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April 3, 1989

PROFITS FALL AT SILICON GRAPHICS BECAUSE ITS NEW HARDWARE IS LATE

By CBR Staff Writer

Its been a case of the good, the bad, and the ugly over at Silicon Graphics’ Mountain View headquarters in California during the last week or so. The good news is that orders for its new high end Power Iris Series of parallel RISC workstations based on the MIPS Computer Systems Inc R3000 processor are much higher than expected. The bad is that the 25MHz version of the chip used in the machines only became available in quantity during last month from the manufacturer, Performance Semiconductor Corp. As a result shipments of the high-end workstations have been delayed. The main problem stems from an initial delivery of R3000s last December, according to Silicon Graphics’ vice president Mark Perry in an interview with Computer Systems News. The chips only clocked at 23.7MHz and not the 25MHz required, said Perry. However the problem is now said to be rectified and volume shipments of the delayed workstations are set to begin this quarter. Silicon had hoped for a balanced mix of orders between the new R3000 machines and the slightly older 16MHz R2000 based systems. In the event it appears customers have rushed for the newer product. LSI Logic Corp and Device Technology Inc are also producing the R3000 – soon to be joined by NEC Corp and Siemens AG – however Performance claims to be the first to produce a 25MHz version of the part. The ugly news now facing Silicon Graphics is that third quarter revenue and earnings are expected to be significantly lower than predicted. Wall Street says the firm, with the top growth rate in the workstation market – 80% according to Dataquest, – will do around $69m in for the third quarter ending March 31. Earnings per share put at a modest 15 cents, down from earlier projections of 30 cents or so – compared with $40m sales and 25 cents per share earnings for the same quarter last year.

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