Silicon Graphics Reports $35-Million Net Loss

Computer maker Silicon Graphics Inc. said Monday that it swung to a loss in its fiscal third quarter as revenue declined 31%.

Silicon Graphics, also known as SGI, reported a net loss of $35 million, or 17 cents a share, in the quarter ended March 28, compared with net income of $10.3 million, or 5 cents, a year earlier.

Revenue fell to $217.1 million from $313.6 million.

The Mountain View, Calif.-based company, which sells high-end computers and counts defense contractors and Hollywood studios among its customers, said the defense industry remained a bright spot for the firm.

However, because of “global uncertainty” and the U.S.-led war in Iraq, “customers have continued to delay larger project commitments,” said Bob Bishop, SGI’s chairman and chief executive.

For the current quarter, SGI executives said during a conference call that they expect revenue of $225 million to $245 million, down from $284.5 million in the same quarter a year earlier. They did not provide a figure for per-share results.

SGI ended the third quarter with unrestricted cash, cash equivalents and marketable investments of $141 million, down from $182 million in the prior quarter. SGI said it expects cash in the fourth quarter to be “flat to slightly up” from the third quarter.

Results for the third quarter fell short of SGI’s guidance for revenue of $235 million to $255 million.

Bishop said customers have expressed concern about SGI’s ability to pay off its convertible notes that are coming due in 16 months.

To that end, SGI said it has filed a registration statement and a tender offer statement with the Securities and Exchange Commission for an exchange offer for its 5.25% senior convertible notes that are due September 2004.

Shares of SGI rose 3 cents to $1.48 on the New York Stock Exchange.