Even under Rick Belluzzo’s new regime, there was little to applaud in Silicon Graphics Inc’s third quarter numbers, especially after Belluzzo kicked off his comments by painting a gloomy picture of the quarter ahead (CI No 3,394). While fourth quarter revenue will be more than the $708.3m it did in the third quarter, it will be shy of $800m. What’s more, the uptick will be considerably less than the improvement between the third and fourth quarters of its last financial year, when it had a safety net of a $700m-odd order backlog; this quarter it is $378m. Contributing to the 33% overall decline in revenue were workstations, sales of which were off 26%, and servers down 34%. Orders were down 30% and the book-to-bill was 0.90. The net loss of $152.6m included a $114m charge, $70m to refocus its Cray supercomputer division and $44m to write-off goodwill. Belluzzo blamed price competition, a fragmented marketing strategy and confusion over SGI’s future, as chief reasons why customers shopped elsewhere. The US accounted for 51% of revenue, Europe 27% and rest of the world 22%. Gross margins were 38.7% before the charges – 28.8% after. Headcount is to fall by 1,000 by attrition not layoffs – deserting, sinking and ship are words that come to mind – expenses will be cut by $200m in its next financial year and a revamp of its graphics products is promised in the fourth quarter. Meantime, proving he’s still got pulling power, Belluzzo has lured yet another executive away from his former employee, Hewlett-Packard Co. Keith Watson’s on board to run worldwide sales and marketing as EVP. He was formerly HP’s VP and general manager of worldwide commercial channels.
