SGI to Divest Cosmo Subsidiary

Cosmo Software Inc. will be divested in the next three months as part of an effort by its parent company, struggling Silicon Graphics Inc., to refocus its business and streamline operations.

In a briefing for press and analysts in New York on Tuesday, SGI executives
said they were considering a number of options for Cosmo, a maker of VRML
software comprised in part of SGI’s acquisition last year of Paragraph
International.

Cosmo had recently added Java to the list of technologies it was developing
and had come out with a version of its software that ran on Windows
machines. But applications software in general isn’t in the new business strategy the company described on Tuesday. That plan includes a broad streamlining of SGI’s product lines and a new commitment to Intel technology.

William M. Kelly, senior vice president for corporate operations at SGI,
said one of the options for Cosmo would be to spin it off as an independent company with several owners, of which SGI might be one. Another option would be to sell the technology Cosmo has been developing to an outside company. He did not say who that outside company might be.

One way or another, though, SGI executives said Cosmo would not be part of the company’s day-to-day financial picture come June 30, when SGI’s fiscal year ends.

SGI, which has seen its market share and profits erode in the last few years, is under pressure to get its costs under control and revitalize growth.