SGI 'eliminates' 600 more employees

Silicon Graphics (SGI) yesterday admitted that some 600 staff positions are to be 'eliminated' in a sweeping restructuring to bring costs in line with promised revenue targets for this financial year.

By December, the company wants to have cut operating expenses to $100m (£64m), enabling it to meet its break-even target on operating profits of between $235m and $240m in quarterly revenues.

As a result of the restructuring, SGI will record a $20m charge consisting mainly of severance costs.

In a statement, the firm said: "Approximately 600 positions in specific areas will be eliminated in the restructuring.

"Together with the elimination of approximately 400 positions announced in May 2003, the company's head count has been reduced by approximately 25 per cent over two quarters."

Bob Bishop, SGI chairman and chief executive, said: "Having made significant product announcements in the last two quarters we are now in a position to take bold and aggressive steps to improve our core financials.

"Today's announcement reflects SGI's determination to reduce its break-even point in a tight economy."

SGI recently said it would soon consolidate its corporate headquarters by moving into a smaller, adjacent facility as part of its cost reduction efforts.

The company is intensifying its focus on high-performance computing, storage and visualisation products, but also hopes to reap revenues from Linux and open source development.