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January 25, 1998

SGI NABS HP COMPUTER CHIEF BELLUZZO TO BE ITS NEW CEO

By CBR Staff Writer

Showing it’s still got the right kind of pulling power, Silicon Graphics Inc has lured Hewlett-Packard Co computer supremo and Lew Platt’s heir-apparent Rick Belluzzo to be its new chairman and CEO. SGI’s hoping Belluzzo, who was instrumental in forging HP’s relationship with Microsoft Corp on Windows NT last year and is said to have a good rapport with Bill Gates, can ignite its nascent NT interest. Belluzzo replaces Ed McCracken who resigned as chairman and CEO of SGI back in October of last year, but stayed on until a successor was found. We understand that more than one HP exec was recommended for the post, including one of Belluzzo’s reports. SGI insiders think it’s a good fit, believing its culture is in any case mostly derived from HP: McCracken [who came to SGI from HP] has always been a person of the highest honesty and integrity; getting a senior HP person is a much better match for us than quite a few others would have been, one source commented. Belluzzo is recognized as a protege of retired HP printer czar Dick Hackborn who sits on Microsoft’s board. SGI, which Thursday reported a second quarter net loss of $31.47m, expects the restructuring program it announced last October to reduce its workforce by up to 1,000. Wall Street’s reaction to the news was mixed although most analysts seemed surprised – and encouraged – SGI was able to lure Belluzzo away. SGI shares closed up $2.43 on the news to reach $13.68. Goldman Sachs upgraded its outlook for the company to outperform, while Merrill Lynch maintained its neutral rating saying We’re skeptical of a sustained turnaround, but spinning off MIPS and sticking to its knitting might allow SGI to be a profitable niche player.

Deck chairs

Meantime HP’s had to do some nifty re-arranging of the deck chairs while a replacement for Belluzzo – a 22-year HP veteran who was widely tipped to be CEO Lew Platt’s successor – is found. Platt takes charge of Belluzzo’s $35bn worth of reports on an interim basis, including printers and PCs, workstations, servers, consulting and software services. HP has also taken the opportunity to streamline its business by collapsing several product groups into two organizations. The existing computer organization gets the former measurement systems organization’s information storage group. A new measurement organization forged from test and measurement and measurement systems organizations and includes all the products groups from HP’s electronic test and measurement business, medical products, chemical analysis and components groups. EVP and general manager Ned Barnholt gets the reins to the group. He previously headed the test and measurement organization. SVP and general manager of the former measurement systems group, Doug Carnahan, is taking early retirement after 30 years with HP. HP will also create an executive management committee – which seem to be all the rage these days – that will meet on a monthly basis to discuss all aspects of the business. It replaces several councils and committees. Named to the executive in addition to Platt, Barnholt and Wayman are VP and GM software and services Ann Livermore; VP and GM consumer products Antonio Perez; VP and GM enterprise systems Bill Russell; VP and GM LaserJet solutions Carolyn Ticknor; and VP and GM personal systems Duane Zitzner. HP’s geographic operations unit now reports to EVP finance and administration Robert Wayman instead of directly to Platt.

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