Newspaper Clipping - Newspaper Clipping Scan - Cray Research acquired by Silicon Graphics - 5/1/1998Fo 1.4)ER
13t�INS
171/
Jun- ic:g
Eagan pulling out the stops to woo Silicon Graphics
• In break with practice,
city to apply for state
funds to lure division
JENNIFER EHRLICH STAFF WRITER
Eagan is going all out in its efforts to
bring more of Silicon Graphics' business
to town.
Unlike many growing suburbs that rou-
tinely offer businesses cheap land, tax
abatements and low -interest loans to
relocate, Eagan has rarely offered any
incentives to attract business.
But the possibility of becoming a new
center for Silicon Graphics has shaken
Eagan's traditional stance:
The Eagan City Council has approved
applying for funds from state sources to
lure Silicon Graphics' new call center, a
division that is expected to create 110
new software support jobs. John Hohen-
stein, assistant city administrator, said
the company may be moving other divi-
sions, and Eagan hopes to attract those
as well.
Mountain View, Calif. -based Silicon
Graphics already owns Cray Research
Inc., which employs about 1,000 people in
Eagan.
Eagan is only one of five cities that
Silicon Graphics is considering as a site
for the new call center.
Eagan plans to apply for $300,000 in
assistance from three sources: The Min-
nesota Investment Fund, the Minnesota
Job Skills Partnership and the Eagan
Revolving Loan Fund, according to
Hohenstein.
The Minnesota Trade and Economic
Development Department controls both
funding sources. The primary goal of the
Minnesota Investment Fund is job cre-
ation and retention. Businesses apply for
loans through their local government.
Funds are given to cities or townships
that then make gap -financing loans to the
qualified businesses.
Hohenstein said 'in addition to the low -
interest loan, the other possible incentive
offered may be worker training.
Eagan plans to apply for training funds
from the state trade department's Job
Skills Partnership, which works with
businesses to train a certain number of
new or existing employees in a specific
skill to fill demand.
sp98 EAGAN MAY BE PICKED AS NEW SILICON GRAPHICS SITS//NSW CALLING CB 05/23/98
ss==== _a== --
ST. PAUL PIONEER PRESS
Copyright (c) 1998, St. Paul Pioneer Press
Saturday, May 23, 1998
AG: 9805230143
DITION: South Suburban
ECTION: Local PAGE: 2B
KNUTH: 32 lines
BADLINE: EAGAN MAY BE PICK AS NEW SILICON GRAPHICS SITE//NEW CALLING CENTER
OULD BRING I10 TECH -SUPPORT JOBS
YLINE: Jennifer Ehrlich, Staff Writer
EXT:
Eagan is one of five cities Silicon Graphics is considering for the
ite of its new calling center.
The center would bring 110 tech -support jobs to Eagan that pay between
40,000 and $70,000.
Eagan will have to beat out Dallas, Milwaukee, Montreal and Nashville,
hich also are being considered for the site, according to John Hohenstein,
agan's assistant city administrator.
Silicon is considering relocating other facilities as well and we are
ntereated in attracting as many Silicon divisions as we can," Hohenstein
aid.
Mountain View, Calif. -based Silicon already owns Cray Research Inc., one of
he largest employers in Eagan.
The city rarely uses economic development incentives to lure businesses to
he city. But Hohenstein said that next week the Eagan Economic Development
omission will decide whether to apply for state financing as a possible way
f edging ahead of the competition.
F YOU GO
he Sagan Economic Development Commission meets Wednesday, May 27 at 4 p.m. at
ity Hall, 3830 Pilot Knob Road in Ragan.
EYWORDS: DEVELOPMENT SUBURB TECHNOLOGY
NHANCER: lc
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1 of 27, 4 Terms
R=97%
05-28-98 01:07PM P002 #40
he :deals: WEST PUBLISHIN
* STAR TRIBUNE • FAGE, D'
Silicon Graphics finds success with 3-D worksta
Annexed by Silicon Valley
The acquisition. of Cray Research Inc. of Eagan by Silicon Graphics Inc. of
Mountain View, Calif, symbolizes the end of both the supercomputer
era and Minnesota's reign as a computer -making powerhouse. Cray
was the last independent supercomputer maker and the last home-
grown player in the global hardware market SGI exemplifies the as-
cendency of software, smaller computers and Silicon Valley.' .
Cray Research
. > Founded:1972
> Headquarters: Eagan:.
> Employees 3,700
> '95 sales: $676 million
> '95 Toss $226 million*
> Notable: products: High-speed
Cray supercomputers.
* Included $188 million in re-
structuring and one-time charges.
