Silicon Graphics Inc is warning that its third-quarter revenue and earnings are going to come in south of Wall Street expectations. The Mountain View, California company reckons it will incur a significant loss on revenue that will total roughly $700m, after sales of $851 million in the second quarter. Analysts surveyed by First Call were looking for the company to break even. SGI says several trends that have affected the past few quarters are behind the shortfall – including declines in the Unix workstation – due to Windows NT encroachment – and supercomputer businesses. The company is also complaining of marketing execution challenges in its server business. What that means, a spokesperson said, is that its server sales force has had trouble targeting the right markets for its products. We take it to mean that its NUMA server marketing effort bombed. SGI promises that in the next few weeks new CEO Richard Belluzzo will unveil a new strategy that will better position it for growth through increased market focus (CI No 3,366). That’ll supposedly start to show up on the bottom line in the second or third quarter of its financial 1999. SGI wouldn’t give any further details, but told us to stay tuned. Belluzzo has vowed he’ll cut non-core businesses and the pending announcement could include the spin-off of its MIPS RISC chip unit (CI No 3,377). The received wisdom is that SGI will give on the pretense that it is a general purpose server company and return to its core strengths in graphics and high-performance I/O such as the Gigabit System Network – Super-HiPPI – makeover it is planning (CI No 3,372 ). The sales and marketing problems have been well documented over the past six months as SGI reported a losses of $56m and $31.5m in its first and second quarters, respectively. The second-quarter loss included restructuring charges of about $50m stemming from the company’s firing of 1,000 employees, announced last October (CI No 3,279). SGI shares showed almost no reaction to the news – guess they’re used to it – slipping just $0.1875 to $13.9375 on Friday.
