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7/24/2003
06:03 PM
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SGI Posts Big Losses For 4Q And Year

Losses were virtually unchanged from a year ago, while revenue declined 15.6%.

Silicon Graphics Inc. took another pounding in the fourth quarter, posting a net loss of $36.6 million for the period ended June 27. The loss was essentially unchanged from a year ago, while revenue declined 15.6%. For its 2003 fiscal year, the maker of supercomputers and technical workstations nearly tripled its year-ago net loss, and company executives warned that additional cost-cutting and "tight-fisted" cash management were needed.

SGI, a maker of specialized servers and workstations for the defense, science, engineering, and entertainment markets, reported fourth-quarter revenue of $240.2 million, compared with $284.5 million a year earlier. For the year, SGI lost $129.7 million, nearly three times its 2002 loss of $46.3 million. Revenue declined 28.3% during the year, to $961.7 million, from $1.3 billion.

During a conference call with financial analysts Thursday, chairman and CEO Bob Bishop said the company plans "tight-fisted management" of its cash, accounts receivable, and inventories. Cash and equivalents declined 34% during the quarter, to $140.8 million, versus $213.3 million a year ago. During the first quarter, SGI expects to consume $40 million in cash, CFO Jeff Zellmer said. The company also plans "further restructuring activities" in the quarter, he said. During the fourth quarter, SGI laid off 400 workers.

The company, which supplies high-performance computers that use its Irix Unix operating system and newer Intel-based machines running Linux, is losing share in a shrinking market.

SGI was fourth in the $4.7 billion high-performance computing market last year, with about 6% share, according to market researcher IDC. The overall market declined more than 7%.

Shares of SGI (NYSE–SGI) closed Thursday down 2 cents at $1.20 in advance of the earnings report.

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