Rackable acquires Silicon Graphics for $25 million

Rackable acquires Silicon Graphics for $25 million

Summary: Leading server and data center provider Rackable Systems, Inc. announced today that it will acquire Silicon Graphics, Inc.

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Leading server and data center provider Rackable Systems, Inc. announced today that it will acquire Silicon Graphics, Inc. (SGI) for approximately $25 million in cash.

The combined businesses will offer hardware and software technology within large-scale x86 cluster computing, HPC, Internet, Cloud Computing, large-scale data storage environments and visualization platforms "across many verticals and geographies." The companies expect "a stronger global services organization" reaching commercial, government and scientific sectors across the globe.

The New York Times Bits blog notes the shock value of the transaction (Techmeme):

A collective shudder rippled through Silicon Valley on Wednesday morning, as Rackable Systems announced its purchase of Silicon Graphics Inc. for just $25 million in cash.

If you travel all the way back to 1997, SGI was pulling in close to $4 billion in revenue per year. The company produced some of the flashiest computers on the planet for handling tough graphics jobs. SGI was the next big thing in Silicon Valley, and people adored the company.

"We have been working very hard to strengthen our company, and today, we've taken another big step in that direction," said Robert "Bo" Ewald, CEO of Silicon Graphics, in a statement. "This transaction represents a compelling opportunity for Silicon Graphics' customers, partners and employees, who can all benefit from the emerging stronger company with better technologies, products and markets reach."

Strengthen indeed. SGI was forced into bankruptcy several years ago, and had filed for bankruptcy again on Wednesday morning.

Here's a look at SGI's balance sheet for Q2 2009:

The acquisition is expected to close in approximately 60 days, and SGI's business operations will likely continue during the pre-closing period.

Rackable also announced today that it had suspended its previously announced program including the repurchase of up to $40 million of the company's stock.

Rackable shares were down 0.25, or 6.16%, in morning trading.

[Rackable release]

Topics: CXO, Data Centers, Enterprise Software, Government, Government US, Hardware, Legal, Storage, IT Employment

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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3 comments
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  • Everyone operating in the black or RED will be found. Maybe just maybe

    this will make companies that have operated with sound financials stronger as the weak are able to be purchsed for cheap. Consolidation is not great for consumers but as a business exec who has to rely on other companies for services, i now must insist on a strong financial portfolio before signing or renewing any service agreements.
    Been_Done_Before
  • RE: Rackable acquires Silicon Graphics for $25 million

    I can't belive it.. SGI got sold itself for just 25 million dollars .... its sad indeed
    Ben_rockwood
    • What does SGi do anymore? I'm suprised its not $25.00 nt

      nt
      T1Oracle