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SGI to emerge from bankruptcy cocoon

Like a crippled butterfly

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SGI is ready to become emergent all over again. A judge has okayed the company's reorganization plan, paving the way for it to come out of bankruptcy protection in October.

The "new" SGI will be a trimmed down version of its former self with just 1,600 staff. In addition, it will have a new board of directors to complement new CEO Dennis McKenna. With so much newness on its side, SGI expects to reach profitability in fiscal 2007.

But the one-time visualization darling still faces plenty of old challenges. It has to prove that its Itanium server line can deliver meaningful sales – a quest that benefits from Intel's recent release of a dual-core Itanic processor. In addition, SGI has to get a fresh Xeon-based server line moving.

SGI's Xeon-only stance remains curious given trends in the server market. The company wants to expand beyond its engineering and scientific computing roots to tempt more mainstream customers with memory-rich boxes.

But by ignoring Opteron, SGI limits its options. AMD has assembled an impressive group of component partners willing to make accelerators and networking gear that slot into Opteron-based motherboards. Such add-ons could be very attractive to the horsepower hungry customers SGI wants to tempt.

Rivals HP, IBM, Sun Microsystems and Dell all seem aware of Opteron's benefits. But we're sure SGI knows what it's doing.

"This is a great day for SGI," McKenna said. "I want to thank our customers, vendors, and employees for supporting the company through this challenging period."

Morgan Stanley and General Electric Capital have chipped in $115m to get SGI through its bankruptcy emergence machinations. ®

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