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Silicon Graphics

SGI Announces Restructuring, Cuts 400 Jobs 318

kerneljacabo writes "Yikes! SGI seems to be the lastest victim of the economic downturn. Today they announced an extensive 'restructuring,' which includes releasing about 10% (400) of their employess. Seems like no one is immune." SGI claims this'll save them $40M, as well as improve their performance next fiscal year.
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SGI Announces Restructuring, Cuts 400 Jobs

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  • by Anonymous Coward on Thursday May 22, 2003 @10:20PM (#6020748)
    Caught in an economic downturn? Force to cut jobs? I am shocked.
    • A *HIGH END* tech company, no less. I'm amazed they made it this long. They must have had good cash reserves.

      Until MS lays people off, I'll just ignore the part about nobody being immune.
      • MS has a two tiered employee system. One class of employees - designated by a color I think it was - is the "upper class" employee. They are rock solid; they work long hours, have full benefits, get stock optiosn from time to time, etc. The other class of employees are expendable - they are temps who are generally paid above average but not hugely so, have limited benefits, and are hired/laid off without fanfare.

        The temp workers getting laid off don't cause much news.
        • The 'other/temp/tiered/expendable' workers are outsourced. They are not on the corporate head count/roster, so that number doesn't change whenever the outsourced quantities rise or fall. It's a non-event in terms of 'official' staff counts, so there is nothing to have news about.

          This is one of the reasons corporations do it this way...they can increase or decrease staffing, and everyone, from investor to competitor, hears nothing...not even the door hitting them in the ass on the way out.
      • by fm6 ( 162816 ) on Thursday May 22, 2003 @11:24PM (#6021094) Homepage Journal
        SGI has been in trouble for a long time. Now that commodity computers are so powerful, nobody goes to them for graphics workstations. That leaves them with supercomputer/servers, and "visualization stations" (basically supercomputers configured as very expensive workstations). They've never done well in the server market: it's hard to compete with IBM and Sun, plus their "Jurassic Park" image is a hard sell in the coporate world. They do better with the VW market, but that's not enough to keep them in espresso.

        When I worked for them in 99, they already had cash flow issues, and had had them for some time. But Wall Street has always loved them, so they always got more cash when they needed it. Many people who worked there thought this was actually a bad thing. I guess Wall Street has finally figured out that their business model is just not working.

        I went from SGI to Borland, which has cash up the wazoo. They got a huge patent settlement (disguised as an investment) from Microsoft, and have mostly been in the black lately. But Wall Street doesn't trust Borland: too much weirdness. (Personal trauma prevents me from being specific.) So we were always under pressure to cut costs. I once had to go all the way to Dale Fuller for a $200 memory upgrade!

        Publically held companies live and die at the sufferance of Wall Street, no matter how well, or how badly, they're doing. I imagine that's why Google is still privately held, even though an IPO would make a lot of the people there -- maybe not rich, but certainly comfortable.

        • Irix is so much better than solaris. I wish SGI were able to break into the mainstream server market. Their gear is much better than Sun's anyway...
  • by InterruptDescriptorT ( 531083 ) on Thursday May 22, 2003 @10:21PM (#6020753) Homepage
    ...SGI stands for jobs soon gone to India.

    Sad. I spent many a fun hour in the SGI lab at university, hacking on GL and wondering if we would ever get consumer-level graphic cards that could do that.

    Poor SGI.
    • Re:Apparently... (Score:2, Interesting)

      I still use an SGI, an Indigo2, to do visual database modelling for an aviation training facility. Great machine- even as old as it is it can still do things you could not think of doing with an Intel machine.
  • Well... (Score:3, Insightful)

    by JoeLinux ( 20366 ) <<moc.liamg> <ta> <xunileoj>> on Thursday May 22, 2003 @10:22PM (#6020758) Homepage
    If they knocked their price down, and brought back FSV, I'd buy one...Problem is, they never used FSV...coulda been one of the best File Managers ever. The one for Linux is lame, and hasn't been updated in a while.
  • fuckedcompany (Score:5, Informative)

    by larry bagina ( 561269 ) on Thursday May 22, 2003 @10:23PM (#6020767) Journal
    for those that don't know, fuckedcompany [] is the best 'news' source for stuff like this.
  • Overseas? (Score:2, Interesting)

    I wonder how many jobs are being outsourced over yonder.
  • boo (Score:5, Funny)

    by digitalsushi ( 137809 ) * <> on Thursday May 22, 2003 @10:24PM (#6020776) Journal
    From the page at the bottom: "About SGI [...] SGI was named on FORTUNE magazine's 2003 list of "Top 100 Companies to Work For." FORTUNE regrets the error."

