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SGI “disappointed” with Q3

Loss narrows, but revenue falls too

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SGI -- the computer company formerly known as Silicon Graphics -- was yesterday forced to admit its recovery programme was not going as smoothly as planned when it posted "disappointing" Q3 results, dispite a marked reduction in the amount of money it lost. The company posted a loss of $40 million for the quarter, ended . That's nearly a quarter of the $153 million it lost in the same period last year. However, revenue for the third quarter was $619 million, compared with $708 million in the same quarter a year ago. "These shortfalls mask the progress that we are continuing to make in other areas of our business, including strong new products, improved quality and operational efficiency, and lower expenses. We are focusing our efforts on generating demand in growing markets," said SGI's chairman and CEO, Richard Belluzzo. And, responding to analysts' predictions that SGI would make a profit in the current quarter, senior VP for corporate operations Bill Kelly told US newswires: "That's not going to happen." "Third quarter is not what we wanted it to be," he added. Still, the company continues to own 85 per cent of Risc processor manufacturer MIPS, and plans to divest itself of a good proportion of that stake. It had already planned to take its shareholding down to 65 per cent, but the latest figures may persude Belluzzo to sell more. It's a strategy working quite well over at Apple -- its recent profitable quarters have been boosted by ditching chunks of its stake in AMD Holdings. Apple and SGI, as companies long associated with creative computing, have much in common. Both ran into real trouble by failing to keep up with wider industry developments and, in many ways, relying on their userbase to stick with them and not opt to migrate to cheaper platforms. Both are now targetting more entry-level customers with designer hardware, and both are looking to the open source world to improve their software support. In SGI's case, that means adopting Linux, initially alongside its Windows NT-based offerings, launched earlier this year, and perhaps replacing NT as the company's core operating system. ®

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