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SGI (almost) doubles sales, (almost) halves losses

Foresees a profitable 2012. Finally

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Silicon Graphics' latest financial report shows that it's growing and moving towards profitability – but it's not quite there yet.

If there were ever a time when SGI needed to make a big sale to get some free PR and possibly a big wad of cash to do a monster supercomputer deal, it's now. And it might just happen.

The company – the result of the merger of hyperscale server maker Rackable Systems and supercomputer maker Silicon Graphics – is a contender to replace IBM's recently withdrawn "Blue Waters" Power7-based super at the National Center for Supercomputer Applications at the University of Illinois.

Last week, Big Blue pulled the plug on the Blue Waters contract, worth $208m, because it couldn't make money off the deal, and now NCSA is looking for a new super that can deliver at least 1 petaflops of sustained performance on real-world workloads.

It is not clear how much money the National Science Foundation will pony up for a petaflopper these days, but you can bet that SGI would love the chance to prove that its Altix UV 1000 can scale up into the HPC stratosphere.

Not that SGI has been asleep at the switch. As announced on Thursday, the company's sales force was busy as worker bees in the fiscal fourth quarter, which ended in June, managing to push revenues up a stunning 92.3 per cent to $195.5m.

But sales, marketing, and general costs rose just as fast. Even while keeping a lid on research and development costs, the company still booked $3.4m in restructuring costs, adding to a net loss of $12.1m, which worked out to 39 cents per share. That was nonetheless better than the fourth quarter of last fiscal year, when SGI had $101.6m in sales and booked a $27.6m net loss (91 cents per share).

For the full fiscal 2011 year, SGI's revenues came to $629.6m, up 56 per cent, and the company shrank its net loss to $21.2m, which worked out to a loss of 69 cents per share. By comparison, in fiscal 2010, SGI had lost $88.9m, or $2.92 per share.

Next stop, profitability

The company has made a lot of progress after digesting the old SGI, storage maker Copan, and its former Japanese reseller partner, and if all goes well – even without a Green and Blue Waters sale to NCSA – SGI thinks it will actually make money in the fiscal 2012 year.

Specifically, SGI thinks it can bring in between $740m and $780m in revenues, and between 15 cents and 30 cents per share in earnings. That's somewhere between 18 and 24 per cent growth on the revenue front and some black ink hitting the bottom line for the first time in many a year.

SGI is debt-free at the moment, after retiring $9.6m in debt related to the acquisition of SGI Japan, and has just under $140m in cash and equivalents in the bank. As El Reg goes to press, the company has a market capitalization that is just shy of $400m. It can now take some risks and expand the scope of its products.

And that is precisely what SGI plans to do, explained CEO Mark Barrenechea, in a conference call with Wall Street analysts.

On the Altix UV 1000 front, SGI is working with Intel to integrate the "Sandy Bridge-EX" Xeon processors into the NUMALink 5 interconnect, and Barrenechea said that with this chip, due next year, SGI will be able to double the global shared memory on the Altix UV 1000 system and quadruple the number of cores in a single image.

The current machines top out at 256 sockets, which with the current "Westmere-EX" Xeon E7 processors puts SGI at 2,560 cores spanning 16TB of global shared memory. Exactly how SGI is moving to 10,240 cores and 32TB of memory is not clear, but quadrupling the number of sockets in an image – perhaps sacrificing some memory bandwidth for CPU interconnect – is one way to do it. Such an Altix UV 1000 machine could be the basis of a petaflopper, if SGI can extend the NUMAlink 5 interconnect with InfiniBand.

The other thing that SGI is planning, according to Barrenechea, is a much more aggressive coupling between its Altix ICE clusters, based on Intel's "Sandy Bridge-EP" Xeon E5 processor, and its related "Romley" server platform and 56Gb/sec FDR InfiniBand networking for plain-vanilla clusters

"We made a strategic decision about a year and a half ago in designing the next generation of Altix ICE for Romley so we would have a path to increasing our ability to scale the product to get to the largest of the clusters in the market," explained Barrenechea in the call, adding that the value of the RFPs coming out each year in this upper echelon of the HPC space was on the order of $1bn.

This area is generally dominated by IBM and Cray at this point, but SGI wants a piece of this action. And it may just be in position to take it. ®

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