Silicon
Graphics
> Founded:1981
> Headquarters:
Mountain View, Calif.
> Employees 6,300
> '95 sales:`'* $223 billion •
• '95 earnings $224.9 million
> Notable products: Three-di-
mensional computer graphics
systems:... ..,
»*Year ended 6/30/95
Star Tribune Graphic
By Steve Alexander
Star Tribune Staff Writer
A few years ago, Cray Research
said that: workstations couldn't
really compete with, supercom-
puters. But Monday, the most
successful of those workstation
competitors agreed to buy Cray
. Research.: ;..., :
Silicon Graphics, a.14. year -old
company that tapped into the hot
market for computer worksta=
tions with the power of a low -end
• supercomputer, found a .niche
that 24-year-old Cray missed: It
parlayed those machines, along
with less -powerful Workstation, -
into a $2.2 billion business last
year.: - . • ;
Today,-SGI's successful line of
3-D workstations = which can
display three-dimensional graph-
ics — are used in automobile de-
sign and movie special effects —
including those in "Jurassic Park
— and supercomputing. Its su-
percomputer-like workstations go -
no higher in price than about $1
million, or barely the beginning
of Cray's price range. :., •
r - As a result of its success, 7,000-
employee SGI was in a position to
acquire 3,700-employee Cray, an-
other high -growth • company
whose glory faded in the late
1980s and which, by last year,
had entered its deepest financial
trouble. •
Cray is the biggest acquisition
SGI _ has. made. Its only .other
computer company purchase was
MIPS Computer Systems, which
it bought in 1992 to acquire rights.'
to MIPS computer chip technol-
ogy, .rather than for the MIPS
computer product line.
"The MIPS product was not
strategic or complementary to
ours, and we did not continue it,"
- said William Kelly, Silicon Graph-
ics' general counsel and vice
president of business develop- -
me_ nt. "With Cray, we are buying
a franchise, an ongoing and
healthy business.';.
Some of the research Cray is
doing for -high -end supercomput-
ers will benefit SGI's workstations
as well as Cray supercomputers,
Kelly. said. By using Cray's re-
search on computer memory and
electronic component connec-
tions, SGI can devote its own re-
searchorganization to solving
other problems, Kelly said. At the
same time,. Cray will be able to
justify research and development:
expenditures by spreading the
technology it develops over a•-,
broad range of Cray and SGI
products, Kelly said.
Another of Cray's major bene-
fits to SGI is Cray's 1,000-employ-
ee service organization, Kelly
said.
"As we ' deal with more large
corporate customers who want
enterprise -level solutions, having
Ca service organization like that is
a real value to. i s," Kelly said;::: y"
For SGI, :'buying';Cray'-.also
makes sense because the deal will
not be dilutive,.based'.on projec-
tions that Cray will be profitable
this year, Kelly said:. ' :::�
While _ SGI Yexpects to ;take .
some writeoffs on•Coy's research
and development; they reflect a
quirk in the accounting -laws; lie
said. Research.and development
expenditures related to products
that are not yet; shipping must be
charged against:earnings,-he said.
"The more valuable:: -..the technol-
ogy, the larger -the writeoff It' `"an
accounting" anomal ""
Besides scientific_ com . tym ,
the area -in which. ::it competes
with Cray, Silicon Graphics. also
has taken a liking to . the ei2tei-
tainment industryr .In 11.99:t
bought two software' :firins; tllias
Research Inc. and Wavefront
Technologies, to form a software
subsidiary for creating movie
effects using workstations;foF
three-dimensional animation and
graphics: Its customers include
filmmakers, game developers-1n'd
people designing graphics fdr"the
Internet. •• - A
"Our'core market' historically
has been scientific and.engineer-
ing computing,'
entertainment is now about_:15
percent of our business,'.. Kelly
said.
Silicon Graphics will acquire
Eaganfirm. for $736 million
William Kelly, SGI's . general Attractive offer
counsel _ and vice : president of
business development, said it ex Cray officials said their deci-
pects the acquisition to create a sion to sell the company was not -
nearly $4 billion company by related to any loss of faith by
combining SGI's anticipated an- customers but by the attractive-
nual revenues of nearly $3 billion ness of the SGI offer.
