SGI files for Chapter 11 protection

A correction was made to this story. Read below for details.

Silicon Graphics Inc. announced on Monday that it has filed for Chapter 11 bankruptcy protection as it seeks to reorganize and re-emerge from its financial woes.

SGI, a former high-flying server and workstation maker for Hollywood and the graphics industry, said it reached a voluntary agreement with its debt holders to simplify its capital arrangements and cut its debt by about $250 million under the reorganization plan.

The company, which made its filing in the U.S. Bankruptcy Court for the Southern District of New York, said it plans to turn in a reorganization plan to the court soon and to emerge from Chapter 11 within six months.

"This is a necessary and responsible step that will strengthen the company and foster a sustained turnaround at SGI," Dennis McKenna, chief executive, said in a statement.

SGI, which is based in Mountain View, Calif., already has a history of turnaround attempts.

Its latest was initiated in March, when SGI cut 12 percent of its work force and hired a new chief financial officer and chief operating officer. The moves were part of a plan from McKenna, who was hired as CEO earlier in the year. McKenna said he wanted to expand into new customer markets, such as telecommunications, that have high computing needs.

And under SGI's previous CEO, Bob Bishop, the company launched a restructuring effort in 2000 to shift its focus away from selling supercomputers, multimedia software and embedded chips for consumer devices to one that focused on much smaller markets, such as digital content creation and supercomputing for technical and scientific projects. SGI's technology, for example, played a role in creating content for such movies as "Lord of the Rings."

Before Bishop's arrival in 1999, then-CEO Rick Belluzzo also initiated a turnaround effort at SGI that included cutting 1,500 positions and selling off its Cray supercomputer unit.

Despite these and other efforts since the early 1990s, the company has continued to encounter losses and lose favor with investors. Late last year, SGI's stock was delisted after falling below New York Stock Exchange requirements.

 

Correction: This story misstated the exchange that delisted SGI's stock. The company was delisted from the New York Stock Exchange.

[Dachi]

6 cents/share currently

Trading OTC as SGID.OB they are $0.06/share currently.

<a class="jive-link-external" href="http://finance.yahoo.com/q?s=SGID.OB" target="_newWindow">http://finance.yahoo.com/q?s=SGID.OB</a>

[snoofy]

Where the value is.

The only thing SGI has left after losing their chip, OS, graphics, software and workstation market to PCs is their Altix servers. These are actually a superior Itanium server design, but the value cannot be realized without being sold to a company in a better marketing position. DELL could now profitably buy SGI on the cheap. It would be a smart move since Itanium may eventually prove to be the superior server chip and would give DELL some good patents and the means to match HP and IBM technically in server design capability. From DELLs marketing muscle the value to the Altix server line would quickly appreciate. But without being acquired SGI is on the path to a quick and certain death.

[balooh]

you gotta be dreaming

Intel is not committed to Itanium and HP, the only serious
customer for Itanium isn't fully committed to it either. Without
full commitment by both the manufacturer and the main
customer, there is no chance whatsoever that Itanium "may
eventually prove to be the superior server chip". And
consequently, buying SGI for its Itanium assets would be foolish,
not a "smart move".

The only value left in SGI is the brand recognition it still has and
its customer portfolio. But both are eroding rather quickly.

[scdecade]

Bad omen for HP?

Yeah, where is the value in SGI's strategy? If the answer is 'nowhere', then HP's enterprise business is looking doomed. Very much like SGI, HP has given up their chip (PA_RISC), OS (HP-US), and workstations (no Itanic workstations). HP's only purported differentiator is the chipset around Itanium. However, IBM and Sun are engineering the chipset at the die level with onboard memory controllers etc. HP is looking more and more out of touch. Actually, they've looked out of touch for a while... Now they're looking trapped.

Anyone want to bet against HP introducing 64 slot AMD Operon Superdomes within the next 2 years?

[webdev511]

The slide started under Belluzzo..

The former exec vp of HP's printer and pc divison pushes SGI into the consumer products arena. It was the beginning of the end.

If SGI were going to do anything even close the the consumer space, they should have gone into the space that NVIDIA now occupies. SGI always had the best overall system speeds because of superior interface bus designs. Trying to build a complete pc based workstation ended up being harder than expected.

Add the misstep with Itanic and even the great people that powered SGI weren't able to catch up.

[nightveil]

Wow. It's like Pan-Am.

2001: A Space Odessey has a Pan-Am space-plane that takes
passengers to the space station between the Earth and the Moon.

Pan-Am is, for all intents and purposes, a dead company.

SGI gets a lengthy mention in the Lost In Space movie...

Just something that cross my mind.

[product strategist]

visual tribute

heres i a little visual tribute to sgi

<a class="jive-link-external" href="http://design-crit.com/blog/2006/06/sgi-down-for-count.html#links" target="_newWindow">http://design-crit.com/blog/2006/06/sgi-down-for-count.html#links</a>