Silicon Graphicswill delay shipments of its workstations based aroundIntelprocessors and Windows NT until January 1999, an embarrassing slip that once again pushes back the company’s revival strategy.
News of the delay came with Silicon Graphics’ yesterday’s announcement of its first-quarter earnings. The Mountain View, California, company reported net losses of $44 million, or 24 cents per diluted share, compared to a net loss of $56 million, or 31 cents per diluted share, for this quarter last year.
SGI’s net losses were lessened by the initial public offering of processor company MIPS, in which SGI owns an 85 percent stake. Without the gain from MIPS, Silicon Graphics would have had a loss of 41 cents per diluted share.
The loss was better than analysts’ expectations of 45 cents a diluted share, according to First Call. With the delay, SGI will not any reap revenues from the new machines until its third fiscal quarter 1999.
The ship date for the Intel/Windows NT workstations was pushed back because SGI “discovered a small problem during testing,” and SGI is willing to take “no shortcuts on quality,” SGI chief financial officer Steve Gomo said in an interview.
Gomo didn’t specify the nature of the problem, but he said its source has been tracked down. The machines were originally expected to ship in the second half of 1998 and earlier this year expected toward the September-October time frame, said sources.
The slip to January is a disappointment, said Philip Rueppel, an analyst with BT Alex Brown. “But it’s one where I’d rather see a high-quality product without bugs in January than one that is riddled with issues coming out in December,” Rueppel said.
“At this point it’s not a major slip,” Rueppel said, but further delays would be bad. “It’s critical for them to be competitive in the NT space. At this point, HP and Sun are taking market share, because they both have a refreshed product line.”
The new SGI computers are based on Intel’s Xeon chips. Earlier this year, SGI said it would begin to phase out workstations…
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