this year with Cray's expected J. Phillip Samper, Cray's chair-
1996 revenues of more than $800 man and chief executive officer
million. - since last May, denied a New
Both Cray and SGI said they York Times story that said that
expect the acquisition to leave "some of Cray's large govern-
Cray's 3,700 employees and its ment and corporate .customers
facilities in Chippewa Falls, Wis., have expressed reluctance to con -
and Eagan largely untouched, at tinue buying multimillion -dollar
least in the near term. Kelly said computers from a company,
his firm plans to run Cray as a whose financial survival is in
separate business unit pending ` doubt:"
the combination of the Cray and "No way," Samper said. "We
Silicon Graphics computer lines are receiving orders from govern -
over a period of several years. ment customers, and as recently
Analysts said Cray had cut its op- as last week I was in touch with
erations back sharply in 1995, re- our government customers, and
ducing employment from 4,800, it's not true; it's ludicrous. The
so SGI is under no immediate U.S. government wants to see
pressure to cut costs. • Cray Research succeed. I've got-
SGI made a cash tender offer ten that verbatim from a number
of $30 a share for 75 percent of of sources, including a meeting in
Cray's stock, plus a one -for -one: the White House in November."
exchange of SGI and Cray stock , But Gary Smaby, an analyst
for the remaining 25 percent. The with • the Minneapolis -based
tender offer represented about a Smaby Group, said his firm has
20 percent premium over the been getting worried calls from
price of Cray shares before the Cray's customers about whether
announcement. Cray stock closed _. the firm would survive. •
at $28.50 Monday, up $3.25. SGl'• "I _ didn't get those calls five
stock closed at $25.371, down years ago," he said. "No one ever
$2.121 . questioned whether Cray was
Conrad Leifur, an analyst with long-term viable and competi-
American Express Financial Advi tive. _
sors,_said SGI's stock went down , .;i> As a result, Cray needed to
"because some people are con-' find some kind of a partnership
cerned that there is too much on with another company to ensure
SGI's plate right now. They are its own future, Smaby said.
worried about SGI's ability to exe- " - • He added, "There were a lot of
cute its business plans with this ' negatives working against Cray,
additional distraction." and the company needed to get
Among SGI's activities is trying something in place this year, if
to get back on schedule with its for no other reason than to keep
new computer workstation prod- talented people at the company
ucts, Leifur said. As a result of a energized. Because people were
shift to new models, SGI missed starting to leave."
its earnings projection in the • Cray has projected a return to
most recent quarter. profitability in 1996, and the
John Rollwagen
company repeatedly has pointed
to its record year-end order back-
log of $437 million as. evidence of
its strong future. - -
But Smaby said the problem
with the big backlog is that it
reflects orders that were delayed
from 1995, not future business
prospects. "Their .backlog was
getting worked off this year, but
there was not a lot [of business]
on the radar screen for 12 to 18
months from now." -
The acquisition should ease
those fears by putting the finan-
cial strength of SGI behind Cray,
Smaby said. In the fiscal year
ended last June, SGI earned $225
million on. revenues : of $2.2
billion.
'A more seamless choicer
Former Cray CEO John Roll-
wagen, who left in January 1993,
said the acquisition appears to be
a good deal for Cray..,: - ' -
"The challenge to Cray in re-
cent years has been the advent of
smaller, high-performance work-
stations with the power of the
original supercomputers," Roll-
wagen said. "Frankly, Silicon
Graphics has been the leader in
that challenge to Cray."
He added, "If they can merge
the technologies, they'll be able
to offer customers a more seam-
•
less choice from top to bottom [of
the computer product line] with-
out having to change software or
vendors."
Leifur agreed that Cray has, an
essence, been acquired by a com- _
petitor.
"SGI was one of the compa•
-
nies that was hurting Cray with...
their high -end workstation sales. -
SGI saw an opportunity to really
solidify its position at the high
end of the technical computing
market, and in one fell swoop
they will have a dominant posi-
tion there. Because, for all of
Cray's problems, they have con-
tinued to dominate the high end
of the market."
But Kelly said the competition
between Cray and SGI "is very.
limited. Even where we sell to the
same customers, we're not com-
peting against them routinely."
But by selling large volumes of
its computer workstations, SGI
nonetheless edged out Cray as
the leader in the total supercom-'
puter market, Smaby said. "SGI is
the market share leader in the
broadly defined $1.9 billion su-
percomputer market [which in-
cludes departmental and compa-
nywide supercomputers] with 23
percent. Cray had 20.percent." .
Sampere said Cray didn't shop
the company but instead sought
strategic alliances. One reason
was that Cray is smaller than
some of its competitors, such as
giant Japanese firms NEC, Fujitsu •
and Hitachi. As a result, _ Cray
could not get the same econo-
mies of scale, a big company
could when it came to buying
component parts or manufactur-
ing computers.
"We talked to a number of
companies about strategic affi-
ances forthings such as technol-
ogy and distribution arrange-
ments,"
Sampere said. "One of
those companies was Silicon
Graphics. As we and they got to
know each other better, they saw
and we saw, too, that it was a
complementary match. Then
they came forward and said
they'd like to discuss a merger."
