Sonny and all,
Here is some evidence of Intel's move upstream.
Profit Troubles Continues at SGI,
Which Anticipates Loss in Quarter
Dow Jones Newswires
Struggling computer maker Silicon Graphics Inc. warned Friday that results for
the fiscal third quarter will come in significantly below analysts' estimates, the
outgrowth of several trends that have hurt the company over the past several
quarters.
In morning trading Friday on the New York Stock Exchange, shares of SGI
were down 50 cents to $13.625.
SGI, Mountain View, Calif., said it will incur a "significant" loss on revenue of
about $700 million. Eleven analysts surveyed by First Call, however, expected
the company to report break-even results on a per-share basis for the fiscal third
quarter ending this month.
"Our disappointing third quarter financial results reflect the continuation of several trends that have affected Silicon Graphics over the past several quarters, including declines in the Unix workstation and supercomputer businesses and marketing execution challenges in the server business," said Richard Belluzzo, who was named chief executive officer of SGI in January. "We will over the next few weeks unveil a new strategy that we believe will position us for renewed growth through market focus."
Mr. Belluuzo is racing to base more of the company's workstation computers on
Intel Corp. chips to counter price competition. He came to SGI from
Hewlett-Packard Co., where he held the No. 2 job. Recruiting Mr. Belluzzo
came as a surprise to Wall Street and bolstered hopes about the ailing firm's
turnaround plans.
Mr. Belluzzo's top priorities include increasing SGI's customer base and moving
from a niche in high-end computer graphics into new products, including
computers used to manage Internet traffic.
Once a Wall Street darling, SGI has repeatedly failed to meet profit and
product-shipment forecasts, a spiral that caused Edward McCracken to
announce plans to step down as CEO in October. While highly regarded in
entertainment and design circles for ultra-realistic graphics, SGI has been
overmatched by competitors such as H-P and Sun Microsystems Inc. in selling
its machines for broader corporate computing tasks.
One of the company's most pressing chores is to execute a promised transition
to computers using Intel semiconductors and Microsoft's Windows NT
operating system, from its longtime combination of proprietary chips and a
variant of Unix software. At H-P, Mr. Belluzzo helped manage a similar process,
and was the point man for the company's closer ties to Microsoft.
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Just the beginning.
Barry |
