Silicon Graphics (SGI) said yesterday that it will begin a corporate restructure which will see the "elimination" of approximately 400 positions, or 10 per cent of the company's workforce.
The firm stated that it is implementing the plan to lower costs, shift focus to specific growth areas and accelerate a return to profitability.
The effect of the cuts will be to reduce quarterly expenses by approximately $10m, beginning with the quarter ending September 26 2003. Savings will be achieved through operating expense reductions and improvements in gross margin.
SGI plans to record a charge of $15m to $20m in the quarter ending June 27 2003 relating to this restructuring activity. The charge will principally consist of severance costs paid over the next several months.
Bob Bishop, chairman and chief executive of SGI, said: "Despite encouraging recent developments, our revenue performance has been lower than expected, reflecting a difficult market for large industrial systems sales.
"Today's announcement reflects our determination to take the steps required to improve the company's financial position and reduce its breakeven point.
"Our intention is to bring expenses in line with revenues. We are in the process of taking other specific actions to increase revenue and lower costs."
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