  • 4,000,000 / 400 = WTF?
    • Re:Math (Score:5, Informative)

      by worst_name_ever ( 633374 ) on Thursday May 22, 2003 @10:31PM (#6020817)
      $40M / 400 = $100k per employee, which sounds absolutely standard for a skilled white-collar job. When I worked for a large (and still successful) company in the tech industry, that was the figure they used to estimate how much each employee cost them: my salary was about half that, and the rest was taxes, benefits, 401(k) match (heh, remember those?), building upkeep, chicken giblets for the cafeteria, etc. etc. etc.
  • Rick Belluzzo (Score:2, Informative)

    i see Rick Belluzzo is living large at Microsoft after driving SGI into the ground? At high corporate levels performance means nothing, knowing the right people means everything. Same with venture capital: its knowing the right corporate heavyweights - nothing to do with ideas :(

    amor, paz, esperanza, muelle
  • by HungWeiLo ( 250320 ) on Thursday May 22, 2003 @10:32PM (#6020825)

    $40,000,000 saved by cutting 400 employees...they SURE do spend a lot per employee! What's that, lifetime Jolt cola, personal 24-hr masseuses, and weekend company Jet usage?
    • by Anonymous Coward on Thursday May 22, 2003 @10:39PM (#6020873)
      $40M sounds about right. Consider that cost of employment is between 1.5-2x an individuals salary.
      Say an average salary of $50K.

      " * " *2.0=40,000,000

      Factor average salary up just a little and it's pretty damn close.
    • by Fallen Kell ( 165468 ) on Thursday May 22, 2003 @10:45PM (#6020907)
      Well, it is probably close to that amount. Depending on location, they can probably stop paying the lease on one or two buildings, as well as the electric, water, and insurance on those buildings as well. For decent office space, I wouldn't be surprised if they were paying 2-5 mill a year on the buildings.

      And remember, its not just the actual salary that they will save, its also the benefits as well (no decent company is without good health care, etc). And it is also counting in the interest they will earn on the money they are saving as well. That is another 3-7% right there.

      So that means the average salary+benefits package only needs to be about $85,000 or so per person. And to be honest, that number is probably about right. Especially if these people are engineers or programmers.
    • Health Insurance usually costs around 50-60% of the total HR budget in the US now.

      Toss in retirement and life insurance and other crap and things add up quick.

      • by IIH ( 33751 )
        Anyone find it amusing to see a comment about job layoffs moderated "Redundant"?
  • by Martin Marvinski ( 581860 ) on Thursday May 22, 2003 @10:33PM (#6020832)
    Thanks to Linux, Unix is now a commodity and corporations must find a new way to add value. You can't keep expecting people to buy the same product year in and year out. Linux is a success because like any other product, eventually it becomes a commodity like textiles and companies cannot charge a premium for commodities.

    Software has the potential to be distributed almost cost free, and that demand for a commoditized Unix came in the form of Linux. Microsoft must commoditize Windows or else risk losing complete market share to Linux.

    This is why SGI is in trouble. Unix can now run on commodity hardware on a free Unix clone, Linux. What SGI needs to do is invest in research for the next business cycle and NOT FIRE EMPLOYEES. Doing so will hamper its chances for survival in the future.
    • by danheskett ( 178529 ) <> on Thursday May 22, 2003 @11:10PM (#6021048)
      That's naive. IF they are researching for the next business cycle, chances are the people they laid off are people who will not be compatible with those future plans.

      If you are switching focus to research, you gotta clear out people who dont contribute to that goal. Sad, but true.
    • What SGI needs to do is invest in research for the next business cycle and NOT FIRE EMPLOYEES. Doing so will hamper its chances for survival in the future.

      And not doing so will hamper its chances for survival in the present.

