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SGI turnaround getting closer, company promises

Yes, its loss narrowed, but its sales are still shrinking

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SGI continues to haemorrhage red ink, losing a further $69 million during its most-recently completed quarter, the first of its 2002 fiscal year and covering the three months to 28 September.

That $69 million (36 cents a share) loss is 41 per cent deeper than the $49 million (26 cents a share) SGI reported this time last year, but is significantly better than Q4 2001. Last quarter, the company last $232 million (120 cents a share).

That suggests SGI's bosses may be right when they say that the company is - at long last - turning around. However, revenue was down from last quarter's $431.5 million to $379 million, a fall of just over 12 per cent. All of which suggests SGI's attempts to cut costs is working, but the company is having little success building demand. SGI's sales have been falling slowly for the last two or three years.

That would explain why the company is now looking to flog off intangible assets such as patents. The quarter's revenue total includes $62.5 million made selling "non-core intellectual property rights" to Microsoft. The agreement also included a patent cross-licensing deal, though its other terms were not made public.

SGI CEO Bob Bishop said: "SGI has a rich portfolio of technical intellectual property. This agreement allows us to tap into the value of that IP without compromising in any way our core R&D or the future of our business."

Maybe not and maybe it will bring in future revenue, too. But it's worrying when a company has to look at what else it can sell off to help up make what it has lost in the sales of its core products. Take away the Microsoft-sourced revenue, and SGI's quarterly sales figure falls to $316.5 million - 27 per cent lower than the previous quarter. What will SGI when it has cut costs as much as it can and it has sold off all its "non-core" IP, we wonder. ®

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