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SGI Announces Layoffs, Cost-Cutting Plans

SGI, in an effort to lower costs and target specific growth areas for the company, has eliminated 400 positions (about 10 percent of company employees) and announced a plan to align company resources with market conditions.

SGI's broadcast division was not affected, according to SGI spokesperson Lisa Pistacchio. "The broadcast sector is viewed by SGI as a growing market," she said, adding that, in fact, the division has hired several new salespeople. Pistacchio said the areas most affected include administrative and marketing. The least affected divisions were in sales and R&D/engineering.

SGI says the layoffs are an attempt to "preserve customer-facing activities, protect customer investments and accelerate a return to profitability" by reducing quarterly expenses by around $10 million, beginning with the quarter ending Sept. 26. SGI plans to record a charge of $15 million to $20 million in the quarter ending June 27 relating to restructuring. The charge will consist of severance costs paid over the next several months and the company says this amount does not represent a significant incremental cash expenditure.

"Despite encouraging recent developments including the growth of SGI's defense sector business and the early success of the Altix line of superclusters and servers, our revenue performance has been lower than expected, reflecting a difficult market for large industrial systems sales," stated Bob Bishop, chairman and CEO of SGI.