inc. Windows and Windows NT are registered trademarks of Microsoft Corporation. Linux is a registered trademark of Linus Torvalds. VERITAS is a registered trademark of VERITAS Software Corporation in the U.S. and other countries. All other trademarks mentioned herein are the property of their respective owners. SOURCE SGI -0- 08/10/99 /CONTACT: Kevin Burr of SGI, 650-933-5411, or kburr@corp.sgi.com/ /Company News On-Call: prnewswire.com or fax, 800-758-5804, ext. 795806/ /Web site: sgi.com (SGI) CO: SGI ST: California IN: CPR SU: -0- Aug/10/1999 9:31 EOS (PRN) Aug/10/1999 09:31 197 -0- (PRN) Aug/10/1999 9:46 t |
