Former Computer Graphics Star SGI Sold To Rackable
Rackable, Fremont, Calif., said it has signed an agreement to acquire substantially all the assets of SGI for about $25 million, plus the assumption of certain liabilities related to the acquired assets.
The acquisition came the same day that SGI filed for Chapter 11 bankruptcy.
Rackable said the acquisition is expected to close within about 60 days.
Rackable declined to comment on the acquisition.
A former SGI solution provider, who preferred to remain unnamed, called the $25 million price a good deal even with the assumption of debt that goes with the acquisition because of SGI's government business, its huge installed base, and its service and maintenance business.
Hope Hayes, president of Alliance Technology Group, a Hanover, Md.-based solution provider which also worked with SGI as a partner for a short time, said Rackable is also getting a huge services business, one that works with many vendors' products.
Hayes said she is sorry to see SGI disappear as a company, but is not surprised given how the vendor changed over the years.
"Anybody who did Hollywood loved SGI," she said. "They owned that market. But they became a me-too product. I thought SGI was really a great company."
SGI has been a troubled company for some time. The company declared Chapter 11 bankruptcy in May of 2006 but emerged from bankruptcy later that year.
In February, SGI reported second fiscal quarter revenue of $82.8 million, down from $90.1 million the year before, as well as a loss for the quarter of $49.2 million, up from a loss of $42.2 million the year before.
Despite its financial condition, SGI still had a stable of midrange and high-end servers and storage devices along with clustering technology. The company was one of several vendors that earlier this week unveiled a line of servers based on Intel's new Xeon 5500 "Nehalem" processors.
By acquiring SGI, Rackable becomes a full-line vendor of x86 clustered computing, high-performance computing (HPC), cloud computing, large-scale data storage and visualization technologies.
"The combined company will be positioned to solve the most demanding business and technology challenges our customers confront today," said Mark J. Barrenechea, president and CEO of Rackable Systems, in a statement. "In addition, this combination gives us the potential for significant operational synergies, a strong balance sheet, and positions the combined company for long-term growth and profitability."