Silicon Graphics on Tuesday announced restructuring that will cut between 1,000 and 1,500 jobs.
The troubled computer maker, best known for its powerful graphics workstations and servers, plans to spin off a number of divisions to concentrate on the Internet and mid-range systems running the Linux operating system.
SGI will start by spinning off its Windows NT and Cray supercomputer businesses.
SGI is looking for other computer companies to help run these two operations as separate ventures. Though deals are in the works, nothing will be finalized until later in the quarter, executives said.
"We want to get more aggressive about the Internet," explained Rick Belluzzo, SGI's chairman and CEO, in a conference call.
"These changes are about creating a foundation for growth so that we can be a growing, thriving company in the future."
The restructuring will result in up to 1,500 layoffs from the current staff of about 9,000, SGI said. The layoffs will be spread across divisions and job functions. The spin-offs could also account for an equal number of employees leaving the company, executives said.
The restructuring announcement comes on the heels of SGI's announcement last month of its first quarterly profit in two years.
The company will phase out its proprietary MIPs processors by 2002 or 2003 in favor of processors from Intel, executives said.
SGI sees massive growth in Linux. The company will fold in some technologies from its own Linux-like IRIX operating system and release some of the results as open-source software, executives said.
SGI last year attempted to restructure itself by introducing a cheaper line of graphics workstations running Windows NT.
"There has been ongoing process to try to cut costs," said Brian Eisenbarth, a financial analyst with Collins & Co.
"[They're] trying to diversify away from the 3D video server market into more the traditional corporate server arena. [But that] market is dominated by Sun Microsystems and Hewlett and Compaq -- tough companies to compete against. They [SGI] still have a strong niche in the graphics market but the days of their growth and selling those machines at exorbitant prices are gone."
The company said its advanced design technology could be used to help companies deliver richer content like streaming video over the Net.
"We think big corporate networks and content providers are going to need very complex and media-intensive images," said SGI senior vice president Bill Kelly.
SGI plans to spin off its MediaBase media streaming application, engineering team and technology to a newly formed company with venture capital backing in which it would hold a "significant" minority stake.
In addition, SGI said it would form an alliance with Japan's NEC to market SGI's high-end systems in Japan.
SGI shares were down 2-3/16 at 14 after the restructuring plan was announced.
Reuters contributed to this report
