Feeds

Rackable free to pick SGI carcass

Court OKs $42.5m buy

Top 5 reasons to deploy VMware with Tegile

Niche server maker Rackable Systems said this morning that the U.S. bankruptcy court in New York handling the Chapter 11 proceedings for supercomputer maker Silicon Graphics has approved Rackable's acquisition of most of the assets of SGI.

Under the deal that was announced on April 1, the same day that SGI filed for bankruptcy protection, Rackable said it would be shelling out $25m to acquire most of the assets of SGI as well as assuming "certain liabilities" that were not specified. In the announcement today, that figure has risen to $42.5m in cash. The liabilities that Rackable is assuming have not been detailed.

"We are pleased with today's news," said Mark Barrenechea, president and chief executive officer at Rackable in a statement. "With this acquisition, Rackable will be positioned to solve the most demanding business and technology challenges our customers confront today. We believe we will have a stronger company with differentiated product lines and professional services; reaching commercial, government and scientific sectors on a worldwide basis."

Rackable had $171.9m in cash as its fiscal 2008 year ended on January 3 and can certainly afford to pay more money for SGI's assets. In mid-February, when it reported its full year 2008 results, with sales down 29.4 per cent to $247.4m and a net loss of $31.3m, the company said its board had allocated $40m to share buybacks and that it would allocated as much as $17m on additional R&D, sales, and marketing spending in fiscal 2009.

When the SGI deal was announced, the share repurchases were canceled and the company had buy SGI without hitting its cash pile too hard. This is a good way to acquire some very good technology and a fairly large customer base on the cheap.

Not that Rackable has it easy now. The company has cut its employee ranks twice in the past year as business for its dense, rack-based server products have plummeted in the face of the economic meltdown, from 378 down to 270. And it remains to be seen what people will make the jump from SGI to Rackable when this deal is completed on or around May 8. And SGI's own business has been on the rocks, with sales of $348.5m in the twelve months of calendar 2008 and losses of $157.8m.

Rackable reports its first quarter fiscal 2009 financial results on May 5 after the markets close and will discuss its plans for integrating Rackable and SGI technology and people at that time. ®

Intelligent flash storage arrays

More from The Register

next story
BOFH: WHERE did this 'fax-enabled' printer UPGRADE come from?
Don't worry about that cable, it's part of the config
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
prev story

Whitepapers

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.
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.
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?
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.