SGI reviewing plans for fiscal 2002

Although revenue for its just-finished fiscal fourth quarter were within expectations, high-performance computer maker Silicon Graphics Inc. yesterday said it's reviewing plans for the new fiscal year because bookings have fallen below projected levels.

In addition, the Mountain View, Calif.-based company said in a statement that Hal Covert, its president and chief financial officer, has resigned "for personal reasons" but will continue to serve as a consultant until the end of July. Covert joined the company just a year ago.

Jeffrey Zellmer, the corporate controller, will replace Covert as CFO, while Chairman and CEO Bob Bishop and Executive Vice President and Chief Operating Officer Warren Pratt will assume Covert's other responsibilities.

SGI could not be reached for comment.

Jay Stevens, an analyst at New York-based Buckingham Research Group Inc., said he has no insight into why Covert decided to leave SGI. "I was surprised [by the announcement]," he said.

In a statement, SGI said that estimated revenue for the fourth quarter ended June 30 would be between US$430 million and $440 million. That's less than the $512 million in revenue reported for the same quarter last year, but more than the $415 million expected by analysts surveyed by Boston-based First Call/Thomson Financial.

SGI said it expects to report an operating loss of between $70 million and $80 million before restructuring and other charges. SGI said it had approximately $120 million in cash on hand at the end of the fourth quarter, up from $118 million at the end of the previous quarter. The company said it will release full results July 26.

"As with other companies, we continue to find the current economic situation to be very challenging," Bishop said. "While our revenues were within expectations, booking levels appear to be disappointing. In light of these preliminary results, we are reviewing our plans for FY2002 with respect to bookings, revenue, expense levels and cash requirements."

"This is a high-tech company in visual computing and high-performance graphics, [with] multimedia technology," noted Stevens. "You would think this would sell. But in the current market, it's just not happening. And [I don't have] a reason for that."

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