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Silicon Graphics’ Sales and Profit Crimped by Shutdown

Silicon Graphics International Corp. (SGI) said profit and sales for the latest fiscal quarter probably fell short of analysts’ projections because the partial government shutdown is “freezing” some projects.

Revenue for the period that ended Sept. 27 was about $147 million, the high-performance computer maker said in a statement of preliminary results yesterday. Analysts projected $164.7 million on average, according to data compiled by Bloomberg.

SGI shares declined as much as 17 percent in extended trading. The 10-day old partial closing of the federal government, caused by a budget impasse and fight over President Barack Obama’s health-care reform law between Democrats and Republicans in Congress, is making it “virtually impossible” to deal with government clients, according to SGI Chief Executive Officer Jorge Titinger. SGI’s supercomputers are used by U.S. government agencies, including the Department of Homeland Security, Defense Department and other agencies, according to SGI’s website.

“The revenue shortfall was primarily due to the impending government shutdown at quarter-end, which led to the freezing of funds for a Federal project; and to delayed acceptance of a non-Federal project,” SGI said in the statement.

SGI shares slumped to a low of $13.52 in extended trading. The stock closed up 2 percent at $16.35 at yesterday’s close in New York, and has advanced 60 percent this year.

Profit, excluding some items, was probably 2 cents to 4 cents a share, Fremont, California-based SGI said. Analysts had predicted 9 cents on average.

The shutdown “adds significant risk to our near-term revenue outlook and impairs our visibility as to the timing of the expected restart of Federal projects,” Titinger said in the statement.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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