Reuters Company News
SGI cuts jobs again as announces narrower loss
SAN FRANCISCO, July 25 (Reuters) - Silicon Graphics Inc. (NYSE:SGI - News; SGI), whose computers are used to design fighter jets and to create special effects for "The Lord of the Rings" movie on Thursday announced new job cuts as it struggled with slow private sector technology buying.
The Mountain View, California-based company reported a narrowed loss in the fourth quarter, since it had taken massive restructuring charges and cut jobs a year ago, but said it was laying off 7 percent more of the work force, about 320 jobs.
SGI Chief Executive Bob Bishop said defense and government business was strong and that orders were higher than sales in the fourth quarter, but the private sector was avoiding technology purchases, and he forecast revenue would fall in the current quarter, which he said was seasonably slow.
The company, which make sophisticated computers for visualization, posted a fiscal fourth quarter loss of $24.6 million, or 12 cents per share, narrowing from a loss of $231.8 million or $1.20 per share a year earlier.
It operating loss narrowed to $18.7 million from $207.1 million a year earlier. Revenue fell to $284.5 million from $431.5 million a year earlier, which was in line with a July 8 warning it made, although analysts in April had hoped for a break-even June quarter or even a profit.
Shares of SGI fell 6 percent to $1.04 on the New York Stock Exchange before the results were announced. The shares crested $4.60 in April, rising from a low of 32 cents September 20.
Bishop said SGI, which has retrenched after a failed attempt to broaden its market, was cutting 7 percent of jobs from the 4,575 at the end of the third quarter. It had already cut about 100 jobs and would finish layoffs this quarter.
SGI had 6,000 jobs in June 2001.
Revenue in the current, fiscal first quarter would drop to $255 million to $270 million, and gross profit margin, 41.2 percent in the fourth quarter, would ease to about 40 percent.
SGI would be cash flow positive for the new fiscal year and revenue would rise in the second quarter, he said.
Competitors Hewlett-Packard Co.(NYSE:HPQ - News) and International Business Machines Corp.(NYSE:IBM - News) have taken aim at Hollywood with systems based on the free Linux operating system, but Bishop said the sales had not undermined SGI's high end.
The economy was squarely to blame for SGI's new cutbacks, he said. "The private economy is so repressed at this moment that we have to remain as absolute tight as we can," he said. |
