250 layoffs announced at SGI; 2 execs out
By Therese Poletti Mercury News
Posted on Sat, Mar. 04, 2006
Silicon Graphics, the troubled maker of high-performance computers, said Friday that it is laying off about 250 workers, or 12 percent of its workforce, and two top executives are leaving the company.
The Mountain View company, which makes supercomputers and workstations, said its chief financial officer, Jeff Zellmer, is leaving for personal reasons. Zellmer was with SGI for 17 years. Kathy Lanterman, SGI's controller, will replace Zellmer as CFO.
The company's chief operating officer, Warren Pratt, is losing his job in the company's restructuring.
SGI said the latest round of layoffs are part of a restructuring plan put in place by the company's new chief executive, Dennis McKenna, to seek to return the company to profitability.
``Dennis has looked at the entire company from the top down and has analyzed where we had duplicate efforts, and that is how the decisions were made,'' said Caroline Japic, a spokeswoman for SGI.
McKenna was named president, chairman and CEO of SGI Jan. 31. He replaced Robert Bishop, who had tried to turn the company around over his six-year tenure as CEO. Bishop remains vice chairman of SGI's board.
SGI is well-respected in the technical community for its fast-performing machines and for their ability to create 3-D visuals of out reams of data. But analysts have said SGI was slow to move to commodity-based systems that use cheaper, off-the-shelf parts, to compete with the much cheaper, clustered systems ganged together to work as one massive computer.
SGI now sells supercomputers designed around Intel's Itanium chip, such as in its Columbia supercomputer installation at NASA/Ames in Mountain View, but it still sells a line of systems designed around the proprietary MIPS chip.
In its fiscal second quarter ended Dec. 30, SGI reported that its revenues fell to $144 million, down from $223 million in the year-ago period. It reported a deeper net loss of $30.5 million, or 11 cents a share, compared with a loss of $11.1 million, or 4 cents a share.
Since June, SGI has cut its workforce to 2,100. This next restructuring will bring SGI's workforce to about 1,850 workers. SGI said its recent moves are aimed at saving $150 million by the end of this year.
The company said it is still exploring strategic alternatives. Last year, it hired turnaround specialist AlixPartners. In recent filings with the Securities and Exchange Commission, the company has said it could be forced to file for bankruptcy.
``We are exploring all our options,'' Japic said. ``Investors, someone who would like to acquire us or whatever. We are looking at all those options right now.''
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