Q1 slump forces SGI restructure

Silicon Graphics' (SGI) channel is set for disruption as the graphics workstation vendor prepares to enter the volume PC market in the wake of disappointing results.

The troubled Unix server maker faces brutal changes, after poor Q1 results.

In the three months to 30 September, the firm made net losses of $56 million, against losses of $22 million last year, on turnover that remained flat at $621 million. It incurred an exceptional charge of $17 million, related to the acquisition of ParaGraph International, along with 'other merger-related expenses' totalling $2 million.

According to a statement issued by SGI, it expects to take a restructuring charge of up to $50 million in the current quarter to December 1997.

Following disappointing Q1 results, SGI unveiled a restructuring programme, due to start next month, to reduce its operating expense levels. The firm intends to shed up to 1,000 jobs from its worldwide workforce.

SGI has continually been squeezed by rival Sun Microsystems, as well as by the the increasing popularity of high-performance Windows NT-based machines, forcing it to enter the Intel-based market.

But SGI chairman and CEO Edward McCracken announced his resignation after issuing the figures. He will remain with Silicon Graphics until a replacement has been found. Executive VP for worldwide sales Gary Lauer has also resigned.

Commenting on SGI's future, McCracken said: 'We're focusing our resources in areas where we anticipate long-term growth. So we are continuing to invest in high-growth areas like high-bandwidth servers and our next generation graphics workstations based on the Intel and Windows NT standards.'