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SGI to layoff ~ 3000 employees, sees 2Q profit (UPDATED)
A reader wrote to us with the news that SGI has doubled their original August estimates for # of layoffs, bringing the probable number to roughly 3000. However, SGI is seeing a return to profitability. The additional 1500 are not actually being laid-they are being offered new jobs with the new NT/Visual Workstations and Cray units, leading to the above erroneous information.
Hey what is Gil Amelio doing these days? Maybe SGI should bring him on and then get rid of him...it worked wonders for Apple.
Then he can write...500 days on the Firing Line part 2...my time at SGI
I'm not sure I agree that reliance on 'proprietary processors' hurt it.
Name a processor that isn't 'proprietary'!
Do you mean they relied too much on internal processes when they should have used available resources that fit the need? Like they're doing now? Intel PIII Xeons, instead of MIPS, Beowulf clusters, instead of freaking expensive supercomputers, and Linux instead of Irix? Take four years ago. What could they have done differently? Linux was still but a babe in diapers, comparatively, and the PIIs didn't have the scaleability or robustness or price point to make them great buys. They could have bought DEC Alpha, I guess, or used Alphas instead of MIPs... But Alphas were just as expensive, and still are, to some point. And about OSes, the only other choices they had were HP UX, OS/2, AIX, Windows NT, DEC's OS, and maybe some others.
I don't know that I believe that the high end graphics market isn't lucretive. What should they focus on instead? Servers(vs IBM or Sun or HP)? Supercomputers(vs IBM)?
It may be necessary to cut loose employees--but that is a lot of talent that they are losing, and a lot of future growth they are sacrificing.
I don't know that I agree with SGI's current focus. But my fingers are crossed for them!
-AS
-AS
*Pikachu*
I'm sad to say it, but frankly this was in the cards long ago. SGI's reliance on proprietary processors hurt it greatly. In addition, the fact that SGI plays into so many different markets (servers, workstations, high-end graphics, processor cores, supercomputers, OS) against so many large established players didn't bode well. The high-end graphics market, while being very sexy, wasn't ever going to yield the kind of revenue they needed. Now they're slowly trying to re-position themselves and cutting loose alot of employees. Frankly it was a necessary move. I'm sorry to see so many of the "oh greedy corporation, cutting loose people to turn a profit" arguements. Perhaps one day when you get out into the real world, start your own corporation and are answering to a board, and your stockholders, you might see why something like this is necessary. Now that SGI is finally trying to get a handle on the market and refocus their efforts, perhaps they'll be able to turn it around. I certainly hope so.
Actually gcc does work without the IDO. For 6.2 you have install additional libs off the installation CD's & get it off the web, for 6.5 it comes on the install disks precompiled and will load any libraries needed. If you are using something older than 6.2 than you only have yourself to blame (actually I think I had a gcc for 5.3 but that was many years ago). Actually I don't know why so many people rag on SGI for this, Sun doesn't give anything away on their distributions, but nobody rags on them about it. Hell SGI precompiles it for you and puts it up as a freedownload hosted on their own equipment. They practically wave gcc in front of your face with it being distributed on the install CD's (with a ton of other GNU utilities).
I'd say they do give a rat's ass about the community, or else they wouldn't spend the cycles to precompile up GCC, KDE, etc. and let you download them off of freeware.sgi.com. They've been doing that for years too, not directly profitable for a company but I think they realize the added-value it brings to the customer.
I do agree that the cube rocked... they should have just done the corporate name change to SGI (did anybody really call them Silicon Graphics Incorporated anymore?) and left the cube there.
I just hope SGI lays off their completely idiotic, moronic, marketing staff (do you sense the love in the room). People have been complaining about them for years, maybe this way they can get rid of some of them. The only idea that they seem to be able to think up is to change their logo. Boy that shows that their servers can push more data then any other server...
SGI rocks, their marketing & management sucks
tsuiter@midusa.net
Oh, I know that. It's just that without any of the 'sexy' stuff or the unique stuff, what will SGI offer that Compaq doesn't?
For now SGI has strengths in graphics and some neat memory technology. They have *excellent* mindshare, what with being involved in just about every single blockbuster high tech sfx movie ever released, and some really good talent, from what I hear.
I hope they do better without their 1500 people =(
-AS
-AS
*Pikachu*
Since it will be GPL'd, we're very likely to see it in the kernel. But it won't be soon -- there's no code there yet, and we're almost at feature-freeze for the 2.3/2.4 kernel. And I doubt it will be the default: ext2 is pretty good, is relatively lightweight, and most importantly, is tried and true. And, for the future, the ext3 project has a lot of equally exciting features -- and since it comes from "inside", from the same people who've been working on the current filesystem, it may have better integration, not to mention better mindshare.
--
This just dawned on me. If they *do* go out of business (ie, just mildly bankrupt, not hundreds of millions of debt), what happens to their intellectual property? I presume that any bankruptcy court would sell of their physical property (buildings, equipment, etc)first to pay off debtors. But what happens to stuff like OpenGL? Graphics tech designs? Software? Do they then sell that off to the highest bidder and send off final checks to shareholders?
I agree that it's sad to see they are laying off 3,000 employees. But think about it for a second. SGI isn't in business to give people jobs. They are in business to make money. These people will find other jobs. How they handle the employees who were dropped from payroll is more of an issue than anything else at this point (i.e. will they provide support to the layed off workers in getting a new job, etc.)
If they aren't making enough to stay afloat (or if they forecast that they won't be), they obviously need to push some of the dead weight overboard. Otherwise they will be destined to sink.
