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HPE Acquires SGI For $275 Million (venturebeat.com) 100

Posted by BeauHD from the age-of-acquisition dept.
An anonymous reader writes: Hewlett Packard Enterprise has announced today that it has acquired SGI for $275 million in cash and debt. VentureBeat provides some backstory on the company that makes servers, storage, and software for high-end computing: "SGI (originally known as Silicon Graphics) was cofounded in 1981 by Jim Clark, who later cofounded Netscape with Marc Andreessen. It filed for Chapter 11 bankruptcy in 2009 after being de-listed from the New York Stock Exchange. In 2009 it was acquired by Rackable Systems, which later adopted the SGI branding. SGI's former campus in Mountain View, California, is now the site of the Googleplex. SGI, which is now based in Milpitas, California, brought in $533 million in revenue in its 2016 fiscal year and has 1,100 employees, according to the statement. HPE thinks buying SGI will be neutral in terms of its financial impact in the year after the deal is closed, which should happen in the first quarter of HPE's 2017 fiscal year, and later a catalyst for growth." HP split into two separate companies last year, betting that the smaller parts will be nimbler and more able to reverse four years of declining sales.
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HPE Acquires SGI For $275 Million More

HPE Acquires SGI For $275 Million

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  • I wonder what (Score:3)

    by saloomy ( 2817221 ) on Thursday August 11, 2016 @05:36PM (#52686783)
    IP or market segments they are looking to expand to. I haven't seen SGI products in years.

    • I saw they have $500 in revenue last year, but I would be very surprised if they were in the red. I suspect this was to try to position for the USPS contract renewal and for customer transfer. HP did something similar with Apollo back in the day. (Compaq and a slew of other businesses were still going concerns. Apollo was on its downward spiral when HP acquired them.)

    • The traditional products SGI was known for are gone... this new company, Rackable, which lifted the SGI brand in 2009, does some pretty interesting integrated rack products, both on density and power consumption.

      What I don't understand is how HPE bought a company that did over $500M in revenue for $275M. This doesn't make sense.

      • Re: (Score:2)

        by plopez ( 54068 )

        revenue != profits. Net income ~ -39 million. Probably bought for their technology portfolio.

      • Re: (Score:2, Troll)

        by hambone142 ( 2551854 )

        HP hasn't had a successful acquisition since they bought Convex Computer decades ago. They essentially trash every company they buy and either let it die or sell off the remains. Palm, EDS, Zenith Data Systems.... it goes on.

        Since HP is now run by bean counters, acquisitions give an "illusion of progress" to those who cannot lead innovation.

        This has been a systemic problem with HP since the Fiorina days.

        The company is dying and most of their innovators have moved on in frustration.

        • HP hasn't had a successful acquisition since they bought Convex Computer decades ago. They essentially trash every company they buy and either let it die or sell off the remains. Palm, EDS, Zenith Data Systems.... it goes on.

          Since HP is now run by bean counters, acquisitions give an "illusion of progress" to those who cannot lead innovation.

          This has been a systemic problem with HP since the Fiorina days.

          The company is dying and most of their innovators have moved on in frustration.

          That isn't quite true. While some have certainly been busts, others 3PAR and Aruba for example have been quite successful.

        • Comment removed based on user account deletion
        • You found that acquisition successful? At 83 cents a share?

      • Re: (Score:1)

        by Anonymous Coward

        What I don't understand is how HPE bought a company that did over $500M in revenue for $275M. This doesn't make sense.

        High revenue but very high costs of goods sold and very lengthy sales cycle. RFP, spec, tender, acceptance, build, install, commission, acceptance. It can (and does) take years.

      • Re: (Score:2)

        by guruevi ( 827432 )

        Looking over their site, it doesn't look all that interesting. It's just a standard reference Intel configuration. I can get the same from SuperMicro and a host of other sites probably for a lot cheaper.

        • When SGI went down the shitter, and dropped the MIPS architecture, they immediately started making Wintel boxes that ran Windows NT. The feeling seems to have been that they were somewhat better than average Wintel boxes.

          I can't figure out why anybody would ever have bought one of them, but they eventually turned up on the University Surplus equipment auctions. Nobody was much interested at all in them at that point.

          • Re: I wonder what (Score:1)

            by Anonymous Coward

            Um... Intel, yes, Windows, no.

            SGI bought Cray, kept the engineers, and sold off the branding. They then made supercomputers â" first with Itanium, later with Xeon.

