SGI downsizes

Silicon Graphics Inc. (SGI) will lay off about 250 employees — nearly 12 percent of its work force — in a move to cut costs and stem operating losses. Two of SGI’s top executives — Warren Pratt, the chief operating officer, and Jeff Zellmer, the chief financial officer — have left the company.

Dennis McKenna, who took over SGI last month as president, chairman and chief executive officer, is seeking to cut costs by $150 million before the end of 2006. He also plans to shake up the product line, seeking better differentiation of existing products and new markets.

SGI said it would consolidate its compute server and visualization platform and take advantage of “best-of-breed, industry standard and open-source graphics partnerships.”

Kathy Lanterman, SGI’s corporate controller, will take over Zellmer’s CFO post. A successor to Pratt was not named.

The company said the total incremental restructuring charge, including severance and other charges, is expected to be approximately $20 million, and incurred over the next several quarters.

SGI had an operating loss of $28 million in revenue of $144 million in its fiscal second quarter ending Dec. 31, 2005, IDG News reported. After reporting those results, McKenna was chosen to replace Chairman and CEO Robert Bishop, who had led the company since 1999. The previous quarter, SGI’s operating loss was $28 million.

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