Rackable Systems becomes SGI, closes deal

The acquisition price jumped from $25 million to $42.5 million in the bankruptcy auction proceedings

Rackable Systems has completed its acquisition of Silicon Graphics and will change the name of the combined company to SGI, Rackable announced Monday. It hopes the name change helps it expand its business overseas, where SGI is a better-known brand.

Rackable's x86 servers have been sold to large and midsize data centers primarily in the U.S., and the SGI name is more easily recognized in Europe and Asia, Mark Barrenechea, Rackable's president and CEO, said in an interview Monday.

"We've gone from being a U.S.-centric company to a global company," he said.

The new SGI will have about 1,300 employees, compared to Rackable's 300, and it will retrain some of Silicon Graphics' overseas staff to sell and support Rackable's x86 equipment, Barrenechea said.

The new SGI will also continue to develop and support the high-performance computing systems that Silicon Graphics was known for, he said.

"There should be no disruption to Silicon Graphics customers," Barrenechea said.

"While clustered computing is certainly bleeding into the low end of HPC, the high end of shared-memory HPC systems is still a very different market," he said.

The combined company will be able to address "all the toughest computing problems, whether it is serving up a billion videos a day through YouTube, modeling weather patterns, helping intelligence and defense agencies, making sure race cars go as fast as they can, or doing scientific research," Barrenechea said.

Renaming the company is a good move, even if Silicon Graphics had been struggling in recent years, said Dan Olds, principal analyst at Gabriel Consulting Group. SGI remains "a respected tech powerhouse" in some markets, he said.

And Rackable needs to expand its customer base, he added.

"Right now they have a relatively small handful of very large customers. They need to expand into more corporate accounts and get into HPC as well," Olds said.

SGI received court approval on April 30 to buy the assets of Silicon Graphics and closed the deal on Friday. Rackable said it would pay US$25 million when it announced the deal April 1, but it ended up paying $42.5 million in the bankruptcy auction proceedings.

It has designed a new SGI logo from Rackable's blue and green colors.

The Rackable name will live on as the brand for SGI's x86 servers. The "centers of gravity" for the new company will be the U.S., the U.K., France, Germany, Japan, China and Korea, Barrenechea said.

Silicon Graphics' revenue peaked at $3.66 billion in 1997 and had dropped to around a tenth of that at the end of its last fiscal year.

The company fell victim to similar market forces that dragged down Sun Microsystems, though with less diversity to weather the storm. It had reported losses for the past several quarters.

Barrenechea said Silicon Graphics was brought down by "a perfect storm" of too much debt, the recession and some operational inefficiencies. He plans to make the business profitable under the new SGI.

"One of the strengths we bring to Silicon Graphics is our operational discipline," he said. "Even though in Q1 we lost money in a very tough economy, we accreted cash."

He hopes to transfer some of the acquired HPC technology to the company's x86 systems, which are known for energy efficiency but now face stiffer competition from bigger server vendors, who have been "greening" their products.

Some of the shared-memory technology in the HPC systems could give the x86 systems better virtualization capabilities, he said.

The new SGI will also use the InfiniBand high-speed network technology more widely in the x86 systems, he said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags mergers & acquistionsRackable SystemsSGI

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

James Niccolai

IDG News Service
Show Comments

Cool Tech

Breitling Superocean Heritage Chronographe 44

Learn more >

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?