    • It absolutely is. And why pay people salaries when you can get gullible college kids to work for you for free? I wish that I could get gullible, wealthy college kids to work for my business for free. I'd can my employees, too.
    • So nobody's buying Unix boxes because Linux boxes are cheaper? That's a pretty narrow picture of the industry. Many of SGI's customers spend hundreds of thousands of dollars for a single system. Do you think a hundred-dollar software license fee is likely to be a deal-breaker?

      SGI's problem is not commodity software, it's commodity hardware. All the movie and CAD/CAM and scientific people who used to buy SGI workstations are buying ordinary PCs instead. And if they need to crunch numbers or crank out thei

  • by Fallen Kell ( 165468 ) on Thursday May 22, 2003 @10:33PM (#6020833)
    No, really. How could anyone seriously be surprised by this? SGI's products are inordinantly expensive for what you get. Their "maintainance" alone on their systems could buy a brand new Sun system of equal or better power EACH and EVERY YEAR. And lets not even compair them to standard PC hardware costs. You could buy a small cluster of high end PC's and run Linux on them cheaper then getting an SGI.

    The only reason SGI still exists is because their name is ingrained into the heads of many people in managment as being "the thing to buy for graphics workstations" when in reality they are by FAR definitly NOT the thing to buy, especially if you are being told to cut back on cost.

    It was only a matter of time before SGI started to cut staff. What they really need to do is cut the price of the maintaince on their systems, and maybe then will more companies ramp up purchasing of their (SGI's) products. But as is, they are completely overpriced given the current market.
  • Erm (Score:4, Interesting)

    by ramzak2k ( 596734 ) * on Thursday May 22, 2003 @10:35PM (#6020847)
    And how is that there are open positions displayed on their Careers page [] ?

    So , Are they blatant fakes ?
    Is the company merely using the time as an excuse to get rid of the chaff ?

    Arent there laws which prevent companies from hiring immediately from a mass layoff ?
    • Re:Erm (Score:2, Insightful)

      maybe the person responsible for updating the careers page got fired?

      I went through 2 "rightsizings" at a company. Both times, some of the open positions were cancelled, besides people being reduced. And both times, divisions within the company continued growing and hiring afterwards.

      If the people being reduced have usable job skills, they'll have a decent chance at getting transferred into one of the open positions. And if they are just chaff, so what? why should sgi settle for 2nd or 3rd rate empl

    • Any company that size would have some 'churn', if 1/1000 people quit a month, then SGI would perpetualy have 4 openings. The layoffs would probably reduce that for a while, but a good company would probably always have it's doors open for relly talented people.
    • Only 28 jobs are listed?

      Seems to be quite low compared to what they are laying off.

  • Aw, crud. (Score:5, Insightful)

    by Skyshadow ( 508 ) on Thursday May 22, 2003 @10:43PM (#6020896) Homepage
    I interned at SGI (Chippewa Falls '98), I have friends who work at SGI, I surfed /. from SGI...

    It seems to me that SGI's major problem is that they were always a one-trick pony -- they made the decision to stick with graphics machines at a time when that particular niche was sliding towards being a commodity, or at least commodity-doable. When Jurrasic Park came out, it was like a birth cry. When Titanic came out, it was a death toll.

    They tried to branch out, but their directionless, clueless management (I'm looking at you, Chainsaw Rick Belluzo) flailed around towards one ill-concieved scheme after another, and all the while powerful PC-based workstations were dropping in price.

    IMO, they should have concentrated on appliances. I remember pilot programs floating around to do things like massive network storage (a la NetApp) and other similarly promising things, but they never went anyplace.

    Oh, and I had a Herman Miller Areon and an office. As an intern. Might have been a symptom of part of the problem, on reflection...

    • Rick Beluzzo was pushing the NT workstation line - which majesticly bombed - and after contributing to SGI's demise, is now working for ... []
  • by JayDiggity ( 70168 ) on Thursday May 22, 2003 @10:43PM (#6020898) Homepage
    Whenever I see stories like this, I can't help but think of this article from SatireWire:


    Funny and brutally honest. Too bad they stopped putting out new stuff.

