SGI announces layoffs, restructuring

Citing a difficult market for its large high-end computing systems, high-performance computer maker Silicon Graphics (SGI) has laid off more than 400 employees and is restructuring its business to "focus on growth areas".

The layoffs constitute 10 per cent of SGI's workforce and are designed to preserve what SGI described in a statement as "customer-facing activities" and hasten the company's return to profitability.

Although cuts were made across the board, administrative and marketing groups felt the brunt of the layoffs, with sales and engineering staff less severely affected, according to Lisa Pistacchio, a spokeswoman for SGI.

SGI employees affected by the cuts were notified on Thursday, she said.

In its most recent quarterly financial statement, SGI reported a loss of $US35 million for the third fiscal quarter ending March 28, compared with net income of $10 million in the same quarter a year ago.

While few specifics were provided on the areas of SGI's business that would be cut, the company indicated that its work in the defence sector, Altix line of servers and clusters based on the Linux operating system were bright spots in an otherwise lacklustre revenue picture.

SGI will be making announcements about further restructuring changes and steps it is taking to reduce costs in the near future, Pistacchio said.

The cuts will reduce SGI's quarterly expenses by $10 million starting with its fiscal year 2004 first quarter, which ends on September 26, due largely to reductions in the company's operating expenses and improvements in its gross margin, SGI said.

SGI said it expected to record a restructuring charge of between $15 million and $20 million in its fiscal fourth quarter ending June 27.

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