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SGI plunges after warning
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October 6, 1997: 1:53 p.m. ET
Workstation maker blames downturn in first period on slower server sales
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NEW YORK (CNNfn) - Shares of computer workstation manufacturer Silicon Graphics Inc. plunged Monday after the company warned Wall Street it expects a 20-cent loss for its fiscal first quarter, ended Sept. 30.
Those numbers are dramatically lower than analysts' expectations. First Call had forecast a first-quarter profit of 21 cents. In the same period a year ago, SGI posted a 7-cent profit.
SGI has missed analyst expectations for three of the past four quarters.
Analysts say that while the quarter is traditionally weak for the company, Monday's announcement was still a surprise.
In early afternoon trading, shares had dropped 8-15/16 to 17-15/16.
Mountain View, Calif.-based SGI also said its first-quarter revenue is expected to come in at $760 million compared with $765 million in the year-earlier period.
SGI is scheduled to release its first-quarter numbers Oct. 23.
Edward R. McCracken, Silicon Graphics' chairman and chief executive officer, blamed much of the downtown on disappointing server sales. However, McCracken said the company's core markets remain viable.
"In hindsight, our strong June quarter, coupled with longer selling cycles associated with the enterprise business, affected demand in the September quarter to a greater extent than we anticipated.
"We believe that the markets that we're focused on are fundamentally healthy. However, we clearly need to intensify our marketing and sales programs to take advantage of these growth opportunities," he said.
McCracken said the company plans to review its operating expenses to identify areas where cuts could be made.
--Cyrus Afzali
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Silicon Graphics
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