  • SGI is the only hardware that excites me more than Apple. Its unfortunate that they have fallen from the mountain that they built. After starting on an Indy, and an Indigo and then moving to a dual Proc Octane 2, i can tell you first hand that they truly do make awesome hardware. I havent gotten my hands on a Fuel yet, but im sure thats great too. The only thing stopping me from buying their machines (second hand) is software. All the software for the system costs more than the hardware does! (ie... Al
    • by Anonymous Coward
      SGI is the only hardware that excites me more than Apple.

      Obviously, you haven't seen a great pair of tits. Although on further reflection, they might be considered software, so never mind.
    • Maya is free as the educational version. If all you want to do is play with it - download it from their website.

      If you are planning on going commercial - Maya is just about the only piece of software that is well worth its price tag.
  • by Kjella ( 173770 ) on Thursday May 22, 2003 @10:54PM (#6020964) Homepage
    ...and basicly they fell victim to a disappearing market niche. PCs could do much of the same, at far lower cost. I think many of the "big iron" companies have had this problem, if your needs haven't scaled with the computing power, what before required a special solution can now be done on a standard Intel/AMD platform. Even in computing intensive applications like CAD/CAM/FEA (Finite Element Analysis) much of the time goes into creating the right model, not calculating it. At least that was my (limited) experience with it.

    I think this is a problem for a lot of the "big irons". If their customers don't need them anymore, but can get away with commondity machines (PCs, laptops, thin clients instead of workstations and things like Athlon MP or Hammer servers, which are "light" servers in this context, they're screwed.

    Of course some people need the big irons. But if I needed the power of a 3GHz desktop ten years ago, what would I have bought then? Five years ago? Now? The answer is very different, even though the needs stay the same.

  • I love Corporate math. Let's review.

    Today they announced an extensive 'restructuring,' which includes releasing about 10% (400) of their employees

    Part two:

    SGI claims this'll save them $40M

    Now for the big finale:

    $40M / 400 = $100,000 (average, of course)

    Those were some VERY expensive employees, don't you think? I suppose maybe there were a couple Big Fish in there, but still, that average seems really high, since layoffs are almost always biased towards the bottom of the food chain, where th

    • by danheskett ( 178529 ) <> on Thursday May 22, 2003 @11:41PM (#6021167)
      Every single one is lying straight through his or her teeth- executive salaries(and stock options), despite slumping profits and stock prices, are skyrocketing without fail.
      That's absolutely false. You just simply made that up, without regard for fact.

      This year's Fortune round-up of Executive Compensation clearly shows a *reversal* of serious proportions. Executive compensation has retreated from a nearly decade long expansion and growth to pre-1996 levels.

      Additionally, nearly without exception, compenstation for the top exec's in organizations fell, even in cases where improved or exceptional performance was clear.

      In other cases, the article showed specific examples of executives who drastically reduced compenstation, or boards who stripped options, rewards, and bonuses across the executive table I'd like some evidence of your clearly non-factual claims.

      Secondly you write:

      Those were some VERY expensive employees, don't you think?

      No, 400 employes, 40 million savings. That's about right for employees who average 50-60k a year. Benefits, HR costs, insurance, 401(k) - it all adds up to a sizable portion of base salary. In many companies benefits equal about 65% of salary. Others, it is as high as 80%-100%. So, no, $100k per employee is not alot. It's average for high-tech employees. Or very close to average, maybe a bit higher since SGI employees are regarded as well paid. Figure the average employee made about $55k.


      (he did repay the loan, BTW, unlike a lot of other execs
      The issue you are evoking is so much more complicated than you'd like it to be. Executive compensation issues swing back and forth over time. For a while, the thought was base salary should be low, with lots of rewards for stock performance. Okay, well, the problem with that is the incentive to cook the books for temporary gains. Then things swing back towards small rewards based packages, with a lot more of the package tilted towards pay. Then you'll see lots of claims of CEOs being unresponsive to share holders and employees. Shareholders and board members will want to improve performance of stocks, and so will take away most of the payment to the CEOs and replace it with stock options. This is especially true in cases like now, with a depressed economy and a down market. And then everything repeats.