            Their UV system is probably the last huzzah for la he shared memory systems, made by nearly retired engineers who hated clusters passionately. (Cray himself referred to clusters as a team of chickens)

            While you could boot Windows on a UV system, it was limited to 256 cores. Linux didn't have that limitation. Terabytes of RAM, millions of cores

            • Circa 2000, the SGI workstations were indeed Wintel boxes with NVidia cards... at an SGI price.
            • Precisely. The only time SGI took a stab at NT - actually, it was their subsidiary MIPS that did - was at the beginning of Windows NT, when they made a workstation called the Magnum based on an R4000 CPU and an EISA bus (mirroring DEC's first foray into the NT market w/ an Alpha 150MHz on the same configuration). That was somewhere in 1994-95, before Windows 95 was even out

              • Re: (Score:2)

                by haruchai ( 17472 )

                Precisely. The only time SGI took a stab at NT - actually, it was their subsidiary MIPS that did - was at the beginning of Windows NT, when they made a workstation called the Magnum based on an R4000 CPU and an EISA bus (mirroring DEC's first foray into the NT market w/ an Alpha 150MHz on the same configuration). That was somewhere in 1994-95, before Windows 95 was even out

                Not the only. The SGI Visual Workstations didn't show up until 2002, initially running NT4 and moving to Win2K some time later and this was SGI, not MIPS.

                http://www.cnet.com/news/nt-wo... [cnet.com]

          • Re: (Score:1)

            by Anonymous Coward

            At that time, the choice was 32-bit UNIX workstations at UNIX prices (An Indy workstation cost £10K+ for a basic system just for software OpenGL). PC's were rapidly catching up with new boards coming out every three months; multi-texturing, hardware lighting, programmable vertex programs, programmable fragment programs. Even a 450Hz Dell PC could run SGI red book tutorials with lighting and hardware texture mapping. Film industry startup companies were getting fed up with this price difference. A sing

            • I sometimes think that companies like Silicon Graphics and DEC could have served themselves better by making a serious push to get their entire suite of applications on NT for their RISCstations. Like offering a wide range of price points for AlphaSstations to developers to have a variety of CAD applications on NT/Alpha: they could have held their own against Intel for a bit. Similarly, Sun, which was heavily anti Microsoft, and HP, could have standardized on NeXTstep, which was just ported to their work

    • I haven't seen SGI products in years.

      Well, their IRIX workstations were just pure awesomesity!

    • Re:The Graveyard of tech (Score:5, Interesting)

      by TheGratefulNet ( 143330 ) on Thursday August 11, 2016 @05:40PM (#52686813)

      I worked for SGI in mtn view a few years before their demise.

      one of the funnest places I was ever at. such a shame to see them go. even worse to think that google (puke!) took their campus over and its now run by ad-men, so to speak.

      not to mention that traffic around shoreline area is a nightmare, all the way up rt 101 for several miles. thanks again, google ;(

      sgi had class and created some stellar products. sadly, they went down a dark side with the WBT project (internally called 'wintel box thing' their x86 systems running modified NT and no BIOS).

      but wow, working at sgi was so much fun. silicon valley used to be cool. now, its a fucking sweat shop for h1b's and 'social media' companies (double puke).

      • Re: (Score:1)

        by afgun ( 634001 )
        No no, Stellar was a different company. ;-)

      • Re:The Graveyard of tech (Score:4, Interesting)

        by jandrese ( 485 ) <kensama@vt.edu> on Thursday August 11, 2016 @07:52PM (#52687611) Homepage Journal
        I was working for SGI as a co-op when that Pentium 4 thing came out. We got a demo unit and I was pretty disappointed. The flatscreen monitor they shipped with it was way more exciting even if it experienced epic tearing when we played the demo video. It's the only PC I ever used that has RAMBUS memory.

        We did have one guy come down and give a demo of Maya (or maybe it was Alias Wavefront at that point? I can't remember) and being amazed at how the demo guy could build and animate an entire scene in about an hour, even though the interface appeared to be 100% black magic. IIRC he had a spaceship he had built from a box flying around a city he built fighting a dinosaur he pulled out of some asset library.
  • Per the statement released by HP about SGI--

    The company has approximately 1,100 employees worldwide, and had revenues of $533 million in fiscal 2016.

    Have they already closed the books on 2016 earnings? Heck yeah they need to get bought. The hardware running their accounting software is literally more than a month faster than anything I've seen in the industry.

    • Have they already closed the books on 2016 earnings? Heck yeah they need to get bought. The hardware running their accounting software is literally more than a month faster than anything I've seen in the industry.

      They may have a tax year that starts as early as June 1, so yeah they might be in 2017, fiscally speaking.

  • Had HP, Inc bought SGI, I might have understood. That's the part of the company that still makes computers.

    But HPE is the EDS part of the company - the one that's into outsourcing IT services. How is SGI relevant to that? Is HPE the part of the company that still owns their server business and so on? What does SGI bring to the table?

    On a different note, who were the people still buying SGI to give them a half billion revenue? What exactly do they sell - it's not like one can buy Irix based workstat

    • Re: (Score:3)

      by dgatwood ( 11270 )

      Maybe this is just another silo experiment on a broader scale—split HP in two and encourage them both to go after each other mercilessly....

    • ..On a different note, who were the people still buying SGI to give them a half billion revenue? What exactly do they sell - it's not like one can buy Irix based workstations or servers anymore, or even Linux ones, from what I understand.

