SGI Announces Enhanced Operating Model Q1 FY2001 Revenue Estimate Revised Material Shortages Affect Results
MOUNTAIN VIEW, Calif., Oct 9, 2000 /PRNewswire via COMTEX/ -- SGI said today
that it plans to begin implementing a new company-wide operating model designed
to improve overall efficiency and operating profit. The plan will be under the
stewardship of the Company's new Executive Vice President and Chief Financial
Officer, Hal Covert. Covert, who joined the Company on July 26th, is a 25-year
finance and operations veteran with extensive experience in the technology
field. He was formerly CFO of Adobe Systems, Inc., the San Jose-based software
company, and is widely credited with having played a major role in significantly
increasing its shareholder value.
"Over the past year, SGI has completely repositioned its business model," said
Bob Bishop, Chairman and CEO of SGI. "Today SGI is focused on growth segments
where we are the market leader and can provide technical and creative users with
solutions that deliver competitive advantages in their core business. With a
large and growing market, new product portfolio and a focused management team,
SGI is positioned to achieve growth and profitability during the second half of
FY2001."
"By implementing an enhanced operating model with industry-leading performance
targets, we can significantly improve shareholder value," said Covert. "Our new
operating model will provide the fiscal structure and include the world class
business processes that are needed to achieve a meaningful and sustainable
improvement in operating results."
The Company expects to outline more details of its enhanced operating model in
the weeks ahead, which will include, among other things, a new global enterprise
resource planning (ERP) system, supply chain and order administration
streamlining, and the sale of selected assets. The sale of selected assets over
the balance of the fiscal year is projected to generate approximately $400
million - $450 million in cash and result in a gain of approximately $200
million - $250 million. In addition, the Company today separately announced a
stock buy-back program of up to 50 million shares of its outstanding common
stock.
Q1 FY2001 Results
SGI also said today that it anticipates its quarterly results will be below the
range of analysts' estimates. For the first quarter of FY2001 ending on
September 30, 2000 revenue is projected to be approximately $420 million. The
Company is projecting a loss of $.28 -$.30 per share for the quarter, which
includes a gain on the sale of selected assets and other income of approximately
$50 million.
The Company stated that material shortages related to a few specific suppliers
account for the revenue shortfall. Orders in the first quarter are projected to
be approximately $370 million equating to a book-to-bill ratio of approximately
1.2. Backlog as of September 30, 2000 is projected to be $370 million, which is
$70 million higher than June 30, 2000 and approximately $120 million higher than
the desired level. "The higher backlog is a reflection of strong order momentum
for our new products and lower than planned shipments due to material
shortages," Covert said.
For Q2 FY2001 the Company expects revenue to be in the range of $500 million -
$530 million. Assuming that current material shortages are substantially
resolved by the end of this calendar year, SGI expects revenue growth to be in
excess of 20% in the second half of the fiscal year ending June 30, 2001. The
Company is forecasting total revenue of $2.2 billion for FY2001 versus $2.06
billion in FY2000 after excluding divested business units. The statements
regarding estimated results are based on preliminary information and management
assumptions. Actual results for the quarter will be announced on October 23,
2000.
The Company will conduct a conference call today at 2:00 p.m. PDT to provide
additional details. The dial-in number for the call is 913-981-4900, and the
webcast site is www.StreetFusion.com. An audio replay of this call will be
available after 5:00pm PDT today until October 16th at 719-457-0820 (passcode:
403192). All links to the archived webcast and audio replay are available
through the Company's web site at www.sgi.com/company_info/investors.
This news release contains forward-looking statements regarding our business,
objectives, financial condition and future performance. These forward-looking
statements include, among other things, statements relating to expected levels
of revenue, gross margin, operating expense, component availability from
third-party suppliers, timing of shipment of product, market position and future
profitability. These forward-looking statements are subject to risks and
uncertainties detailed from time to time in the Company's SEC filings, including
the report on Form 10K for the fiscal year that ended June 30, 2000. These risks
and uncertainties could cause actual results to differ materially from those
expressed or implied in such forward-looking statements. Such risks and
uncertainties include, among other things: the risks of continued constraints on
availability of key, single-sourced components; risks related to the planned
reduction in operating expenses, including adverse revenue impact or the
inability to realize planned efficiencies; risks related to our dependence on
timely and proper performance of our partners and suppliers; risks associated
with implementation of our new business practices, processes and information
systems; and adverse changes in the specific markets for our products, including
expected rates of growth and ability to gain market share relative to our
competitors.
About SGI
SGI, also known as Silicon Graphics, Inc., is a technology solutions provider
with a broad range of high-performance computing, advanced graphics, and
consulting services that enable its technical and creative customers to maintain
a competitive advantage in their core businesses. SGI customers are making
important contributions and discoveries in a wide range of fields that improve
our daily lives. From designing and building safer cars and airplanes, to
discovering new medications and oil reserves, to helping us understand and
better predict the weather, to entertaining us with thrilling movie special
effects, SGI systems and expertise are empowering a world of innovation and
discovery.
The Company is headquartered in Mountain View, Calif., and has offices
worldwide. The Company is located on the Web at www.sgi.com.
SOURCE SGI
CONTACT: financial, Larissa DeCarlo, 650-933-7738, or ldecarlo@sgi.com,
or media, Richard Marshall, 650-933-8119, or rmar@sgi.com, both of Silicon
Graphics, Inc.
/Company News On-Call: prnewswire.com or fax,
800-758-5804, ext. 795806
URL: sgi.com
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