RealTime IT News

SGI to Slim Down Workforce... Again

Silicon Graphics (SGI) Wednesday said it is making drastic cuts to its staff levels in an effort to hone its core products and stay in the server and workstation hunt.

The Mountain View, Calif.-based firm said about 600 positions in specific divisions will be eliminated in the restructuring. This after SGI said it would fire some 400 employees back in May 2003. In all, the company said its headcount has been reduced by approximately 25 percent over two quarters.

SGI chairman and CEO Bob Bishop said the job cuts also let the company redouble its efforts on new High-Performance Computing, Storage and Visualization products.

"Having made significant product announcements in the last two quarters, we are now in a position to take bold and aggressive steps to improve our core financials" Bishop said in a statement. "Today's announcement reflects SGI's determination to reduce its breakeven point in a tight economy."

The company said things looked promising with its Linux-based SGI Altix line of superclusters and servers, as well as an uptick in sales of its InfiniteStorage products. In July, the company even it heralded a new generation of visualization products with its Silicon Graphics Onyx4 and Silicon Graphics Tezro systems.

But increased competition from IBM , Dell , Hewlett-Packard , and Sun Microsystems have whittled away SGI's market share. Analysts predict the company will report a loss of 16-cents per share during its next quarterly earnings report.

The company said it is still looking to hit the breakeven point and said the overall cuts will shave its operating expenses by $100 million starting in its December quarter.

Moving forward, SGI said it's decided to concentrate more of its next-generation R&D efforts on products based on the Linux operating system through its development partnership with SuSE Linux and Intel's Itanium 2 processors for general purpose technical computing.

The rest of the way, SGI says its future efforts involving MIPS microprocessors and the IRIX operating system will focus on customers looking for custom-built systems.

For example, its Origin 3000 line of supercomputing servers is at the heart of specialized applications such as satellite ground stations, weather prediction and real- time simulation; while Onyx visualization systems are used for entertainment special effects, oil reservoir simulation and large model visualization in the automotive industry.

Also as part of the restructuring, SGI said it preparing to vacate its Mountain View headquarters into a smaller office close by. The old SGI offices will soon be the corporate offices of search engine giant Google.