Shares of Silicon Graphics plummeted in response to news of its bankruptcy filing and sale. The company's stock, which had already taken a pounding during the last 12 months, plunged 23 cents, or 56.1%, to close at 18 cents Wednesday.
The Sunnyvale, Calif.-based firm became a Silicon Valley success story by selling its high-end gear to movie studios, broadcasters and research labs, but has struggled during the last few years. Even before the global economic slowdown, SGI was already facing stiff competition from rivals such as Hewlett-Packard (HPQ), IBM (IBM), and Sun Microsystems (JAVA).Silicon Graphics even spent some months in bankruptcy protection during 2006 in an attempt to get its house in order. The company emerged from Chapter 11 but has continued to wrestle with losses and a heavy debt load. At least one technology analyst was surprised by Silicon Graphics' bargain-basement price-tag. "SGI has been having trouble for years so some sort of deal seemed likely, but I was frankly shocked by the $25 million price," wrote Charles King, principal analyst at Pund-IT, in an email to TheStreet.com. "For the equivalent of some VCs' running bar tabs, Rackable acquired a stable of innovative systems that significantly deepens its product offerings and should broaden its customer base."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV