Analyst Conference Summary

Silicon Graphics International

conference date: August 6, 2009 @ 2:00 PM Pacific Time
for quarter ending: June 26, 2009 (2nd fiscal quarter. See SGI (Silicon Graphics International) fiscal calendar change [July 14, 2009])

Forward-looking statements

Overview: Unclear to me due to acquisition-related changes Although syled Q2, this is actually the last quarter of fiscal 2009, due to the fiscal calendar change. Fiscal year 2010 ends June 25, 2010.

Basic data (GAAP) :

These are preliminary figures

Revenues were between $55.0 and $60.0 million.

Net income was not announced.

EPS (earnings per share) - not announced.


Internal plan is for fiscal year 2010 revenue of $500 million with Non-GAAP gross margins in the 20 to 30% range.

Conference Highlights:

Rackable (RACK) purchased bankrupt SGI (Silicon Graphics, Inc.) in May for $42.5 million. The new company is called Silicon Graphics International Corporation (SGI).

Second quarter revenue showed solid sequential growth. 53 new customers were added in the quarter.

Integration activities are on track. They are very excited about the opportunities of the combined company.

In general, Q2 results will not be comparable to past or future results. There are signs that the pace of sales deterioration due to the economy has slowed. Service business is very important, with about 6000 customers in the installed base. Believes service business should eventually produce as much revenue as product sales. Storage will be an important part of the business.

R&D expense for fiscal 2010 expected around $50 million.

The calendar year change reduced the quarter by eight business days.

Non-GAAP revenue for the quarter expeced between $57 and $62 million.

Results will be affected by purchase price accounting. See the 10-Q when it is filed with the SEC.

GAAP gross margin for the quarter expected at 6% to 10%. Non-GAAP gross margin 14% to 18%. This would be the best gross margin in three quarters.

Results could be impacted by the change in fiscal year and purchase price fair value analysis of SGI assets acquired.

Cash assets ended at $139.5 million.

A one-time gain reflecting the difference between the SGI purchase price and the fair value of the assets acquired is expected to be recorded.

$63 to 68 million in deferred revenue was acquired. Net inventory is $114 million.

Amazon was the only 10% customer in the quarter.

Believes gross margins in the 20%+ range can be achieved by consolidating purchasing costs. There are other synergies in expense reduction that will kick in throughout the year.

1361 employees at end of quarter.

CloudRack X2 is a result of cross-pollenation of Rackable and SGI technologies.

Gave examples of new customer orders in the first quarter of fiscal 2010.


No questions were asked.

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Copyright 2009 William P. Meyers