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Silicon Graphics To Be Delisted From NYSE
Dan Linder writes "Starting Monday, November 7th, Silicon Graphics will be delisted from the NYSE. The future of the graphics and supercomputing former-heavyweight has never been less certain. This is especially unfortunate given their ongoing commitment to Linux and other open-source projects." From the article: "The company's stock, which once traded at $50 per share, fell below NYSE's minimum standard for continued listing earlier this year. The move comes as little surprise. The company received a warning from the NYSE in May, when its share price dropped below the $1 barrier. Although it had dipped into sub-$1 territory in late 2001 and again in late 2002, the price on both occasions recovered within a month or two. "
For another inside look at SGI's delisting, see also yesterday's article on sister site Slashdot (disclosure: Slashdot and Slashdot are both part of OSTG). Writes contributor ScuttleMonkey: "SGI, the former darling of the high-tech world, has been in trouble for a while, perhaps this is really the end."
We recently had heard in the office over one of the Yellow Machine that's made by Anthology Solutions.
Reverse splits are not done on the NYSE, only on NASDAQ and maybe some other markets outside the US. This goes back to the great crash in 1929, when everyone was doing this, and it caused a lot of confusion about what the stock was worth. Antiquated rule though.
Once they have delisted, yes it will become harder to raise more capital. The bigger issue I think though is that the analysts do not look fondly on a stock that drops off of an exchange. The investing public's opinion will fall drastically and, as a result, the confidence in them will be basically gone. The ability to raise any form of capital (through equity or debt) will be very restricted and there is a likelihood that other companies with receivables out with them will come knocking for their money.
SGI put out some increadibly cool technologies:
OpenGL - a very important 3D API
The Standard Template Library
VRML which gave rise to X3D Open Inventor which is a C++ wrapper around OpenGL.
Pretty purple boxen that were great in their day.
It seems that these came out years before the average user could really leverage them - years before anyone (including SGI it seems) knew what to do with them.
It seems a shame that such a brilliant company could have such a hard time making money. They made the world a better place though, IMHO.
Nope. You can't be under $1.00/share on NASDAQ for more than a month without being delisted.
"I'd rather be a lightning rod than a seismometer." -Ken Kesey
I have followed SGI's stock and conference calls very closely since 2001.. I have also Extensively used their product since 1993. I've made a lot of money trading the pops in the stock but those days seem over and the risk is too high.
They've had the Same CEO for 7 years. He is also the Chairman of the board. That makes it difficult for the board to remove him. The board should be sued. The executives should be sued. It is sad to watch those assclowns run the company into the ground. Their is no sense of urgency and there never has been.
No executives have been fired. Heads are rolling at Dell because of a single bad quarter. It is like that at most successful companies.. but not SGI..
On October 25, they had their quarterly CON call.. The CEO didn't even mention the impending delisting.. I figure he had to know that it would be announced to the public by the NYSE within days.
The story of SGI is that the best tech doesn't always win (though it is a bit hard to say that with Itanic in the picture).
When I read the comment about the commitement of SGI to linux, I couldn't help but think of Sun which gets a lot of bashing because they insist on Solaris instead of commiting itself to linux. Now, SGI's future is uncertain although they "commited" to the supposedly right choice.
IMHO Irix was great and they should commit to their own child. Who knows, today we might had yet another choice if they did.
IMHO its a shame because SGI have always been visionaries in computing architecture, and if you look at a modern PC alot of what it is doing for the 'first' time was done years ago by SGI. I think I'm right in saying that many of the people working for ATi/Nvidia/Microsoft etc. are ex SGI guys and have carried the seeds of great ideas to places that are perhaps better at executing commercial designs.
I'll be sad to see SGI go because they've never seemed as tied to consumer demands and as such look to be a place where elegant/correct designs are valued over whatever can be thrown together in six months and stamped out on a production line to make some quick bucks.
Perhaps I'm just getting older but it seems like a modern version of an older problem, namely that we no longer value artisans. We value mass production and whats cheap, we live in carbon copy houses (watch MTV cribs for a few minutes) and buy the same mass produced items. Though there are some inklings that we are starting to get fed up of it with more people these days focusing on individual fashion and customising everything to their own tastes. What were really saying is we want something unique/crafted/personal just look at all the case modding going on.
Sadly by the time we value something it can be lost for good, many old techniques have been lost over the ages only for modern historians to bemoan and endeavour to recover. And even if we can flawlessly record the techniques used does that prevent them dying out, I'm thinking of bruce lee recording the techniques he used or a japanese sword maker recording his techniques. When not practiced these techniques become 'sterile' and are much better passed on to an apprentice. Maybe it doesn't matter if these techniques die out after all who needs japanese swords and martial arts? Though you can't help feeling the world is a poorer place without them.
I don't know I could be way off the mark and if so I'm sure someone will shortly correct me, but I for one would be sad to see SGI go (looks around and steps down off soapbox wondering how he got up here).
