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+ CRAY BEGINS TO LOOK LIKE AN ACQUISITION TOO FAR FOR SGI
Was Cray Research Inc Silicon Graphics Inc's Tandy Corp? AST
Research bought all Tandy's computer manufacturing operations
and almost immediately realized that it was an acquisition too
far. The saga concluded only last week with its collapse into
the arms of Samsung Electronics Co. The numbers are just not
coming out right any more, and Silicon Graphics is still
looking for the kind of hit records that made it such a star in
the early 1990s. It doesn't help that it is having to make
sense of the Cray acquisition at the same time as it it
embroiled in an end-to-end product transition, and it also
faces growing encroachment by rival Unix vendors on its prized
imaging and graphics markets, plus aggressive competitive
pricing and nibbling from Windows NT workstation vendors. The
company missed third quarter expectations by a mile, reporting
net profit down 80% at $10.5m, on revenue up 15% at $909.3m.
Earnings per share were just $0.06 where Wall Street fans had
been looking for $0.27 according to First Call. The operating
figure before one-time expenses was nine cents a share, and it
was likely this that analysts were trying to call. Silicon
Graphics said a big contributing factor to the disappointing
quarter was a delay getting its high-margin, high-performance
Octane workstation line to market. It only did eight days of
Octane revenue ships in the quarter, shifting 1,150 units. Also
Cray started eating into its backlog - which translates as Cray
orders are beginning to tail off - which significantly hurt its
overall orders. "Nobody really has any faith in this company,"
one analyst told Reuter - "Nobody has any expectations."
McCracken offered little further explanation of the reasons
behind the shortfall in the tersely-worded statement issued by
the firm but he cited healthy server demand from industrial,
commercial and governmental users.
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