      Meanwhile, of course, Bush is buying off the rich for the next two elections
      Interesting thought, but offtopic. Mostly.

      making it even cheaper for them to cash out their stocks and investments
      First off, in a down stock market, this is largely irrelevant. Capital gains applies to investments sold for a profit. As long as the market is down, most people selling short-term investments would not trigger a capital gains. The people who do trigger a capital gains are people who are long-term invested (aka, go into the market 20-40 years ago when it was much much lower). These people will in fact benefit.

      and giving them huge tax cuts
      The example you give is not a huge tax cut by any means. That is barely 1.7% of income, and something like between 3-5% of total taxes paid on that income.

      Likewise, you completely discount the significant savings that the lowest paid Americans will reap. The number of Americans in the lowest (10%) bracket will increase by anywhere from 500,000 to 1,000,000. Mind you, this is the same 10% bracket that Bush created with his previous tax reform.

      I am not stumping for Bush's tax cut; in terms of economic development it is too small to late for the wrong things. As a tax reduction its handy but again not very large as far as those things go.

      Your claim that they are huge is a major gaffe, and I think shows that you are not in touch with reality.

      Finally, about this helping the economy: you seem to dispute the idea of "supply-side economics". Let me say this about that: Reagonomics, trickle-down, whatever you call it is simple and well-tested. Given time and proper regulatory conditions, it works.

      • Just wanted to say: excellent post. I might not agree with everything you say (though I do agree with a lot of it), it's very well-thought out and insightful. Slashdotters would do well to read it and actually learn about the "other" side of reality, rather than rant on about things about which they only have cursory or secondhand knowledge.
    • $40M / 400 = $100,000 (average, of course)
      Those were some VERY expensive employees, don't you think?

      No, not in the slightest. Why do people seem to think that the salary is what an FTE costs a company? All in all the actual cost of an employee is usually over twice their salary, if not more.

      Not to mention the savings in no longer doing what those employees were there to do.

    • Although it is true that execs tend to loot dying companies, your math is probably wrong. The emoloyees getting axed probably didn't make $100,000, but firing them may also mean closing some offices, which means saving on rents and property taxes and equiptment. It also can mean hiring fewer contractors, who are not exactly being laid off.
    • $100,000 (average, of course) Those were some VERY expensive employees, don't you think?

      Not particularly. Rule of thumb is that an employee costs twice as much as their salary. You need to consider the cost of the building, the equipment they use, benefits and insurance, indirect costs like cleaners and HR depts and secretaries. An employee costs a fortune. Just looking at their salary is a mistake.

  • by rice_burners_suck ( 243660 ) on Thursday May 22, 2003 @10:58PM (#6020987)
    It's a shame that SGI is slowly going down the tubes. Back in the 80's, this company made some of the most incredible hardware and software there ever was. I remember seeing a few of those computers in action. One of the earlier models, a 32-bit RISC model (at a time when most personal and business computers were 286s) was able to graphically transform the design of automobile parts in ways that I never imagined possible. Heck, 2d side-scrolling video games with 16 colors were, like, high tech! I had the pleasure of using a few of these computers on several occasions, but never had the pleasure of owning one. (There is something very aesthetic about an SGI. I don't know what it is.) Back in the 80's, these computers did what today's PCs are just beginning to do. I deeply hope that Linux will acquire a lot of great graphics technologies, and that the "magic" of SGI will live on, if in another form.
  • by green pizza ( 159161 ) on Thursday May 22, 2003 @10:59PM (#6020989) Homepage
    Here's an interesting tidbit from SGI's site... some performance numbers of Intel's Madison (next generation Itanium) on SGI's Altix (Linux/Itanium-based machine running on Origin 3000 architecture) y/madison.html []

    The machine is limited to 64 processors per single-system image (O3K can handle up to 512 out of the box, or 1024 with a special kernel) but the Itanium2 is about 2x as fast as the MIPS R14K... plus the Itanium system can run a very slightly modified linux distribution (currently Red Hat plus SGI's ProPack kernel patches and additional utilities).

