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Risks and Rewards: SGI Sells Out to Rackable

by Christopher G. Willard, Ph.D., Addison Snell, Debra Goldfarb
for Intersect360 Research (originally published under the Tabor Research name)
April 2009

Rackable has agreed to purchase “substantially all” of SGI’s assets out of bankruptcy for a rock-bottom price of $25 million. Rackable stands to gain an established position within the HPC market (albeit with a small share), a potentially lucrative services operation, an array of servers, storage and software products, and an accomplished R&D organization. Rackable also faces a number of challenges with the acquisition, including significant management and expense challenges, product line bloat, and customer contract liabilities. Overall, there is more potential upside than risk in this deal for Rackable, but the company will need to move quickly after the acquisition to keep costs and risks under control while sorting through products and technologies to develop a cohesive and integrated overall strategy.

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