New SGI Chief Sticking With Turnaround Plan

Silicon Graphics Inc.'s new CEO, Robert Bishop, said he will continue with the turnaround strategy laid out by former CEO and Chairman Richard Belluzzo, who unexpectedly resigned this week.

Bishop, who helped build the company's international sales, said SGI still has to execute the plan and "that's where we have some room for involvement and fine-tuning." The new strategy, announced earlier this month, calls for narrowing SGI's focus to its server and visual computing units, entering the broadband Internet market, spinning off its Windows NT and Cray Research Inc. supercomputer units and embracing the Linux system.

Bishop, 56, insisted he's not grooming the Mountain View, California, company for an acquisition.

Bill Kelly, SGI's senior vice president of corporate marketing and development, said the company chose a successor quickly because "it was important to preserve the momentum that we have. The company could not afford an extended period of interim leadership."

Some observers said putting a new leader at the helm quickly was imperative. "It was important for SGI not to lose talent because of being leaderless," said Philip Rueppel, an analyst at Deutsche Banc Alex. Brown in San Francisco.

Bishop also has experience at SGI. A 35-year industry veteran, Bishop joined SGI in 1986 and helped build its international division. He joined SGI's board of directors in 1993.

Questions are still swirling around Belluzzo's departure to take a non-CEO position at a noncompeting firm. Some industry watchers said Belluzzo will accept the top spot at Microsoft Corp.'s Internet operations. SGI officials wouldn't confirm Belluzzo's plans or elaborate on why he left, but some industry analysts said the prospect of another turnaround try may have been unappealing.

"Things weren't really going the way he had anticipated," said Brian Eisenbarth, an analyst at Collins & Co. in San Francisco. "This is his second plan. The first plan didn't work out, and I think that's why he's leaving."

Belluzzo, a former Hewlett-Packard Co. executive, was named CEO and chairman of SGI in January 1998 and spearheaded a plan to reduce operating expenses and eliminate 1,000 jobs worldwide. The company still struggled to achieveprofitability until the most recent quarter, when profits rose to $157.8 million. On Aug. 12, Belluzzo unveiled what he called the "second phase" of the turnaround.

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