About Silicon Graphics International Corp.

Silicon Graphics International (SGI) handles computing on a large scale. The company provides high-performance computer servers that are based on the Linux operating system and designed for large-scale data center deployments. SGI also offers data storage servers, as well as modular data center systems sold under the ICE brand. Its equipment is tailored to quickly access, analyze, process, manage, visualize, and store large amounts of data. SGI targets the IT, Internet, financial services, government, and electronics sectors, as well as scientific community. Clients have included Amazon.com (18% of sales in 2014), Microsoft, Yahoo!, and Deutsche Bank. In November 2016 SGI was acquired by Hewlett-Packard Enterprise.

Change in Company Type

HPE closed on the $275 million deal for SGI in November 2016. HPE plans to deploy SGI's supercomputing capabilities to beef up HPE's enterprise offerings to provide faster and higher capacity analytics to customers. The deal is expected to close in early 2017.

Operations

About 74% of SGI's sales come from of its product business and the other 26% was generated by the services unit.

The product segment contains products from both High Performance Computing (HPC) and High Performance Data Analytics (HPDA) operating segments as well as compute solutions, which include scale-out computing, scale-up computing, software, and cloud/web products.

The service segment focuses on technical services such as hardware and software maintenance, system installation, and configuration. The division also offers consulting, systems design, and support, as well as on-site staffing for customers.

Geographic Reach

About 46% of SGI's revenue comes from customers outside the US. Overall, North America and South America accounted for 54% of SGI's sales, followed by Asia/Pacific at 24% of revenue, and Europe at 20%.

SGI is based in Milpitas, California, and conducts assembly and testing at a plant in Chippewa Falls, Wisconsin. SGI's offices in Japan, France, Germany, and the UK are used for sales, services, research and development, and administration.

Sales and Marketing

SGI has more than 6,500 customers, who it reaches through a direct sales force in nearly 20 countries and a network of resellers and distributors.

Government agencies generate about 45% of SGI's revenue. Government customers include education and research institutions. A portion of those sales are made through system integrators.

Financial Performance

SGI reported its 2016 (ended June) financial results before the HP Enterprise deal.

In 2016 SGI had a bit of a bounce in revenue with a 2% increase to about $524 million. A 5% rise in product sales came from large strategic project wins in Europe and Asia. Services sales notched down 2% for the year.

The sales rise helped reduce SGI's net loss to $11 million in 2016 from $48 million in 2015. A reduction in headcount helped reduce the loss.

Cash flow from operations popped into positive territory at $27 million, on decreases in accounts receivable and inventory, compared to a negative $97 million in 2015.

Strategy

SGI is moving away from it older cloud computing business and directing its attention and resources to areas that should bring higher margins. Those areas include High Performance Computing, High Performance Data Analytics, storage, and services. The company will expand its business in several vertical markets, including weather and climate; physical sciences; life sciences; energy, aerospace and automotive; financial services; internet; and media and entertainment.

Those changes set the company in good stead for its acquisition by HP Enterprise, particularly in the data analytics area.

Company Background

The company took its pre-HP form when Rackable Systems bought the assets of high-performance computer pioneer Silicon Graphics, Inc. (SGI) for $42.5 million in cash in 2009. Rackable expanded its product line, customer base, and geographic reach with the acquisition, and the company adopted the better-known SGI brand in an effort to tap a larger global market. Uniquely for a computer maker, the company performs all of its manufacturing, assembly, and testing at a facility in the US.

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Silicon Graphics International Corp.

900 N Mccarthy Blvd
Milpitas, CA 95035-5128
Phone: 1 (669) 900-8000

Stats

  • Employer Type: Public
  • President and CEO: Jorge L. Titinger
  • President and CEO: Jorge L. Titinger
  • Chairman: Ronald D. Verdoorn
  • 2016 Employees: 1,100

Major Office Locations

  • Milpitas, CA

Other Locations

  • Chippewa Falls, WI