SGI Still Feels Effects of Government Shutdown
Officials with the HPC systems maker say revenues in the latest quarter and for the rest of the fiscal year will be hurt by the shutdown last fall.SGI continues to feel the impact of the Congress' highly partisan budget debates, with officials at the high-performance computing vendor saying that the government shutdown last fall will hurt fiscal second-quarter numbers and impact the company through the rest of the fiscal year. Company executives said Jan. 14 that SGI generates a lot of revenue from government contracts as well as deals with organizations that get government funding. While the systems vendor's core businesses in high-performance computing (HPC), big data, storage and services saw revenues grow in the second quarter—which ended Dec. 27—sales in its federal business unit were down $21 million from the same period in 2012. According to preliminary numbers released Jan. 14, revenues for SGI's federal group in the quarter were $44 million, compared with $65 million during the previous fiscal second quarter and $76 million from the prior quarter. Remove the federal business, and revenues for SGI's HPC, big data, storage and services hit $63 million, up 7 percent from the previous year and 14 percent from the prior quarter. President and CEO Jorge Titinger attributed the growth to the company's focus on offering solutions that integrate HPC and big data capabilities. "As expected, our results in the fiscal second quarter were impacted by the government shutdown and its after-effects," Titinger said in a statement. "We expect to achieve strong growth in core revenue and greater profitability in the second half of our fiscal year. However, this growth likely will be less than originally expected due to near-term delays in certain federal programs."
The hope is that with a new federal budget being agreed upon, federal agencies will finally have a better idea of their long-term spending capabilities, he said. "We therefore remain positive on the long-term outlook for growth, based on increasing traction with enterprise and international customers, increasing penetration of new agencies and departments within the federal government, and an eventual return to historical spending levels for most current federal customers," Titinger said.