SGI to lay off 250 in revamp

Silicon Graphics Inc. (SGI) will lay off about 250 employees, or 12 per cent of its work force, in a restructuring aimed at cutting costs amid continuing operating losses.

The server and visualization systems company also announced Friday that Chief Financial Officer (CFO) Jeff Zellmer and Chief Operating Officer (COO) Warren Pratt have resigned to pursue personal interests.

Dennis McKenna, who took over the Mountain View, California, company last month as president, chairman and chief executive officer (CEO), also plans to accelerate a drive for cost savings and reorganize SGI’s product lines.

The company will consolidate its compute server and visualization platform and take advantage of best-of-breed, industry standard and open-source graphics partnerships, according to a Friday press release. SGI will also aim for new enterprise markets with midrange products based on its Numaflex shared memory, NAS (network-attached storage) and SAN (storage-area network) technologies.

Kathy Lanterman, SGI’s corporate controller, will take over Zellmer’s CFO post, the company said. It did not disclose a successor to former COO Pratt. A company representative could not immediately be reached for comment.

Through the restructuring, the company intends to reach annual savings of US$150 million per year by the end of 2006. It expects to take a charge of about $20 million over the next several quarters.

SGI had an operating loss of $28 million on revenue of $144 million in its fiscal second quarter ended Dec. 31. After reporting those results, it appointed McKenna to replace Chairman and CEO Robert Bishop, who had led the company since 1999. The previous quarter, its operating loss was $28 million.

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