Tera to Acquire SGI's Cray Supercomputer Unit

MUNICH (03/02/2000) - Tera Computer Co., a producer of high-end computers, today agreed to purchase Silicon Graphics Inc.'s (SGI) Cray supercomputer business for an undisclosed price.

The financial terms of the deal were not disclosed, but Tera said in a statement it will pay SGI in cash, notes and common stock.

Following the purchase, Tera will create a new combined company called Cray Inc., which will have annual revenues of over US$200 million and about 900 employees, the company said.

Under the terms of an agreement, Tera will take over both the Cray brand and SGI's Cray supercomputer product line, which includes the Cray SV1, Cray T3E and Cray T90 systems, as well as existing service contracts and future Cray vector supercomputer products, according to the statement.

Tera will also retain three manufacturing facilities in Chippewa Falls, Wisconsin, and expects to offer positions to about 800 Cray employees, the company said.

Tera sees the move as a way to expand the supercomputing and high-performance computing markets, particularly the market for servers that make up the Internet backbone, the company said.

For its part, SGI said in a separate statement that the sale of the Cray unit will allow it to better concentrate its "resources, technology and future platforms on a common set of technical solutions."

The news does not come unexpectedly. SGI announced last year a wide-ranging reorganization that would entail it looking for a partner for Cray. [See "SGI Reorganizes, Cuts Staff, Launches Cray Unit, " Aug. 10, 1999.] The sale is subject to customary regulatory approvals and is expected to close within 60 days.

SGI, in Mountain View, California, can be reached at +1-650-960-1980, via the Web at http://www.sgi.com. Tera, in Seattle, Washington, is at +1-206-701-2000, or at http://www.tera.com/.

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