Rackable’s Q1 2009 Earnings call was today, and they covered alot of ground. Toward the end they discussed the details of the SGI acquisition.
We anticipate closing the transaction within the next few days, subject to closing conditions in the agreement. Let me provide more detail on the acquired assets. Internationally, on the agreement, we would purchase the equity of the SGI operating subsidiaries. We would also purchase the equity of SGI’s U.S. federal business. Essentially, it is SGI’s domestic non-federal U.S. business entities that are going through the bankruptcy process.
In the acquisition they get inventory, patents, real estate, and all cash on hand. They become immediately operational in over 25 countries, and do not assume any of SGI’s approximately $150M of debt. They assume a few select liabilities such as accounts payable and employee benefits, but that’s it. They also drop this bomb:
We expect to streamline operations and eliminate redundant positions, resulting in an initial 10% reduction in personnel. We anticipate a global workforce of approximately 1,250 employees soon after closing.
Now, before all you SGI engineers start brushing up resumes (Which I recommend you do anyway), this 10% is probably management and HR-type positions. Rackable has it’s own human resources, accounting, and middle-management structure and likely doesn’t need SGI’s.
For the full transcript, follow the link.
via Rackable Systems Q1 2009 Earnings Call Transcript — Seeking Alpha.
Cray should buy SGI Federal, they are already a major player in the fed space. From the amount of Cray-on signatures required for the legal paperwork, there appears to still be a SGI/Cray relationship going on under the sheets, likely for technology that was developed when SGI owned Cray & that Cray is currently using.
@RabbJohnny Yeah, that’s a wierd one.. I don’t have the slightest idea how they intend to pull that off, unless it’s just that “SGI Federal” will become the new “SGI”..
An interesting thing covered in the call is that Rackable will not be acquiring SGI Federal, which makes me wonder if SGI will continue to exist in some form. Back when Bob Bishop (an Australian citizen) was CEO, SGI Federal (wholly owned subsidiary for SGI) was created. Most SGI Federal employees have federal government security clearances & even some employees @ black sites, so the simple fact that SGI Fed handles classified makes it a special case.