Original URL: http://www.theregister.co.uk/2006/02/01/sgi_moves_bishop/

SGI moves Bishop to avoid checkmate

McKenna welcomed with shocker Q2

By Ashlee Vance

Posted in Financial News, 1st February 2006 00:36 GMT

With revenue disappearing at speed, SGI has nudged CEO Bob Bishop to the side and tapped a new chief - Dennis McKenna.

SGI rolled out its new chairman, CEO and president just as it announced another bleak quarter. Revenue for the second quarter dipped to $144m from $223m in the same period last year. Product revenue almost halved, falling to $69m from $117m in the second quarter of 2004. The only thing keeping SGI near equilibrium is a steady flow of services revenue, which was down just slightly this quarter at $70m.

SGI plans to "take actions" to lower costs, it said in a statement. The folks here in Mountain View all know what that means.

"We have challenges that we are addressing," said new CEO McKenna - a semiconductor veteran who previously ran SCP Global Technologies. "My approach will be to continue to do what we do well, do it more efficiently and productively, and determine how what we do well can extend our ability to grow revenue and profits. I believe this will give our current and potential customers and partners confidence in our ability to deliver leading HPC solutions into the future."

SGI's transition away from MIPS and IRIX to Linux on Itanium has proved disastrous. The technology shift compounded SGI's existing struggles to keep selling expensive, high-end gear in a server market dominated by cheaper x86 servers.

Many blame Bishop for not taking more drastic action earlier on in SGI's decline. The Aussie will stay on as vice-chairman.

"It has been my honor to serve as the company's leader for the last six years and to foster the company's spirit of innovation and entrepreneurship," Bishop said. "I welcome Dennis McKenna into the role of chairman and CEO, knowing that he will balance the company's focus on technical markets with the pursuit of new activities that accelerate our path to profitability."

The NYSE booted SGI last November, sending it to the over-the-counter market to join a myriad of other penny stocks. The venerable company saw its shares rise more than eight per cent today on word of the management shift, to 39.5 cents.

It's hard to watch a one-time giant and true technology powerhouse go through these end-of-life machinations.

The company's Linux on Itanium focus limits its suitors, with HP appearing as the only real acquistion candidate here in the US. Perhaps a Japanese vendor or Bull and its French Government friends will scrounge up the dough needed to buy SGI's stunning customer lists and patent portfolio. ®