'A lot of. co
SGI :was -.interested.-.because
Cray'01nanciar-troubles:iargely
are over as :a.result of cutbacks
last year, Sampere_ said. -TJ se = "
cutbacks produced $250 million
in cash:and:the actii-alor..plairr ad
sale of :several.,small-.business
units; Chippeiwa'`palls "So, the
- restructuring paid off,"he,said/
Sampere said he .Was —dot
brought in . last_ year"" to ,prepare
Cray for sale, "my intention was
to build"_Cray."'IBut:he: said''he
knew good acquisition deal-
when'he saw one.
Kelly added, ."There's'' a•lpt of
compatibility. Welon't"view this 7,.
as a troubled or turnarouid situ-
ation.:This:is a significant oppor,
tunity to create a?leadern scien-
tific and technical computing..
Rollwagenwasn't'so sure how
long it will be before Crays, oper-
ations
Clearly, Silicon-Graphicswill
want to: consolidate some: Opera-
tions over.time;'and my:guess.is
that it would more likely'come in`
Wisconsin than; in the Twin_Cit-
ies," he said. "The software.de-
velopment is concentratedhere,
and engineering and manufactur-
ing is,. in Wisconsin. It's:'much
simpler to have a distributed soft-
ware development "operation ,that
can communicate over thhelnter-
net. I'd expect more pressure,for
consolidation would be on Wis-
consin" . _ - ..-
But with the .passing. of. Cray,
the Twin ` Cities area computer
industry_ has lost somethingri—
the successful independent com-
pany living on the edgeof►ew
technology.
"Cray:represents the lastof the
1980s-"pure plays in the= super-
computer market,"' Smaby:said.
"There are no other major'.play-
ers left standing from the super-
computer battles of the 1980s,and
1990s."
— Staff writer Dick -Youngblood
contributed to this report: .:4
• 1
Eagan e alpq Its fr.,_04,,opz: upfrq
. .
•
West eUbliShing
The dial:
>• Thomson Corp. of Toronto, Ontario, will
require West Publishing Co. of Eagan for $3.43 bil-
ion in cash. West Publishing is best known for its
- z Westlaw online legal research__ __
service and primary law data- -
base. Thomson is a worldwide -
publishing and information '
••
company, and its already siz-
able presence in legal publish
ing
' 7 could raise antitrust con-
-erns West had revenue of more than $825 million
on
operating profit of more than $200 million for
he year ended July 31, 1995. The company has
tbout 6,700 employees. •E: •
• •
'• .Local tm
;). West's headquarters will remain in Eagan. •
chomson is knownas a hard-nosed, cost-cutting
:dmpany, but West's high profit levels may spare it
from any immediate changes. The sale also will bring
n estirnated $1 billion to Dwight Opperman, West's .
argest shareholdeiN„4,.., • ... • • • ' -• •
- •
'.:41ifY
More msde: -
.. •
The deal: After seven months of flirting with
French,':Geinian, Dutch -and American suitor,
West Publishing agreed to be sold to a Canadian
firm. PAGE DI - 4_ . .. •
Profile: Who is Thomson Corp.? And should
employees be fearful of its reputation? PAGE D6
r Employees: After waiting anxiously for some time .
f, to learn of their fate, workers and community
1 players are relieved to hear Thomson plans to
1. keep West in Eagan. PAGE D6 _ _ : _
-",-*,47L-N.#31;`
Pi;";444-4.-i-;-4-444-;‘,-;"...,_.....,., •
4,;44-
actiiiii;•-•di'e-viciims o
The fast-movinginformatio_n revolution dealt::
'..,' West catalogs are being put
Minnesota aone-.:two punch Monday as two : ,-.:,...!. the biggest computer - net -Work.
,s ofakthe:
Internet,
while CDi-n-
prestigioUshoniegroWn companies Were. ' Ro;P
swallowed up: West Publishing and Cray . : . lowest
Lcdigseet loapweratfowni t.)1' to e,' '
Research were caught in a global tidal wave.. publish potentially competitivee
•:`--
that has brought the rise of giant information.-,_ text :-
-companies and the demise of big coniputers.
By Terry
priority and the norm.
