SGI Posts Smaller Than Expected Loss

Although miles away from sustained profitability, workstation maker Silicon Graphics has posted a smaller than expected first-quarter net loss of $US44 million, or 24 cents per share, on revenue of $616 million. The company still has 'a way to go' to sustained profitability, said SGI CEO Richard Belluzzo- who also announced that SGI's new Windows NT-based workstations, originally to launch at the end of the year, had been postponed to the first half of January 1999, due to a last minute technical problem discovered during testing.

Although miles away from sustained profitability, workstation maker Silicon Graphics has posted a smaller than expected first-quarter net loss of $US44 million, or 24 cents per share, on revenue of $616 million.

Those results include a $33 million gain on the initial public offering of SGI's Mips Technologies subsidiary. Excluding the Mips gain, SGI's net loss would have been $77 million, or 41 cents per share, which compares to last year's first quarter net loss of $56 million, or 31 cents per share.

The bad news wasn't as bad as Wall Street had predicted it to be, but actually 4 cents below the 45 cent loss consensus estimate collected by First Call, which polled 13 analysts.

SGI's $616 million revenue for the first quarter of fiscal 1999, ended Sept. 30, compared with $768 million in the same quarter a year ago. Operating expenses for the quarter were $335 million, down by about $40 million from the previous quarter and the same quarter a year ago.

The company still has "a way to go" before achieving sustained profitability, Richard Belluzzo, SGI's chairman and chief executive officer, said in a statement. He added that he is encouraged by the "progress demonstrated in this quarter's results."

While managing to "dramatically" reduce operating expenses in the quarter, Belluzzo also announced that the expected introduction of new Windows NT-based workstations, originally scheduled for the end of the year, has been postponed to the first half of January 1999, due to a last minute technical problem discovered during testing.

"We are not taking any chances with these machines," said Steve Gomo, SGI's chief financial officer in an interview with the IDGNS. He added that the small problem, which he declined to specify, has been fixed. However, more testing of the new workstation is now necessary, which results in the delay of the product's introduction.

"If you don't get a new product out by the middle of December, you can't introduce it," Gomo said. "It's hard to get through the Christmas noise," Gomo said.

As for reaching profitability, Gomo said, SGI hopes to significantly reduce its losses in the third quarter and return to profitability in the subsequent quarter.

In April SGI outlined a new corporate strategy, which involves moving key products to the Wintel platform and spinning off its Mips Technologies Inc. chip-making unit.

SGI is based in Mountain View, California ,and can be reached at +1-415-933-8515 or on the World Wide Web on http://www.sgi.com/.

Join the newsletter!

Error: Please check your email address.
Show Comments

Market Place

[]