SGIC Gets the Rack in The Shadow of The Sun

April 6 Update
Sold for Gain
SGIC - $986
LVS- - $956
Total Gain - $1942

JAVA Loses IBM

The Shadow of The Sun

Yesterday had some interesting news stories and whenever that's the case, there's sure to be buzz surrounding the plays of the day. That certainly was the case of the two Digital Giants of the Silicon Valley , Sun Mircosystems and SGI. A story SUN would take well to heed as IBM might not be their biggest problem, but the fate of it's sister of Silicon Valley, SGI.

SGI's news item was that Rackable Systems -RACK was to buyout the assets of Silicon Graphics for only 25 million. The news hit the wires beginning last week and Zacks posted on it. SGIC closed at .125 on Friday so even though it looks as if the sharholders will not recive anything in this buyout, the stcok still went ballistic. I got in for some fun in the early am at .175 as I wrote about it the other day in last blogs comment section. It quickly ran up to .30, thinking a quick bounce to .25 was nice I sold at .285 for a quick gain on a little margin. Thinking it was done for the day and confident in my other positions, LVS and CNO I had to step away from trading for awhile only to come back at 2:30 to watch the close. I couldn't believe my eyes. SGIC was going vertical! I didn't think this was worth more then a news trade for a quck in and out. So I just watched in amazement as it printed .76 in AH, up over 300%??? Say what!?

SGI
Say What?

The Item 1.01. of the 8-K Filing - Entry into a Material Definitive Agreement reads as follows.

On March 31, 2009, Silicon Graphics, Inc. ("SGI") entered into an Asset Purchase Agreement (the "Asset Purchase Agreement") with Rackable Systems, Inc. ("Rackable"). Under this agreement, Rackable will purchase substantially all the assets, except for certain excluded assets, of SGI for $25 million, subject to adjustment in certain circumstances, plus the assumption of certain liabilities associated with the acquired assets. The Asset Purchase Agreement has been approved by the respective boards of directors of Rackable and SGI.

Completion of the transaction is subject to a number of closing conditions, including the approval of the Court (as defined below). Subject to such conditions and uncertainties, the transaction is expected to close within approximately 60 days. The assets to be acquired do not include certain non-core patents, which will be retained by SGI. It is expected that the net proceeds of the transaction will be distributed for the benefit of the secured creditors of SGI, and that SGI stockholders will not receive any proceeds in respect of the sale.

“It is sad that the once great SGI has fallen on unfortunate times and devalued its assets,”
Todd A. Bone, CEO of XS International.


Silicon Graphics (SGI) initially filed for Chapter 11 bankruptcy protection early on Wednesday, listing some $526.5 million in debt against $390.5 million in assets, just hours before Rackable announced it would be purchasing the computing legend for just $25 million. SEC filings reveal that SGI intends to use the proceeds of the sale to pay off secured creditors, as the bankruptcy filing constituted a default on those obligations. This is the second Chapter 11 proceeding for SGI.

Wanting to know more I thought I'd follow the leads to see where they go, and they got pretty interesting so I thought I's share what I think are some really amazing connections and stories behind these two SV Giants.

Both Silicon Graphics -SGIC and Sun - JAVA were founded in 1982 and were both influenced by engineering innovations that emerged from Stanford University. The two companies used the same microprocessors but for different purposes: Sun optimized its computers for networking; Silicon Graphics, created engines for displaying computer graphics for such well known moves as

Terminator 2, Jurassic Park, Swordfish, Twister, Disclosure, and Lost in Space, among others.

SGI's :"Its initial products were based on the Geometry Engine that Clark and Marc Hannah had developed at Stanford University, and derived from Clark's broader background in computer graphics. The Geometry Engine was the first very-large-scale integration (VLSI) implementation of a geometry pipeline: specialized hardware that accelerated the "inner-loop" geometric computations needed to display three-dimensional images."

Not only known for their Graphics from the movies listed above and other cool shorts like "RYAN" and Academy award winning film you can see here. (It's really wild)

SGI also helped create NASA's supercomputer, COLUMBIA seen here.

SLES-Powered Colombia Supercomputer

NASA's 10,240-processor Columbia supercomputer is built from 20 Altix systems, each powered by 512 Intel Itanium 2 processors. (Image courtesy of Silicon Graphics, Inc.)

The powerful system, built by Silicon Graphics Inc. (SGI), promises to revolutionize the rate of scientific discovery at NASA. Using only 16 of its 20 installed systems, Columbia achieved sustained performance of 42.7 trillion calculations per second, or 42.7 teraflops.

"If you could do one calculation per second by hand, it would take you a million years to do what this machine does in a single second," said G. Scott Hubbard, Ames' director.

The new performance record eclipses the performance of every supercomputer operating today and knocks NEC's Earth Simulator off its perch as the world's No. 1 machine—a spot it has held since 2002.

So some cool stuff and with the rackable systems now competting with SUN Microsystems for mobile virtual Data Centers.

RACKABLE SYSTEMS

Rackable Systems is joining the mobile data center parade. The Bay Area company is rolling out its first "Concentro" mobile data center on March 26, which will compete with Sun Microsystems' Project Blackbox, which Sun unveiled in October. Rackable's mobile shipping container, which the company dubbed Concentro, is a 40-foot by 8-foot mobile data center with the capacity to hold up to 1,200 of company's rack-mount 1U (1.75-inch) servers

"Concentro"
Mobile Data Center

Project Blackbox

Virtual Datacenter

So with Sun left standing alone after IBM ends takeover talks and RACK anteing up, I think I'll keep alert to see what big plays are next with these three. SUN might want to heed yesterdays news with SGI and Yahoo's rebuff of Microsoft.... Should be an interesting day. maybe it's time to go back to Vegas and look at MGM because it's all a gamble today in this market. Staying on the sidelines for the most part today as the market is at a level could get ugly.

JAVA