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Backlog softens revenue slump

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On the eve of its launch of third generation products, has Silicon Graphics detailed its final quarter results for the fiscal year. As expected, revenue slumped by 36 per cent against the preceding quarter, down to $434m, giving a net loss of $830m for the entire year.

The company said the poor quarter was down to "weakness across the range", as orders dried up for the systems which have been superseded by its new Onyx3 and Origin cubes, launched at SIGGRAPH this week.

SGI says it's already booked $100m in new orders for the new range, and expects to ship two thirds of this in the next quarter. Although diminished, SGI's cash pile remains substantial at $384m. SGI CEO Bob Bishop boasted that advanced orders for the new range already included DaimlerChrysler and Renault among the manufacturers, and Morgan Stanley for risk analysis.

Bishop said he expected lower revenues over the next year, down to $2.1bn, but was reckoning on margins creeping back up to the 40 per cent days of yore. SGI says "component shortages" - in other words, the delayed MIPS R12000 processor - are behind it. These days the company earns almost twice as much from services than it does from workstations.

In addition to the cubes, SGI has acquired Intergraph's Zx10 NT workstations and servers, which it will pitch at the print business. Bloodied by its legal tussles with Intel, Intergraph has promised to take $100m of SGI kit and services over three years, in exchange for SGI acquiring exclusive rights to reselling the Zx10 line. ®

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