ACADEMIA

MOUNTAIN VIEW, Calif. -- Silicon Graphics, Inc. announced today that it is implementing an action plan to lower costs and shift focus to specific growth areas. The goal of the plan is to align the Company resources to better match market conditions while continuing to provide a product roadmap that meets the high-performance computing, storage and visualization needs of our target customers. The plan includes the elimination of approximately 400 positions, or 10% of the company's employees, in specific areas. The reduction is intended to preserve customer-facing activities, protect customer investments, and accelerate a return to profitability. The effect of the reduction will be to reduce quarterly expenses by approximately $10 million, beginning with the quarter ending September 26, 2003. The savings will be achieved through a combination of operating expense reductions and improvements in gross margin. SGI plans to record a charge of approximately $15 to 20 million in the quarter ending June 27, 2003 relating to this restructuring activity. The charge will principally consist of severance costs paid over the next several months, and as a result does not represent a significant incremental cash expenditure. "Despite encouraging recent developments including the growth of SGI's defense sector business and the early success of the Altix line of superclusters and servers, our revenue performance has been lower than expected, reflecting a difficult market for large industrial systems sales," said Bob Bishop, chairman and CEO of SGI. "Today's announcement reflects our determination to take the steps required to improve the Company's financial position and reduce its breakeven point. Our intent is to bring expenses in line with revenues. We are in the process of taking other specific actions to increase revenue and lower costs."