Feeds

SGI shares plummet as deal closing malady lingers

Eyes penny stock status

  • alert
  • submit to reddit

Internet Security Threat Report 2014

SGI today lurched towards penny stock territory after announcing a huge fourth quarter revenue miss.

The server maker, in a preliminary forecast, warned investors to expect revenue between $170m and $175m for the period. Previously, SGI had predicted revenue to come in between $180m and $200m. Shares of SGI dropped more than 15 per cent, at the time of this report, hitting 59 cents - a new 52-week low. For the quarter, SGI expects to post a loss of approximately $15m to $18m.

SGI blamed the unexpected shortfall on its failure to close two large deals worth more than $15m. "The Company is working diligently to finalize these installations."

No kidding.

In an ominous note for employees, SGI warned that it is "closely reviewing its expense structure and expects to adopt additional restructuring actions this quarter" as a result of the revenue miss. It, however, seems odd to blame a couple of slow-closing deals for the bad quarter only to insist later that the whole company must be restructured to avoid revenue misses in the future. Which one is it? One-time problem or large scale issues?

SGI has tried to revitalize its business by moving away from homemade processors and its specialized IRIX operating system to Linux running on Intel's Itanium chip. Itanium sales, however, have fallen painfully below expectations - so much so that analyst powerhouse IDC missed a 2004 Itanic sales forecast by 95 per cent or $26.6bn. Oops.

The only company to enjoy anything approaching recent success with Itanium is HP, which owns the vast majority of the Itanic server market.

SGI continues to have a stellar reputation in its core market, delivering high-performance systems to labs and companies in need of serious graphics horsepower. And with SGI's market cap at just $157m, one wonders how long the likes of IBM or Sun Microsystems can resist adding this compute hungry customer base to their server lines.

SGI will report full fourth quarter results on July 28. It blamed a failure to close deals for a third quarter miss as well

Related stories

IBM and Intel punish supercomputing rivals
Intel to add memory controllers to future Xeons, Itanics
Itanium and Opteron fight for significance
SGI sees red
Intel misses Itanium sales mark by $26.6bn

Beginner's guide to SSL certificates

More from The Register

next story
Docker's app containers are coming to Windows Server, says Microsoft
MS chases app deployment speeds already enjoyed by Linux devs
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
'Urika': Cray unveils new 1,500-core big data crunching monster
6TB of DRAM, 38TB of SSD flash and 120TB of disk storage
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
SDI wars: WTF is software defined infrastructure?
This time we play for ALL the marbles
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
Oracle hires former SAP exec for cloudy push
'We know Larry said cloud was gibberish, and insane, and idiotic, but...'
Symantec backs out of Backup Exec: Plans to can appliance in Jan
Will still provide support to existing customers
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.