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8/28/2003
10:51 AM
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Silicon Graphics Cuts More Jobs In Restructuring

The troubled computer maker is axing nearly 17% of its workforce as it tries to keep costs in line with revenue.

Despite its recent move to more fully embrace the increasingly popular Linux market, Silicon Graphics Inc. is restructuring the company in a move to lower costs and increase its focus on the high-performance computing market.

The restructuring includes Wednesday's announcement that it's cutting 600 employees, nearly 17 percent of its workforce, in its latest effort to keep costs in line with sagging revenue. Including 400 layoffs announced in May, SGI will have reduced its total headcount by 25%, to 3,000, when the latest round is completed over the next several months. The company, which is taking a $20 million charge, expects to save $100 million per quarter.

Earlier in the week, SGI disclosed plans to deliver in October SuSE Linux Enterprise Server 8 on its Intel Itanium 2-base Altix 3000 servers and server clusters. SuSE Linux will support servers and clusters with as many as 64 processors, although both companies are working to develop Linux support for up to 128 processors. Although Linux doesn't generally scale well above eight processors when running business apps, it's able to scale to 64 processors when running certain scientific apps. Silicon Graphics entered the Linux market in January with its own distribution of the operating system that ran exclusively on its Altix 3300 server and 3700 servers cluster. The partnership with SuSE gives SGI customers a second source of operating-system support as well as access to a recognizable Linux provider.

Despite SGI's entry into the Linux market, the company lost $129.7 million for its fiscal 2003, nearly three times its 2002 loss of $46.3 million. SGI will also consolidate its Mountain View, Calif., headquarters into a smaller adjacent facility as part of its cost-reduction efforts and take a $20 million charge for the current quarter to cover severance pay.

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