    Pretty neat stuff for the high-end Linux market. Of course, the number of people that need Origin/Altix level system I/O is pretty slim...
  • Why is this news? (Score:4, Interesting)

    by smooge ( 3938 ) on Thursday May 22, 2003 @11:34PM (#6021135) Homepage
    SGI has been cutting jobs steadily for the last 4 years. This is one of the smallest job cuts in that time...
  • by callipygian-showsyst ( 631222 ) on Thursday May 22, 2003 @11:36PM (#6021144) Homepage
    SGI seems to be the lastest victim of the economic downturn. Today they announced an extensive 'restructuring,'

    I don't think they are the victim of the economic downturn. People were wondering why they were still around even during the peak of the dot-com boom! In fact, several years prior, when they build that ugly "toon-town" building near the old Adobe HQ, people thought they were through.

  • MIPS Processors (Score:3, Interesting)

    by gratefully dead ( 638634 ) on Friday May 23, 2003 @12:13AM (#6021355)
    One of the more regrettable things about SGI is that they spun off the MIPS processor division. My computer architecture class used the MIPS R22000 processor (1985) as the example through which to explain computer architecture. Evidently the MIPS processor had a very elegant and efficient instruction set when compared to most processors (some argue that ARM and Alpha are better, but hey).

    Mips stands for Microprocessor without Interlocked Pipeline Stages, and it means that each instruction was executed in one cycle. Therefore, multi cycle depedencies ("locks") did not have to be accounted for, simplifying the design.

    Unfortunately their design was not able to keep up mostly because SGI could not afford to stay on the bleeding edge of manufacturing techniques. MIPS lives on in embedded applications, but the last great computer processor was actually able to reach 1 Ghz!

    Anyway, people who deal with assembly code (electrical engineers, and esp. compiler writers) can appreciate the relatively small and simple instruction set of the MIPS architecture.

    I don't think SGI will be going out of business soon. They have a few cool machines up their sleeve. And customers for whom price is not much of an issue (US Govt. *ehem*) will buy them.
    • We still use MIPS to teach some classes that use assembly. For learning it, we (and many others) use a program called SPIM (clever, huh) that emulates a MIPS processor on a *nix or Windows machine. It was a fun language to learn and use although I'm sure I'll never have to use it. I haven't played with too many other assembly languages, just a bit of PPC but I hear X86 is a pain to program in compared to MIPS.

      I remember writing a standard input and output routine set with SPIM among other cool things.
  • Um, SGI is not the *latest* to suffer from the economic downturn - they were one of the first. They used to have *many* more employees than the 4k they have now. They started laying people off in droves almost 3 years ago.

  • SGI jobs SCO (Score:4, Insightful)

    by sparkes ( 125299 ) on Friday May 23, 2003 @04:19AM (#6022145) Homepage Journal
    all the names we used to look up to are dieing, is it our fault?

    years back I wanted to run SCO (couldn't afford it) played with Minix (didn't pay for it) and then Linux arrives and so do I. After linux I didn't need SCO.

    I always wanted an SGI box if only to play with 3d graphics. They where too expensive I carried on buying PC's and ran free unices eventully getting the performance I wanted for a couple of hundred quid.

    I always wanted a Sun machine they where just the ultimate (to me at least) so eventully I splashed out on an Ultra Sparc (I just had to get those extra 32 bits before the wintel brigade) so what if it was beige it has a 18inch flat panel display, and those mythical 64 bits I was after. I soon got bored with Solaris and went back to Debian, now those extra 32 bits are rarely used in userland.

    We are killing off all the hacker companies we used to respect and the big boys that we had no respect for are getting all the corporate dosh thats left around. Perhaps SGI, Sun et al need to start putting out some cool bits and pieces in our price range because MS and IBM are getting our bosses money.

    SCO are gonna's by their own making I just hope SGI and Sun manage to pull a few tricks out of the hat or they will also self destruct. I never owned an Alpha becuase DEC tossed itself to the mercy of it's competitors I hope that I get an SGI one day if only for the cool case ;-)


  • Every portion of the market has been hit, from TVs to mainframes. People will buy lower cost machines in far greater numbers now, and 'elite' machine companies are going out of business. Sun has realized this late, and are now releasing cheaper workstations, but their ultrasparc offerings are still a bit too high in cost. IBM got it down just right and started competing with DELL early. Compaq simply lost it.

    Apples been bit, and brought out the eMac, and are now making it cheaper. SGI needs to cheapen

"If you lived today as if it were your last, you'd buy up a box of rockets and fire them all off, wouldn't you?" -- Garrison Keillor