Silicon Graphics Inc is going to exit its fiscal 1999 looking very different to the SGI of today. Its Cray supercomputer business is already half the size it was this time last year, and it will also have begun shipments of Windows NT workstations. However SGI’s NT gambit isn’t going to make it onto any Christmas list of hit records as testing uncovered a problem with the units and the fix will push first deliveries out into January. That is likely to push SGI’s third fiscal quarter into the red as revenue from NT sales will be in the region of $300m, not the $500m expected although SGI still expects to exit its fiscal 1999 with a profitable quarter. It says it now expects that product revenues from growth markets – read NT and Origin – to account for some two thirds of product revenue by that time, rather than the one third it had originally projected. It also promises that a slew of new NT technologies will follow initial shipments of Intel workstations. Other programs it is putting in place include a new partner program guaranteeing network uptime, mirroring recent moves by Sun, HP and other to offer guaranteed availability of their high-end commercial Unix servers. Although sales of its Origin server line rose 25% year over year all of that gain was all attributable to the US. European sales were down and Asia Pacific declined significantly. Graphics workstation sales slumped 30%. The Americas were 54% of revenue; Europe 30% and the rest of the world 17%. In the quarter, US revenue declined 23% year over year, Europe fell 3% and revenue from the rest of the world tumbled 31%, all in dollar terms. SGI still has to axe half of the 700 employees it said it would in its April restructuring. It has 9,830 staff, down 11% on last year. Its remaining majority stake in Mips Technology Inc is worth some $700m at $23 a share. SGI yesterday reported a first quarter net loss of $44m, including a $33m gain for the Mips Technology IPO, down from a loss of $56m last time – not third quarter numbers as we previously said (CI No 3,522). Revenue was down 20% at $616.3m compared with $767.9m.
