New SGI CEO says he'll stick with turnaround plan

Silicon Graphics Inc.'s new chairman and CEO, Robert Bishop, said he'll continue with the turnaround strategy laid out by Richard Belluzzo, who abruptly resigned on Monday, leaving the company scrambling for a replacement.

Speaking to reporters in a conference call hours after accepting the position, Bishop said SGI still has to execute the turnaround plan announced earlier this month. "That's where we have some room for involvement and fine-tuning," he said.

The new strategy calls for narrowing SGI's focus to its server and visual computing units, entering the broadband Internet market, spinning off its NT and Cray supercomputer units and embracing the Linux operating system.

Bishop insisted he's not grooming the Mountain View, California, company for an acquisition and that he's committed for the long term.

William Kelly, senior vice president of corporate operations, said the company chose a successor quickly because "it was important to preserve the momentum that we have. The company could not afford an extended period of interim leadership," he said, pointing as an example to rival Compaq Computer, which went through an extensive search for a new CEO before choosing an insider for the job.

Some observers said putting a new leader at the helm quickly was imperative. "It was important for SGI not to go into a period where they would lose talent because of being leaderless. Belluzzo didn't give them any other alternative," said Philip Rueppel, analyst at Deutsche Banc Alex. Brown in San Francisco.

Bishop also has experience with SGI.

A 35-year technology industry veteran, Bishop joined SGI in 1986 and built its international division. He joined SGI's board of directors in 1993 and continued to be active in management through 1995.

Questions are still swirling around Belluzzo's departure to take a non-CEO position at a noncompeting firm, according to SGI officials who wouldn't elaborate further. Some industry analysts said the prospect of another turnaround try may have been unappealing.

"It doesn't really take me by surprise, considering things aren't really going the way he had anticipated," said Brian Eisenbarth, analyst at Collins & Co. in San Francisco. "This is his second plan. The first plan didn't work out and I think that's why he's leaving."

Belluzzo, a former Hewlett-Packard executive, was named CEO and chairman of SGI in January 1998 to spearhead a plan to reduce operating expenses and eliminate 1,000 jobs worldwide. The company still struggled to achieve profitability until its last quarter when profits rose to $157.8 million. On August 12, Belluzzo unveiled what he called the "second phase" of the turnaround plan.

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