SGI Q1 2001 loss to double expectations
Company spends to buy back stock, clear fiscal decks
SGI will significantly widen its losses by buying back up to 50 million of the company's shares - some 27 per cent of its outstanding stock - part of a program to clear the company's financial decks.
Wall Street analysts expect SGI to lose 14 cents a share, according to First Call's average, for its first quarter of fiscal 2001. SGI's loss will now amount to double that figure - the company said its Q1 loss would lie between 28 and 30 cents a share.
The share buyback will cost around $193.8 million (based on yesterday's closing price), though that will be offset a little by the sale of $50 million worth of SGI assets.
Last quarter, SGI lost $59 million, though that quickly expanded to $608 million when deferred tax and other charges were taken into account.
SGI expects to announce Q1 sales of around $420 million, compared with $534 million during Q4 2000. The difference, the company, said was due to "material shortages related to a few specific suppliers". If those supply problems are resolved, SGI said, it expects revenue to begin growing again, rising around 20 per cent throughout the first half of fiscal 2001.
That's the target, anyway, any SGI hopes to hit it with its new, "enhanced" operating model. Essentially, that means putting in place a financial framework that will allow the company to focus on what it needs to do to get product into the market that people want, market that product and thus drive up sales.
That means revenue growth and, more importantly, profitability. SGI CEO Bob Bishop said the company is "positioned to achieve growth and profitability during the second half of [fiscal] 2001".
Part of the programme is a divestment of SGI assets, of which the current quarter's $50 million is simply part of an overall $400-450 million sale. ®