Financial Update: SGI Seen Turning Profit in Q2. Seagate to Cut 8,000 Jobs. Andataco Reports Q3 Results.

September 17, 1999

SHORT TAKES

SGI SEEN TURNING PROFIT IN SECOND QTR

Boston, Mass — Silicon Graphics Inc. on Tuesday said it expects to reduce its workforce by up to 3,000 employees as the result of a restructuring plan, and predicts it will turn a profit in the second quarter.

Steve Gomo, chief financial officer of the maker of sophisticated graphics computers, said its head count of about 9,000 will be cut by between 2,000 and 3,000 people — up to 1,500 jobs will be slashed, while as many as 1,500 employees may transfer to companies with whom SGI hopes to partner.

Gomo, speaking at an SG Cowen technology conference here, said that the sale of certain non-core businesses in the restructuring would begin to make the company profitable in the second quarter ending December 31.

“We see we will be profitable in Q2, (and) growing in profitability in the second half of the year,” he said. But Gomo cautioned that its bottom line could be bruised by the unexpected resignation on August 23 of Chief Executive Rick Belluzzo.

“We are waiting to see the impact on orders,” Gomo said. “We’ve got to believe it’s not good, but some customers will freeze. There’s been nothing yet. But I would be cautious.”

Despite the warning, Gomo added that he had not changed his guidance to the financial community about SGI’s results. He did not elaborate on specifics of that guidance.

Analysts surveyed by First Call/Thomson expect Mountain View, Calif.-based SGI to report a second quarter profit of $0.06 per share.

In August, SGI set its second transition plan in 18 months, saying it will focus on fewer markets, outsource much of its costly research, and pursue new business on the Internet.

It plans to form joint ventures with other companies to manage its line of Windows NT workstations, and its Cray-branded line of supercomputers, which will most likely leave SGI with a minority stake in those businesses.

“The Cray business divestiture is moving along quite well,” he said. “NT Workstation is in the same state.” Gomo said a Cray deal may be revealed by the end of the current quarter, and that an NT deal could come this week.

An SGI spokeswoman said the total number of jobs that will be transfered will be determined by the final details of the NT-Workstation and Cray agreements. Gomo added that any any gains from these sales would be immaterial to their financial results.

SEAGATE PLANS TO CUT 8,000 JOBS

Scotts Valley, CA — Seagate Technology Inc. plans to cut about 8,000 jobs, or 10 percent of its work force, over the next nine months as it undergoes a restructuring. The changes will lower quarterly earnings by up to $200 million, the company announced.

Once complete, the restructuring will save the company $150 million a year, said spokeswoman Julie Still. The work force reduction would be met by attrition, voluntary separation incentives and layoffs, she added.

ANDATACO REPORTS Q3 RESULTS

San Diego, CA — ANDATACO, INC. reported revenues for the quarter ended July 31, 1999 were $14,486,000, with a net loss of $783,000, or $0.03 per share, compared to revenues of $17,092,000, with a net loss of $1,874,000, or $0.08 per share, for the third quarter of fiscal 1998. Net loss for the quarter ended July 31, 1999 included $418,000 for amortization of goodwill and $355,000 for depreciation. Net loss for the quarter ended July 31, 1998 included $418,000 for amortization of goodwill and $468,000 for depreciation.

Revenues for the nine-month period ended July 31, 1999 were $45,856,000, with a net loss of $2,374,000, or $0.10 per share, compared to revenues of $59,848,000, with a net loss of $2,483,000, or $0.10 per share, for the nine months ended July 31, 1998. The net loss for the first nine months of fiscal 1999 includes $1,255,000 of amortization of goodwill and $1,234,000 of depreciation. The net loss for the first nine months of fiscal 1998 included $1,254,000 of goodwill amortization and depreciation expense of $1,237,000.

ORACLE STOCK FALLS SHORT OF WHISPER NUMBER

San Francisco, CA — Shares of Oracle Corp. dropped sharply in after-hours trading Tuesday evening after the company reported first-quarter earnings that met the published consensus estimate of analysts but fell short of the so-called whisper number. Whisper numbers are the last-minute adjustments analysts make to their forecasts that they informally mention to clients and traders just before companies report results.

For the quarter ended Aug. 31, Oracle reported earnings of $236.7 million, or 16 cents a diluted share, up 21 percent from $195 million, or 13 cents a share, in the comparable period a year ago. Revenue rose 13 percent, to $1.98 billion. The earnings number matched the consensus estimate as reported by First Call Corp., which tracks corporate earnings, but the whisper number had been as much as 19 cents.

— This file compiled by Steve Fisher, HPCwire managing editor. Email: [email protected]

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