It wasn’t all that long ago that Silicon Graphics, Inc. (SGI) occupied most of the area out by East Charleston Drive and Shoreline Drive in Mountain View, California.  Today, most of SGI’s old campus locations are wholly owned and used by Google.  There was even a point, albeit rather brief, that I considered working for an SGI spin-off.  I’m glad I reconsidered that career path.

SGI’s claim to fame was originally servers and powerful workstation computers that could produce high-quality computer graphics, used by everyone from the US department of defense to Hollywood studios for special effects.  It was in the mid-90’s when the first low-cost graphic acceleration cards came out for the Intel x86 PC, and ever since then, strong competition in that market has driven the performance of PC graphics accelerator cards way up, and the prices way down, all the meanwhile leaving SGI in the metaphorical dust.  Simply put: SGI got lazy, thought they were invincible, and made a series of poor decisions that led to their eventual demise, including in 1998 the decision to support the Intel Itanium processor for its high-end graphics workstations.

SGI’s market capitalization gradually declined, from $7 billion USD in 1995 to just over $100 million USD in 2005, when they were ultimately de-listed from the New York Stock Exchange.  SGI later filed for Chapter 11 bankruptcy in May 2006, and eventually came out of bankruptcy in October 2006.

Today, however, marks a whole new low for SGI.  According to a company press release, SGI (traded as SGIC) has failed to meet the minimum requirements to stay listed on the Nasdaq.  The company’s stock was trading at just under $3/share today, at $2.83, giving them a total market cap of just $32.85 mill USD.  Their current EPS is -13.22, with the company losing $33 mill USD just last quarter.

SGI has until January 9th, 2009 to meet the minimum requirements, otherwise its stock will be delisted from the Nasdaq exchange.

SGI’s story has been repeated by many companies throughout the Valley, and should stand as a lesson for everyone in the tech industry:

• Don’t get lazy, always keep the innovation and new ideas flowing
• Pay attention to what your competition is doing
• Remember that nobody is invincible
• Fighting the inevitable future is futile at best, lethal at worst

SGI currently employs about 1,600 employees.  I really hope for all of them that SGI is able to pull an amazing turn-around in the next few months and weeks, especially given how rough the next few months will be for the economy.

Filed under: Product Management