Analyst Conference Call Summary

Silicon Graphics International

conference date: April 29, 2015 @ 1:30 PM Pacific Time
for quarter ending: March 27, 2014 (third quarter, Q3, fiscal 2015)

but did in the past
Forward-looking statements

Overview: Another lousy quarter, but claims bookings are up. Cash burn continues.

Basic data (GAAP) :

Revenues were $118.5 million, down 14% sequentially from $138.2 million and down 5% from $124.3 million in the year-earlier quarter.

Net income was negative $8.8 million, up sequentially from negative $10.4 million, and up from negative $21.9 million in the year-earlier quarter.

EPS (earnings per share) were negative $0.25, up sequentially from negative $0.30 and up from negative $0.64 year-earlier.


Fiscal Q4 (June) revenue is expected betwee $130 and $145 million, with a non-GAAP net loss between $4 and $8 million, or EPS negative $0.12 to $0.24 per share. GAAP net loss $9 to $13 millin, of EPS negative $0.26 to $0.38 per share.

For the full fiscal year ending in June revenue is expected between $500 and $515 million.

Conference Highlights:

Bookings increased significantly, the highest in 3 years, led by HPC (high-performance compute). Federal business bookings were up. Won 7 large HPC programs in the quarter. Japanese bookings were also strong.

The 16-socket version of UV for SAP HANA was certified in the quarter. The lower-socket versions have been selling well.

In the quarter $5 million of revenue was missed, as a federal funding delay caused it to move into the June quarter.

Revenue from one large Defense Department contract is likely to be delayed to the September quarter (Q1 fiscal 2016). That will mean Q4 will come up short of prior expectation. There is also some delay as customers want to wait for systems using newer Intel processors.

Silicon Graphics is essentially out of the cloud business, with less than $1 million shipped in the quarter.

Non-GAAP numbers: net income was negative $3.4 million, down sequentially from $0.1 million, and up from negative $7.4 million year-earlier. EPS was negative $0.10, down sequentially from $0.00 and up from negative $0.22 year-earlier. Excludes share-based compensation of $3.9 million and other non-cash expenses. 29.4% gross margin.

EBITDA was $1 million.

Cash and equivalents balance ended at $79.9 million, down $4 million sequentially from $84 million. Debt was $68 million. $2 million was made in capital expenditures. Inventory was up $24 million in the quarter.

Cost of revenue was $84.8 million, leaving gross profit of $33.7 million. Operating expenses of $40.1 million included: $13.0 million for research and development; $14.2 million sales and marketing; and $12.8 million general and administrative. Leaving income from operations of negative $6.4 million. Other expense was $2.2 million. Income taxes $0.1 million.

One customer represented over 10% of revenue in the quarter.


After a glitch, they started reading prepared remarks they had already read, and I just bailed because this company has no real turn-around prospects that I can believe in, but it still has a fairly high stock price. Maybe some other company that wants to expand into supercomputers will buy it. But the Chinese are out, because much of its revenue comes from U.S. defense and spy agency work.

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Copyright 2015 William P. Meyers