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SGI kicks off new era by firing 12% of its staff

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SGI's new CEO has wasted no time performing a major shakeup at the server company. Moves announced today include substantial layoffs, executive departures and SGI's plans to tweak its server business.

SGI will fire close to 12 per cent of its workforce - 250 staffers - in the hopes of saving some extra cash. Word of the layoffs arrives just about a month after SGI moved former CEO Bob Bishop aside and tapped Dennis McKenna as its new chief. SGI heralded the layoffs as proof of McKenna's quick, decisive action, issuing a statement titled "CEO Delivers Aggressive Changes in First 30 Days as Part of Turnaround."

"As promised in late January, the goal for my first 30 days at SGI was to solidify a strong business foundation and assemble an organization that is laser-focused on execution," said McKenna. "We've made tough decisions and we thank all SGI employees for their hard work and commitment."

Er, yeah, thanks to you too, Dennis. It was a great month together.

The McKenna Effect carried over to SGI's executive suite. CFO Jeff Zellmer and COO Warren Pratt are leaving the company to "pursue personal interests." Kathy Lanterman, the corporate controller, will become CFO.

Here's where SGI's future plans become more complex.

"The company will consolidate its compute server and visualization platform, and support customers' visualization needs by leveraging best-of-breed, industry-standard, and open-source graphics partnerships," SGI said.

"In addition, the Company will aggressively pursue new markets in the enterprise space, which are an excellent match for SGI's highly scalable servers and high-performance storage solutions. SGI helps these companies efficiently manage big data problems through its unique technologies, including its NUMAflex global shared memory, NAS and SAN solutions. Finally, the company will bring new products to market within different price/performance bands, specifically targeting the mid-range."

To us, this reads like SGI is exiting the graphics business and moving to be more of a general purpose server maker with a focus on high performance computing. We, however, struggle to believe that's the case.

When pushed by us on this issue, SGI would only add the following:

"SGI will continue to sell to the high-performance technical computing space. We are adding to our sales targets segments of the enterprise that have high-performance computing needs, such as telcos or very large database users.

"We are consolidating our server and visualization product lines into one." ®

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