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IBM, SGI in frame to buy Intergraph?

A sugar daddy of some form may be at hand for the small but perfectly formed workstation outfit

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Predators are stalking workstation manufacturer Intergraph, according to industry sources, with both SGI and IBM tipped as possible buyers. If a deal with either went ahead, it could have interesting consequences both for Intergraph's legal tussle with Intel and for Intel's plans for the workstation market. The sources suggest that although SGI is in the frame, IBM is the most likely suitor to be successful. The fact that two names are in the field suggests that Intergraph itself wouldn't be entirely against takeover, and may indeed be seeking a purchaser. The company lost $25.5 million on sales of $253.6 million in its third quarter, blaming damage caused by anticompetitive action by Intel, but even without this Intergraph's position doesn't look entirely positive. The company is a minnow that did well by spotting the potential of Intel-based workstations, but has been under pressure since Intel started commoditising workstation design, and (Intergraph claims) witholding key technical data from the company. Intergraph currently has an injunction compelling Intel to co-operate with it, although Intel is challenging this, and earlier this year took steps to reinvent itself. Its manufacturing is being transferred to SCI, with Intergraph itself becoming a design operation. But perhaps the company also sees merger or acquisition as an alternative option. SGI might be a viable partner from the point of view of consolidation. The company is close to Intel, and has itself introduced a range of high-powered Intel workstations within the last few weeks. A deal with IBM on the other hand would indicate that Big Blue felt the need to beef up its own Intel workstation operations. At the moment Hewlett-Packard is ahead in Intel workstation sales, and with other manufacturers starting to challenge too, IBM might be in some danger of missing another boat. If a deal of some form did go ahead, it could be viewed as a bizarre Intel version of the Netscape-AOL deal. Intel is due to face an FTC antitrust action next year, and Intergraph is a key alleged victim. So if Intergraph cashed out... Either of the suggested suitors would probably drop Intergraph's lawsuit, although like the DoJ, the FTC would probably still go ahead. But don't even think Intel's pulling the strings - that's paranoia beyond 10 Groves on the Richter scale. ®

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