      Remember, SGI is not the SGI of old. Rackable bought SGI (Silicon Graphics) and the renamed the company SGI. So I imagine most of the product line was heritage Rackable?

      • that's not correct. sgi renamed to sgi while it was still in mtn view. they changed their logo (lost that very cool cube icon) and their logo and name were shortened to sgi. after that they were never again silicon graphics.

    • But HPE is the EDS part of the company - the one that's into outsourcing IT services. How is SGI relevant to that? Is HPE the part of the company that still owns their server business and so on? What does SGI bring to the table?

      No, HPE is HP Enterprise. Networking, servers, storage, etc.

    • HPE makes Enterprise hardware as well as networking hardware and IT services.

    • Re: (Score:2)

      by plopez ( 54068 )

      HPE is dumping EDS

    • Had HP, Inc bought SGI, I might have understood. That's the part of the company that still makes computers.

      Sorry, no. HPE still makes servers and big iron. Consumer goods like desktops, laptops, tablets, and printers is what went to HP, Inc.

  • WTF? (Score:2)

    by fnj ( 64210 )

    What?? SGI still exists????? As anything more than a worthless shell? It's been a loooooong time since I heard anything from that graveyard.

    • That's what I was wondering too when I saw the headline. Looks like they managed to pivot [sgi.com] to a company that provides high-performance computing to the same company-set that uses Oracle and SAP. (In other words, probably only certain departments at fortune 500 companies).

  • Well, I'll be damn, I thought they died years ago. What have they been up to all these years?

    • Re: (Score:2)

      by jandrese ( 485 )
      Nothing related to graphics apparently.

    • Re: (Score:2)

      by guruevi ( 827432 )

      The brand got bought, "SGI" is now selling basic, standard SuperMicro servers and putting the logo on it. They also apparently support your average Hadoop, SAP etc. implementation.

  • Rackable (Score:5, Informative)

    by bobthesungeek76036 ( 2697689 ) on Thursday August 11, 2016 @06:19PM (#52686981)
    For of those in need of an SGI history lesson, the SGI currently in business is not quite the same SGI (Silicon Graphics) of old. Remember that Rackable Systems acquired Silicon Graphics back in 2009 for like $20M I think? And they turned around and renamed Rackable to SGI.

  • They are dumping off Enterprise Services, are buying SGI, and wanted to buy EMC. I predict that they will sell or spin off their software division soon and make a pure enterprise hardware play. Which makes sense as software is hard to manage and HPE understands hardware much better.

    • Why not then buy Itanium from Intel, since the latter doesn't seem to sell it to anyone else? They can still have Intel manufacture it, or if the volumes don't justify it, have it made by TSMC or someone else on the other side of the rim

      • Re: (Score:2)

        by plopez ( 54068 )

        An interesting idea. Though Intel would have to agree to it.

        • I would think Intel would be happy to. The only reason they haven't stopped making it is that HP won't allow them. If they sell it to HP, then it's no longer a losing business for them - it's an account that they can either keep or lose.
  • Every piece of HP kit we've had has been a lemon. We have a 100% failure rate within 5 years on whole classes of desktop machines that we've bought from them, and the servers I have of theirs (that are still around) are a constant headache to get a management session going to their ILO. Unless they're going to give me a batch of equipment FOR FREE to let me use for a year and see that it no longer sucks, my budget will be spent somewhere else. Forever.

    • Re: (Score:3)

      by sconeu ( 64226 )

      This is HPE -- HP Enterprise. It spun off from HP about a year ago.

      HPE does the big iron. NonStop (aka Tandems), HPUX, and I'm guessing Windows servers as well. Enterprise class storage, networking, etc...

      Not the HP desktop people.

  • ... SGI's former campus in Mountain View, California, is now the site of the Googleplex ...

    I thought the old SGI building was now the Computer History Museum...

    • ... SGI's former campus in Mountain View, California, is now the site of the Googleplex ...

      I thought the old SGI building was now the Computer History Museum...

      SGI campus. One of the old SGI buildings now houses the Computer History Museum; the rest of the campus is now the Googleplex.

  • ... to die.

    HP got Digital Equipment Corporation and Tandem Computers (via Compaq), and now Silicon Graphics as well (yes, yes, we know, SGI went Kaput and was acquired by rackspace...).

    Should have bought SUN as well...

    What's next? Cray?

    • I think they technically already got CRAY since Cray was bought by SGI after Seymore died. A lot of the last generation of real SGI machines were designed by ex-Cray engineers.

    • eh, the descendants of the products of those acquisitions are still around. Tandem is HP's Nonstop, Compaq the servers (which still have compaq on components inside and in many firmware/drivers). The tech from DEC was sold to various companies, the most notable being various processor system designs sold to Intel and which you're using right now

    • Sun had already been digested by Oracle. And with it, Cray. I think at some point, HP itself may get bought by Lenovo

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