The Sad Saga Of Silicon Graphics

Back in July, 1995, no computer maker was flying higher than Silicon Graphics Inc. Its dazzling three-dimensional graphics computers had a starring role animating the fearsome dinosaurs in Jurassic Park. Nintendo was using the same technology to give the Mario Brothers a face-lift and to design a new generation of arcade-like game machines. And sales were soaring. For the fiscal year ended that June 30, revenue skyrocketed 45%, to $2.2 billion--far outpacing all rivals. To top it off, CEO Edward R. McCracken was a White House regular, hobnobbing with Bill Clinton and Al Gore. SGI's sexy image prompted a Wall Street analyst to label it "the new Apple."

Sadly for SGI, that may prove all too true. Now, like Apple Computer Inc., the Mountain View (Calif.) company is a stark anomaly in booming Silicon Valley. While rivals such as Sun Microsystems Inc. ride the Internet wave and even IBM enjoys a comeback, SGI has been mostly an onlooker at the tech party. After racking up losses of $35 million in the first half of this year, the company managed to carve out a profit for the 1997 fiscal year ended in June, thanks to a strong fourth quarter. Still, the stock, even after bouncing up from its low of 12 7/8 last April to 18 3/4 on July 23, is at less than half of its value 24 months ago. Dubbed "the gee-whiz company" by BUSINESS WEEK three years ago, SGI is scrambling to stay off technology's long list of has-beens. Concedes McCracken: "If we can't produce good quarters, we're not going to have a future."