January 11, 2000 1:00 AM PST

SGI spins off MediaBase software unit

SGI has spun off its MediaBase software unit into a separate company called Kasenna, fulfilling a promise made by former chief executive Rick Belluzzo as part of the troubled computer maker's latest recovery plan.

MediaBase software is used for sending streams of video, audio and other data across computer networks. SGI is a minority shareholder, and other investors include U.S. Venture Partners, Alloy Ventures and Entertainment Media Ventures.

"We've been lining up venture capital funding" since the spin-off plan was announced in August, said Greg Estes, general manager of SGI's broadband and Internet solutions business unit. "We're going to continue to be a significant minority shareholder in the company," and SGI will continue to sell, service and support MediaBase software worldwide, he added.

The MediaBase software currently works on SGI servers running its Irix operating system, but Kasenna and SGI plan to release a version for SGI's version of Linux as well, the companies said.

SGI plans to sell servers with hardware and software that is set up specifically for streaming media, Estes said. These systems will be based both on SGI's own chips and on Intel chips.

The spin-off is part of Mountain View, Calif.-based SGI's plan to recover from its financial woes. The company, famed for making high-end graphics hardware used in making movies such as "Jurassic Park," has been trying to increase its server sales in the strategy adopted profitably by Sun Microsystems.

A years-long effort to adopt Microsoft's Windows NT operating system has fallen by the wayside in favor of Linux, but SGI stock has yet to benefit from the surge many companies experience when announcing Linux plans. SGI is producing a version of the open-source operating system based on Red Hat's model and designed for computers with hundreds of processors.

Shortly after former chief executive Rick Belluzzo announced the new recovery plan, SGI's stock plummeted and Belluzzo departed for Microsoft. Bob Bishop, the new CEO, was pulled from within the ranks of SGI, and he plans to return SGI to its high-end hardware roots. Part of that plan is a new computer, the SN-1, due to arrive in 2001.

Things could be getting a little rosier for SGI. "We think upside surprises are possible at...SGI," said Merrill Lynch analyst Steve Milunovich in a report Friday. "SGI's business has stabilized, especially in Unix workstations."

SGI also is unloading its Cray Research computing division, which the company acquired in 1996. Though SGI has found an undisclosed financial partner to help with the effort, the deal still hasn't been finalized five months after the plan was announced.

MediaBase was originally developed as part of a project with Time Warner to deliver video-on-demand in a pilot project several years ago in Orlando, Fla., Estes said. Fewer than 30 SGI employees have left to join Kasenna, he added.

Tom Engdahl has been named chief executive of Kasenna, the companies said.

 

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