It's always funny to me when people post stuff like this.... saying companies are so bad to do this. Try owning your own company for a while - especially during a slump in your market segment or during a recession - and see what you think then. When it comes down to it, it's either a few of the sailors now or the whole ship later. Which is worse then?
If they didn't do this type of thing to stay in business, I would be more worried about buying their product than if they did. There's nothing worse than owning hardware from a company that no longer exists.
--SONET
Any fool can criticize, condemn and complain and most fools do. --Benjamin Franklin
Hey, I didn't say Compaq doesn't research or innovate. I just said that SGI's research helps it to differentiate itself from Compaq, otherwise they are both companies that sell RISC servers, RISC and Intel workstations, supercomputers, Linux machines, Beowulf clusters, UNIX OSes, etc.
It seems a good idea that SGI dropped NT, if only because they would be hobbled by Microsoft's development schedule.
Now we have to wait and see if SGI's plan has any merit!
-AS
-AS
*Pikachu*
It's an easy way to make a company profitable again, just reduce your expenses so it's less than your income.
Of course, this only works in the short term. Without your staff it will be *much* harder to generate new revenue. And without new revenue it's impossible to hire new staff.
Yes, it's a downward spiral, and one that I fear SGI won't be able to pull out of.
The brief mentions laying off almost double it's previously announced expectations as well as outsourcing much of it's costly research.
What I've got to wonder is *who* SGI is laying off? They have some unique and powerful technology, and the research is what differentiates SGI from, say, Compaq. If they stop innovating and exploring, they *can't* offer any value over Compaq. Of course Compaq may decide to buy out SGI anyway =)
-AS
-AS
*Pikachu*
They are open sourcing every piece of IP they own. They don't care about the community? They are GPLing it. Right now they are bleeding money and they need to stop. Unless you think keeping everyone employed until they go out of business is a good idea. SGI is getting behind Linux (with investments with VA Linux and Linuxcare) and open sourcing their IP. I doubt the logo change is the source of their current problems. Failing to price product properly in the marketplace is probably a larger problem along with poor customer service.
Thalasar
Four people that I went to college with began working at SGI after they graduated. I remember hearing from two of them of at least two instances where they were told to "take a week off" without pay. To me, this is crappy management at it's best.
...this from a company that used to have huge 'beer bashes' each Friday and kicked out more colorful free t-shirts for their employees than fruit of the loom. All of those perks went away when profitability started to fade. With those perks went morale as well, I suspect.
At least three of the people moved on two other companies within one year of starting there. That says a lot to me about SGI and their work environment.
One wonders whether the solution is much like Apple's or Tektronix's decision to cut the proverbial 'fat' and move back to their core business of profitability. Isn't this something SGI began a bit ago?
Anyway, that's my $0.02. I'd love to hear what some insiders think.
-lb
Everyone is attributing to their profit to laying off and not paying 3000 employees. Sure, that saves some cash, but the real reason is the shortened name. Think about it - instead of "Silicon Graphics International" they only have to print "SGI" on their products, stationary, the doors of their buildings, signs, etc. All that ink adds up and *that* is why they are profiting...
Its cold comfort, but its sometimes better to cut off an infected arm than to outright die. The real tragedy is having a leader who doesn't have the balls or brains to make tough decisions now, wastes time and resources, and ends up putting more people in jeopardy.
Hypothetically, anything hypothetical is possible.
Announcing layoffs has a much more widespread effect than many people realize. When I was at my last job, they had a 200 person layoff. As a consequence, morale went through the floor and many of those who were not layed off left for greener pastures. They lost a lot of intellectual knowlege and experience which cannot be easily recovered. Furthermore, here in California, if a company lays someone off they cannot hire someone else for the same job for at least 6 months. SGI is in for a very rough ride ahead. It will be very difficult for them to keep those who were not layed off.
When layoffs occur, it is some ways harder on those who were not layed off. You then start wondering, "when is it my turn to be layed off?"
Being layed off is not necessarily a bad thing around here in Silicon Valley. There are a lot of job openings elsewhere, and usually the company doing the layoff offers a good severense package. I know that when my division at my last company was dissolved, within a month everyone had found a better job than they had, and with the severense packages many people did quite well. Everyone from the admin to the managers found new jobs quickly. Most of the people are happier at their new job as well.
It is sad to see a company like SGI have a layoff. I fear that SGI may not be able to recover from this.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
SGI has to redefine who it is. Of course the logo thing was a mistake -- long live the old SGI logo!
:)
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They have a serious problem: you don't need a crazy SGI station to do graphics anymore. You'll do decently well with a high-end PC, 3DSMax, and good consumer graphics hardware, and for a fraction of the price. There was a reason so many people fell in love with equipment like the original Indigo (mmmm....purple box): it got the job done in a much more primitive age. It was the only way.
I recently heard a story about a little graphics design company a couple of years back (not all that many years, either, maybe 2 or 3). They didn't have money for SGIs, so they invested in PCs and MAX back when MAX was the first product for PC that didn't suck. They would get clients interested with samples, then give a tour of their office. When the clients saw they used PCs, they ran away. So then they got the clients interested, but made excuses why they couldn't visit the office ("We're painting...","We just moved...","There was a water leak, it's a mess..."). After that they started landing jobs and making money
But nowadays you can equip a 3D artist with a $2k PC and a $2500 copy of MAX and be in good shape, rather than SGI equipment and software totaling 4x as much.
So that's their problem. I don't know what the solution is. Linux is great, but it runs on cheap PCs too
I guess if I knew what the solution was I'd go be the CEO of SGI