Silicon Graphics says sales will be flat

Workstation developer Silicon Graphics hit the financial marketswith a one-two punch of bad news late last month. The MountainView, CA, company initiated a replacement program to correct problemsin a high-end computer chip and warned that it expects revenuesto be only slightly higher for its first quarter (end-September).

Silicon Graphics chairman and CEO Edward McCracken said thecompany's sluggish sales were due in part to market anticipationof its new O2 workstation, which was introduced on Monday. McCrackensaid the O2 debut was one of SGI's most important new introductionsin several years.

In addition, SGI last month began a replacement program forcustomers who bought workstations shipped between March and Julywith the MIPS R10000 microprocessor. Systems with the affectedmicroprocessors may shut down, the company said. The R10000 chipis a 64-bit microprocessor that was debuted earlier this year(SCAN 1/31/96). Shipments since Aug. 1 are free of the defect.

SGI expected to post revenues only slightly higher than the$758 million recorded last year (including sales of Cray Research,which has SGI acquired), McCracken said. The company said itsnet income will be below market expectations.