Hewlett Packard Enterprise buying Silicon Graphics for $275 million

Hewlett Packard Enterprise (HPE) has struck an acquisition deal that could boost its presence in the high-performance computing (HPC) and big data analytics markets.

SGI, now located in Milpitas, Calif., after selling its storied Silicon Valley headquarters to Google in 2006, brought in $533 million in revenue 2016 and $521 million in 2015. HPC operates in sectors such as government, life sciences, higher education and research, and manufacturing, as well as supercomputing.

HPE’s purchase of SGI means HPE wants to extend itself into that market. Shares of Hewlett Packard were inactive in after-hours trade, but they rose 1% to $21.78 in the regular session, pushing them up 26% in the past three months, versus a 6% improvement for the S&P 500.

SGI’s systems and data management and visualization software, and consulting and support services will better position HPE to compete against vendors such as IBM, Fujitsu and others as an analytics and HPC solution provider, as opposed to a systems provider.

“At HPE, we are focused on empowering data-driven organisations”, said Antonio Neri, executive vice president and general manager, Enterprise Group, Hewlett Packard Enterprise.

Ireland said HPE’s innovation offensive, including its no-holds-barred high-performance computing push, has helped CB Technologies grow its customer base by more than 108 percent during the past five years.

The combination of the two companies will not only create “one of the most comprehensive suites of solutions in the industry”, but will enable SGI’s offerings to reach a much wider market thanks to HPE’s reach, Jorge Titinger, CEO and president of SGI, said in a statement. HPE expects the deal will be neutral to earnings in the first full year following close and accretive thereafter. (HPE) agreed to pay about $275 million to buy Silicon Graphics International Corp., a once-influential pioneer in computing hardware that wound up settling into a small industry niche.

Founded as Silicon Graphics Inc.in 1981, SGI has more than 6,500 customers, 1,000 employees and over 600 granted and pending patents. SGI, which has about 1,100 employees worldwide, reported revenues of United States dollars 533 million in fiscal 2016.

With a long and tempestuous history dating back to 1982, SGI was founded by Jim Clark, who later went on to launch Netscape. And, in May, she entered an agreement to spin out HPE’s consulting unit, Enterprise Services, into a new company half owned by HPE and half by one-time rival CSC.

SGI’s business has sagged in recent years, its sales declining from $767.2 million in 2013 to $529.9 million the following year.