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Silicon Graphics goes titsup (again)

Instant buy up by Rackable

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Silicon Graphics Inc. (SGI), the perma-struggling workstation-turned-server-maker, filed for bankruptcy protection today, and was immediately bought by Rackable Systems for $25m cash.

Rackable has signed to take on of SGI liabilities. The deal is expected to complete in 60 days.

The combined company will target the hyper-competitive market for x86 boxes for cluster and high performance computing, internet and cloud services.

"This combination gives us the potential for significant operational synergies, a strong balance sheet, and positions the combined company for long-term growth and profitability," said Rackable CEO Mark Barrenechea.

SGI recently laid off more than 15 per cent of its workforce, leaving it with about 1,155 staff. The move wasn't sufficient to save it as a standalone firm however.

Today's Chapter 11 filing is SGI's second in three years. It last went titsup in May 2006 with debts of $664m. The subsequent reorganisation didn't help matters much; SGI's most recent quarterly results revealed an operating loss of $38.2m and rising.

It's expected that SGI will continue business operations while the deal goes through. Its international operations would be part of the sale, but are not part of the US bankruptcy. ®

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