SGI Shares Soar 24 Percent on Strong Earnings

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Shares of SGI soared 24 percent Wednesday after the maker of server and storage equipment reported another quarter of strong earnings, easily surpassing the expectations of Wall Street analysts. SGI stock was up $4.01 on the session to close at $20.49 , a gain of 24.3 percent, and has more than doubled in value since the start of 2011, when SGI traded at around $9 a share.

The jump in SGI stock was prompted by a second consecutive earnings surprise. After the market closed Tuesday, SGI reported revenue of $143.7 million, up 33% from a year ago. with a non-GAAP profit of 7 cents a share, well ahead of the single analyst estimate of a loss of 12 cents a share.

The earnings results reinforced the progress the company once known as Rackable Systems has made since acquiring Silicon Graphics in May 2009 and repositioning the company and its brand. In the wake of the acquisition, SGI has focused on the market for technical computing, targeting customers in high-performance computing and supercomputing markets. Analysts project the market for technical computing to groiw steadily and reach $19 billion to $24 billion by 2014.

“Technical computing requires the extremes of scale and speed,” said SGI CEO Mark Barrenechea. “The barriers to enter the technical computing segment are high. It requires the ability to translate complex customer requirements into architected, ready-to-deploy solutions with an expert sales force.

“We remain focused on expanding our opportunities within the technical computing market,” Barrenechea added. “We believe that we are well positioned for growth and earnings within these core markets and remain intelligent in our analysis on where and how to expand the business. We are very pleased with our progress in technical computing. And there is no better indicator than our view of our fiscal 2011 outlook.”

The company also reported that sold four of its ICE Cube data center containers to federal agencies, suggesting that the company can continue to win government business even as the Obama administration consolidates data centers.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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