Rackable to buy vanquished SGI

Former Silicon Valley powerhouse to be sold. Agam Shah reports

Rackable Systems says it plans to buy the assets of bankrupt Silicon Graphics (SGI) for roughly US$25 million (NZ$44 million) in cash, and will also assume certain liabilities.

SGI filed for Chapter 11 bankruptcy on Wednesday. The asset sale, which is subject to approval by the bankruptcy court, is expected to close within 60 days. SGI, which had posted a net loss of US$49.2 million in the second quarter, will continue operating while the deal closes.

The acquisition will expand Rackable's product portfolio in the high-performance computing (HPC) market, Mark Barrenechea [CQ], Rackable's president and CEO, says.

Rackable will gain hardware and software technologies related to HPC, allowing it to build systems that can process complex algorithms for scientific computing and other environments. It will also get access to SGI's customers in the government, scientific and academic sectors.

The deal may create some overlap at the lower-end of the HPC market, where Rackable already sells servers based on Intel x86 chips, says George Skaff, Rackable's vice president of marketing. But SGI has access to organisations such as NASA, while Rackable is stronger in the commercial sectors.

Rackable will also get SGI's services infrastructure, which extends to about 20 countries and will give Rackable an instant global presence, the company says.

Skaff says it would be premature to discuss layoffs since the companies have only just reached an agreement. A transition team is being formed to merge the companies' operations.

SGI's rise and fall has been summarised by Silicon Valley website Mercury News.

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