Rackable Acquires Silicon Graphics after Second Bankruptcy

Breaking News – Silicon Graphics International (SGI) files again for Chapter 11 bankruptcy and Rackable announces that they are acquiring the company for $25 million USD. On first response, this sounds like a great deal. SGI can eliminate and restructure a large portion of their debt, and Rackable gets a huge bargain on one of Silicon Valley’s all time great companies. In 1995, according to Wikipedia, Silicon Graphics was valued at roughly $7 Billion USD – selling at less than 1% of that merely 14 years later. SGI’s problems are similar to those of Sun, Cray, and even IBM… historical makers of mainframe supercomputers unable to keep up in R&D / relevancy vs. Intel / AMD / Nvidia.

What will happen to shareholders of SGI stock is unknown – it looks to be a wipeout with total loss of value there. Trading of SGIC stock was suspended by NASDAQ around March 12^th, 2009 – the company was appealing the decision, but (even though no official announcement has been made yet) it looks like it will probably stay de-listed and the assets / trademarks of SGI will be absorbed in Rackable. When it comes down to business plan, SGI seems to have been making some great process in building high-end, custom servers with Intel’s new Xeon chips.

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