Silicon Graphics files for Chapter 11

Silicon Graphics (SGI) has filed for Chapter 11 bankruptcy protection in an effort to reduce the company's debt by around $250m. The company expects to emerge from Chapter 11 within six months. 

The bankruptcy protection allows the company to focus on a corporate restructuring that it began earlier this year, while keeping creditors at bay.

The company warned in February that it risked running out of cash by the end of this year.

SGI specialises in high-powered workstations with a strong focus on graphics applications. The company initially developed its own MIPS processors, but switched to Intel's Itanium in the late 1990s.

Having tied its fate to the Intel chip, SGI was hit hard when the processor missed development deadlines and initial models showed disappointing performance.

Advances in microprocessor and graphics processor designs, meanwhile, allowed the PC to catch up with specialised, high-power work stations such as the those marketed by SGI.

The company's stock tumbled and was delisted from the New York Stock Exchange in November 2005.

The bankruptcy filing is limited to SGI and its US subsidiaries. Subsidiary companies in other regions including Europe, Canada and Asia are not affected by the restructuring.

The vendor emphasised that it expects to continue operating during the disruption. "We want to assure our customers, employees and communities that SGI is business as usual," said chief executive Dennis McKenna.

"Our customers can continue to rely on SGI for its mission-critical products, services and support."