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SGI Reports Sharp Losses

October 21, 1999

SAN JOSE, Calif. (AP) _ Troubled computer maker Silicon Graphics Inc. reported its first-quarter losses steepened, falling below Wall Street expectations, after it set aside money to slash its work force and retool its operations.

For the three months ended Sept. 30, SGI reported a net loss of $212.9 million, or $1.17 a share, compared to a loss of $44 million, or 24 cents a share, the same period a year earlier.

Excluding charges the company announced in August it was taking to cut up to 3,000 jobs and write down costs of some computer lines, SGI’s loss for the most recent quarter was $68 million, or 37 cents a share.

Wall Street had expected Mountain View, Calif.-based SGI to report an operating loss of 7 cents a share, according to a survey of analysts by First Call/Thompson Financial.

The 17-year-old high-tech company has lost money for two years as the supercomputer market continues to show weakness. SGI also has been hurt by stiff competition in the high-end computer workstation market from competitors such as Hewlett-Packard Co., IBM and Sun Microsystems.

The company said also suffered in the current quarter from the sudden departure of Richard Belluzzo, the architect of SGI’s turnaround plan, who became Microsoft Corp.’s head of Internet operations.

``We are disappointed with the results and the temporary loss of momentum that has resulted from the recent management transition″, said Robert Bishop, SGI’s chairman and chief executive. ``I remain confident that by continuing to simplify our business we will be able to improve our execution and return to growth and profitability.″

Revenue fell 5 percent to $585 million from $616.4 million.

Shares of Silicon Graphics rose 37 1/2 cents to $10 in trading on the New York Stock Exchange.

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