Re: FW: FYI: CF Article!!

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: : The following was forwarded to me by MJI, still at SGI: : : Report: SGI to sell off Cray : : ===================== : : By Michael Klein : : Leader-Telegram staff : : SGI plans to sell its Cray Research supercomputer operations, an : : industry publication reports. : : Quoting anonymous sources within and outside SGI, High Performance : : Computing and Communications Week reported that SGI's strategy is to : : sell off business under the Cray name so it can focus on its core : : products: : : servers and graphics workstations. : : Analysts and SGI insiders also said they see signs of a sale, and the : : company has scheduled a strategy announcement for Tuesday, Aug. 10. : : Potential buyers include Compaq Computer Corp. or Sun Microsystems, : : HPCC reported. Another scenario would have SGI helping former Cray : : managers spin off the company independently, it said. : : Another analyst said a large aerospace company or other defense : : contractor is a likely buyer, because such a company could benefit from : : the supercomputer research and development Cray conducts, HPCC said. : : Cray Chief Executive Officer Richard Belluzzo dropped hints about : : selling Cray at a teleconference announcing SGI's quarterly earnings a : : few weeks ago, said Rich Partridge, an analyst with D.H. Brown : : Associates of Port Chester, N.Y. : : "Rick Belluzzo repeated frequently that the Cray contribution (to SGI : : sales) was less than 10 percent and dropping," Partridge said Monday. : : "And he said that SGI needed to focus, to concentrate on its key core : : competencies." : : Partridge said he thinks Belluzzo, by downplaying Cray Research's : : importance to the company, was preparing analysts for a sale of Cray : : assets. : : Asked about the reports, SGI spokesman John Cristofano said company : : officials don't comment on rumor or speculation. : : But Cristofano said SGI plans to disclose details of the second phase of : : its turnaround strategy on Aug. 10. : : SGI makes high-performance computers and graphics workstations. Its : : Cray Research division makes supercomputers. : : But not much is left of Cray Research. : : When SGI purchased Cray in 1996, Cray employed 1,700 people at its : : Chippewa Falls hardware development and manufacturing facility. : : Since then SGI has laid off many Cray employees, sold off parts of the : : former Cray plant in Chippewa Falls to other companies and started : : building several SGI products there. : : Today SGI employs about 860 in Chippewa Falls, and two-thirds of : : them work on SGI rather than Cray products. : : The SGI Origin 2000, Origin 200 servers and Onyx 2 workstations are : : built in Chippewa Falls, as are several Cray supercomputer models. : : Presumably the SGI operations in Chippewa Falls would remain part of : : SGI, sources said. : : SGI's merger with Cray has been rocky at times; some analysts say SGI : : has de-emphasized Cray's traditional mission to make the world's fastest : : supercomputers in favor of more profitable products. : : But Cray's decline is not all SGI's fault, analysts have said. : : Supercomputer sales declined as the power of smaller, cheaper : : computers skyrocketed, and the U.S. government cut spending on : : high-performance computers with the end of the Cold War. : : Partridge said Belluzzo, who's been CEO for a little more than a year, : : wants to do something dramatic. "It sounds like something is brewing," : : Partridge said. : : According to the HPCC publication, SGI has been offering discounts as : : high as 80 percent on Cray machines to win defense contracts because : : it's : : having trouble keeping its core accounts. : : SGI is focusing on building and selling computers that sell in high : : volume, rather than the custom-designed supercomputers that Cray : : makes for a select group of buyers, Partridge said. : : "They don't have the luxury of carrying those parts that were unique and : : differentiated, that made them set apart," he said. : : Richard Sherman of RCI Ltd., a Minneapolis supercomputer user group, : : said Cray employees have told him they can't discuss the company lately, : : which would be consistent with a "quiet period" often enforced before : : such a merger. : : Sherman said if Cray Research obtained some stability and strong : : financial backing in a sale, the entire high-performance computing : : industry would benefit. : : Rebuilding Cray would be challenging, but the company has a good : : reputation in the industry and many old loyal customers that could be : : regained, Sherman said. : : Partridge said some customers, mostly government-funded ones, still : : buy the huge, expensive supercomputers Cray builds. : : "They're the proverbial `spooks and nukes' kind of projects," he said, : : referring to intelligence agencies and defense contracts. : : "I think it's a shrinking market, but it's not going to disappear," he : : said. : : "A solid core is going to continue, but it's not an exciting growth : : area." : : The question is how Cray's remaining assets would fit into another : : company, Partridge said. Although Cray's business is not huge, it's : : important. : : "I would like to think there's enough remaining of Cray that it could : : continue on its own," Partridge said. : : : Klein can be reached at 833-9204 or (800) 236-7077.

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