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Semiconductor industry

Silicon Graphics Bets on New Work Stations Amid Financial Struggles

Strategic Insights

— 2 min read

Silicon Graphics, once a pioneering force in the computer industry, is introducing a new line of work stations built around Intel chips and Microsoft software, signaling a significant shift in its strategy. Despite the new machines' potential appeal, analysts remain cautious about the company's prospects, citing its history of brilliant technology introductions followed by disappointing product deliveries. As Silicon Graphics seeks to regain its footing, the high-tech sector in Silicon Valley is experiencing a slowdown, partly due to the Asian economic crisis.

Key Takeaways:

  • Silicon Graphics is introducing a new line of work stations based on Intel chips and Microsoft software, marking a significant shift in its strategy.
  • The company's history of introducing brilliant new technology only to struggle with product deliveries has led analysts to remain neutral on its stock, awaiting signs of sustainable growth and profitability.
  • The high-tech sector in Silicon Valley, once surging, has slowed down during 1998, with the region adding 19,400 jobs compared to 62,000 in 1997.
  • Ascend Communications is selling its Stratus Enterprise Computer division for over $100 million to Investcorp, a Middle Eastern investment group.
  • The industry is concerned that low prices for high-definition TV sets could threaten profitability in the short term.
  • The transition to the Year 2000 went relatively smoothly, with only isolated incidents of older equipment malfunctioning.
  • Chinese officials have delayed repayment of $4 billion to creditors of the Guangdong International Trust and Investment Corporation (Gitic).
  • Auditors must disclose conflicts of interest starting in July, following new rules approved by the Independence Standards Board.
  • Hiroshi Okuda, president of Toyota, is set to become the new chairman of the Japan Federation of Employers' Associations.

Statistics:

  • Silicon Valley added 19,400 jobs in 1998, down from 62,000 in the previous year.
  • Exports declined in Silicon Valley during 1998.
  • The new line of work stations from Silicon Graphics is built around Intel chips and Microsoft software.
  • Ascend Communications is selling its Stratus Enterprise Computer division for over $100 million.
  • High-definition TV sets are now available at prices lower than half of what they cost last fall, with some sets priced below $1000.
  • Older equipment in New York had trouble producing 00 on auto inspection stickers, opting for 91 instead, indicating isolated incidents of the Year 2000 problem.
  • Gitic creditors will not receive repayment of $4 billion anytime soon, according to Chinese officials.
  • Hiroshi Okuda, president of Toyota, will lead the Japan Federation of Employers' Associations as its new chairman.

Sources:

  • Market Place, Page C2.
  • Market Place, Page C15.
  • Market Place, Page C13.
  • Market Place, Page C14.
  • Market Place, Page C14.
  • Market Place, Page C3.
  • Market Place, Page C2.
  • Market Place, Page C2.
  • Market Place, Page C18.

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