The Linux kernel reaches 128 CPU's just because of SGI. So, it's not as easy as you think. Also, there's the hardware to consider. Opterons aren't up to 32 yet, they are hoping that the new 3rd-party chipset will work well with that
...incompetence ever told. It's astonishing that a company that made the best computers in the world for 3D graphics can have fared so badly in a world where even your cell phone is a computer supporting 3D graphics. They had the world handed to them on a plate and they simply threw their hands in the air, the plate with it. Astonishing. And so depressing. I'd really ike to try to understand how the likes of nvidia took the laurel from them. I remember nvidia's very first '3D' card (you probably never saw it, I helped develop drivers for it many many years ago). It was the biggest pile of crap ever developed. Never in a million years would I guess that a few years later these guys would be blowing away SGI and hiring half of their staff.
You missed one of the biggest factors, many mutual funds and institutions (e.g., retirement/pension investors) generally have rules which prohibit them from investing in OTC stocks with low market cap (share price * shares). This is why a reverse split doesn't help, it may increase the share price, but of course reduce the number of shares.
Mutual funds and institutional investors are highly desired as they tend to be stable stock holders which can reduce the volatility of a stock (once they decide to invest they hold large chunks of companies and hold them for a while to increase tax efficiency). Once you get into the open market, you get hedge funds, insiders, and day-traders manipulating your stock price which can cause other investors to flee for the woods.
They also haven't had any analysts covering them since the beginning of this year (nobody likes to cover OTC or penny stocks).
Moving to an OTC (over the counter) market means that there are only a couple brokers making a market in the stock and price reporting is really up to them to perform on a timely basis. This means your broker (unless they are the ones making the market in the stock) really has to try to find a buyer for any stock to you want to sell or will have to pay the market maker a fee and/or be subject to the price they report. In a "listed" stock there generally are several big brokerages that match buyers with sellers and with a big exchange like NYSE enough shares are traded on the floor to create a more continuous range of prices and fast execution of any retail sized trader order. As the price continues to fall, the OTC market maker gives up and demote the stock to the "pink sheets" where sales are reported on paper reports as trades occur. Then the stock isn't very liquid at all and the daily or weekly price report is fairly worthless as an indicator of the worth of the stock.
The long and the short of it is that this means giving stock options to the employees or the executives is really not very meaningful anymore (anytime they sell, they don't have a good idea of the price they will get and more likely they will "heisenberg" the stock because if they sell the price is likely to go down) meaning it's hard to motivate employees and executives with either their existing or any new stock options or grants. Companies like SGI are all about employees, the assets are basically worthless to the investors w/o the employees. Unable to motivate them with stock/ownership, they have to pay them more (e.g. bonuses), or likely suffer attrition.
It's a downward death spiral that almost no company can get out of. For example, SGI has already had to pledge assets (e.g., patents, trademarks, etc.) to get their latest operating loan. In bankrupcy this puts these new lenders in a primary position and the normal equity/stock holders and current bond holders in an inferior position making it less likely for people to invest in the stock (equity holders are the last to get paid back in a bankrupcy). This is what makes it hard to raise any captial, except by heavily mortgaging thier assets even further to the lenders.
Once one of the lenders decides that the company assets are worth more than the company itself it often just rips the company apart for a fire sale to an army of lawyers who snap up patents at fire sales in order to shake down large companies for a few quick bucks. It's a sad, sad day when that happens.
Management decided not to pursue this - they didn't want to cannibalise their workstation sales. The employees shrugged, left, and set up a new company of their own - you may have heard of it, it is called nVidia.
The moral of this story? Never avoid creating a market just to avoid destroying your existing market. If you do, then you will find that you have a competitor who wasn't even in your original market.
I am TheRaven on Soylent News
SGI's problem is that they've made way too many mistakes and missed too many boats. They should have released a PC graphics card in the mid 90's. Instead, that group went to nVidia. They should have allowed Cray (who they owned) to continue with the (quite successful) T3E line. Instead they pushed Origin which, at the time, was barely working. They should never have built a PC that didn't have a standard BIOS and couldn't run a standard version of Windows. They should have never built PC's, period. They should have not tried to commit to shipping Windows on every platform they built (this was a late 90's thing which, fortunately, died). They should have actually used the people and technology that they bought when they bought Cray. Instead, it took 6 years of political infighting before the companies were really merged (a large part of what was Cray Research is still part of SGI). They should have put effort into stabalizing and securing Irix back in the mid 90's when it was swiss cheese. They *owned* the webserver market at one point. Sun anhialated them. They shouldn't have sold the Cray SuperServer to Sun for $56 million. It became the Sun Ultra Enterprise and Sun has made billions on it. Lastly, and possibly most importantly, they shouldn't have driven off their best employees because of poltical infighting and starting, but not finishing, far too many projects.
You can't make that many *major* errors and stay alive. Honestly, I'm surprised they've managed to last as long as they have. I thought they were dead 4 years ago when I quit.
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