Does anyone know what the bolded portion means? Will DELL manufacture and brand SGI machines???
Fez
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(08/10/99, 7:05 p.m. ET)
SGI Cuts Jobs In Restructuring
By Jennifer Hagendorf and Barbara Darrow, Computer Reseller News
Silicon Graphics on Tuesday announced a reorganization that will cut 1,000 to 1,500 jobs and spin off parts of its business.
The Mountain View, Calif.-based company unveiled a series of partnerships and restructuring plans, including the spin-off of its Cray supercomputer unit.
The company is seeking a partner to take over operations of the Cray unit, which will become a separate entity, said Rick Belluzzo, chairman and CEO of SGI.
"We feel that customers and shareholders will be better served by focusing on this unique set of customers and this unique technology, and that trying to continue to keep it blended within SGI is difficult to manage and results in less-than-ideal execution," said Belluzzo in a conference call Tuesday.
The move is a step in the right direction for SGI, said analysts.
"This is a company in dire need of focus. They have too many projects going on for a company their size," said Shawn Willett, senior analyst at Aberdeen Group, in Boston.
The company also announced it has reached a "preliminary understanding" with an undisclosed computer systems company to form a joint venture to manage SGI's Windows NT-based Visual Workstation line.
Speculation among observers is the computer company in question is Dell Computer, in Round Rock, Texas.
The product line has been a "challenging endeavor" for SGI, said Belluzo.
"On the one hand it has represented some leadership technology and some leadership functionality in the industry, but at the same time we feel it's important to leverage that across a broader set of customers, across more channels and more volume, and to do that we've decided to work with a partner," said Belluzo.
At the same time, SGI will concentrate on high-performance systems, visual computing solutions and broadband Internet access, a plan that includes the formation of a business unit that will produce broadband Internet systems, he said.
"Our goal here is to build appliance-like servers that can deliver broadband content, applications, and services over the Internet," said Belluzzo.
Matthew Nordan, an analyst at Cambridge, Mass.-based Forrester Research, recapped the three broad initiatives -- spinning out Cray, outsourcing Windows NT workstations, and broadband Internet access: "When I look at those three initiatives, Isay 'Okay, okay, and okay."
"On the workstation side, they should have OEMed someone else's box from the beginning," Nordan added.
Belluzzo also unveiled plans work with Veritas Software to integrate the IRIX, it's own Unix operating system, and Linux. SGI will continue to introduce new MIPS processors through 2002, but at the same time will roll out low-end products that are based on Linux and Intel processors, he said.
As part of the restructuring, SGI will cut 1,000 to 1,500 jobs from its current work force of 9,000. The cuts will impact various areas, including administration and marketing, Belluzzo said. An additional 1,000 to 1,500 jobs could be shifted to SGI's new business partners, he added.
The changes mark the continuation of a transition plan put in motion 18 months ago to focus SGI's business on high-performance computing and visual computing, said Belluzzo.
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