Departing SGI chief may join Microsoft

Rick Belluzzo, who abruptly resigned yesterday as chief executive of Silicon Graphics, reportedly will join Microsoft to run its interactive operations unit.

The unit includes the Microsoft Network online service. Microsoft has been searching since last November for a new leader for its Internet businesses, which are facing stiff competition from America Online and others, the Wall Street Journal said in reporting Belluzzo's decision today.

A source told CNET News.com that Belluzzo had told the SGI board that he was talking to Microsoft's chairman Bill Gates and to company president Steve Ballmer about heading up their Internet operations, including WebTV.

When Belluzzo's resignation was announced yesterday, Silicon Graphics spokesman John Cristofano would say only that the departing CEO was leaving to take a position at a company that doesn't compete with SGI.

Although his resignation took SGI's board by surprise, it was mainly the timing of his decision that was unexpected, sources said. During the last board meeting in July, Belluzzo told the directors that "he was not sure he was the right person to lead the company," a source familiar with those discussions told CNET News.com yesterday.

The board responded that it had confidence in Belluzzo and that the CEO would put the company in a difficult position if SGI went forward with its planned restructuring, only to have him pull out later on.

Belluzzo told directors that he would do what's best for the company, the source said. After the restructuring plans were announced in August, however, SGI's stock fell from about $17 a share down to $12.

"He told [the board] that he felt he had lost the confidence of Wall Street," the source said.

Despite the board's efforts to convince Belluzzo to stay, the CEO said he had taken another job. "I'm sorry to see him go. But he left the company in a positive position with Bob's qualifications," the source said.

Bob Bishop, 56, a Silicon Graphics board member, headed up SGI's marketing organization until 1995. He joined the company in 1986.

"Having participated in the formation of our new strategy, I am fully committed to the next phase in SGI's transformation that positions the company for sustained growth and profitability," Bishop said in a statement. "I have enormous faith in the talented people, depth of technology, and customer loyalty resident at SGI."

"As an active board member and the person who led our global sales organization until 1995, he is intimately familiar with the company, its customers, its technology, and its people," SGI board member James McDivitt said in a statement. "Bob brings substantial experience to this position, having built and managed several worldwide sales and marketing organizations at SGI, Apollo Computer, and Digital Equipment Corporation during his 35-year career."

Belluzzo, a former Hewlett-Packard executive, was named CEO in January 1998, taking over from Ed McCracken.

Belluzzo is leaving the computer company in the midst of a years-long attempt to return to profitability. The company has been cutting thousands of jobs and is changing its future computer line to use Intel chips and the Linux operating system.