Star Ti-ibithe Staff Writer.: As for. West and,..Cray, "Both
- - ' grew out of the second wave of
• The third wave of computing computing that valued the pro- •
crashed into Eagan on Monday, prietary nature of things," said
sweeping away the indepen-
. denee of two of Minnesota's
best known : •
In selling their companies to
•much larger competitors, West
Publishing Co., the low-key le-
gal publisher with more than
100 years of history in Minne-
sota, and Cray Research Inc.,
-Cray;-: suffered
when companies such as its act.z.
quirer, California -based Silicon
Graphics Inc., offered, ,
networked workstations thataP
lowed more people more op
portunities to do simulation,
which once was the exclusive ,.
domain of Cray's more expen—
Minneapolis technology con- sive and technically challenging
sultant Gary Smaby. As a cus-, supercomputer system.
tomer, "it was difficult to go. "If you can't beat 'em, jckin:
elsewhere," whether buying 'em," Smaby said. "Cray could .
West's legal citations or. Cray's, not have gone alone past this:
world -class computers: As a re- year without strong partneis':
sult, if you bought from them,•,with links into the .new
you did things at their prices:: digm. I suspect the same could;:
and in their formats': be true for West" '''',4•4-'.;44-':'14.7;-.1/,
the once brash; 24-year-old '4,.;.-„Their -profitability reflected:4., It also is true that the acquir.7.-Z6
manufacturer of the worlds their dominarice.„In the mid ing .companies don't have all
fastest -"cOmputerS, also '80s• Cray's":net profit once.4f the aniwers. Even so, Canadar:
..
knowledged a sea change in, reached 21- percent "of sales; based Thomson Corp., with an
technologY..i.` highesi''aMong-.„f;Prtithe 500 iinalreYentie, of $6.35
; In the first wave Of comput companie Even in its fiscal compared with WeSt'SC-'$8254:
ing, scientists lined up for tirrie-J. ,1995, West still showedoperat:A..; million; and Silicon ,Graphic,N;
With the big mainframe. In the;: ing profit of 25 percent. which weighs in at $2.23 billion
second wave, technical and -•,,•'• But: times changed, and as opposed to Cray's $676
nontechnical people alike had strong profitahility,'orke takeni lion, do offer something else bes;4,-,
computing -power'; on:, their for granted, no, longer is, a, sides ganie
desktops. In the third wave; . ,
networked , computers have In West s case, some federal Turn to ACQUISITIONS on AS
- • '
made ,access and openness ta. appeals court decisions, which 4.: .1." •I• - ;
rayResearch
„- •
• • •
; 4,4
-;:revolution 1•
• ,
• ';„itti4-4,,., 7-4., •
nation's Cold War •
* STAR TRIBUNE • PAGEAS
man
-tiling. We'll just have to
be -difficult for him to
r from the public eye..
iawhich runs the mili-
ly "maximum security
ofi't say what Lonetree
while incarcerated. He
one of the minimum-
heas and received the
h amount of tithe off for
avor.
ee; like all inmates, has
vocational training in
rout 20 fields, and has
e "to take educational
le joined the Marine
finishing high school
been described as an
yet: interested in world.
d'. aveling.. •
interests, in part, took
Ioscow, where he be -
central character in a
tat is still being dis-
tnd debated. At one
is thought that Lone -
other Marines had al-
viet agents to have ac-
:cure parts of the em-
at was later discounted,
efore it was publicized
e4. and Lonetree had
rounced by the secre-
ense.
gh he signed a confes-
etree fought the espio-
rges in a trial that fea-
nboyant Defense Attor-
un Kunstler, who urged
to . reject 'an offer ` to
ilty in exchange for a
sentence.
'faken that offer, Lone-
' have walked away free
ago or even sooner.
z>a
lard Welnglass, attorney
Ju=Jamal.
led," he says.
ass will speak at two
eetings today: at 11:30
Oacalester College's Wey-
;ir Chapel in St. Paul and
n in Room 175 at Willey
$the -.University of Min-
nMinneapolis.
-AACQUISmONS from Al
West, Cray are swept away
'by third wave of computing
"Smaller, - more .narrowly fo- ' cles that once ran five to seven
cused firms can't keep up," said
W. Bruce Erickson, a professor at
the University of Minnesota's
Carlson School of Management.
"They need deep pockets to get
access to various technologies.
Ever; giant firms are in alliances.
They don't know which technol-
ogy will pay off, so they hedge
--their bets." e._
Erickson added that the rules
have changed for all companies,
no matter their orientation.
"There used to be just market
risks," he said. "Now there are
technology risks, -too."
Staggering' changes -
Erwin Kelen, a longtime Min-
neapolis entrepreneur and inves-
tor who has started two compa-
nies of his own and who sits on
the boards of smaller Twin Cities
area technology companies such
as Cyberoptics Inc. and Comput-
er Network Technology Corp.,
noted that the "rate of change is
staggering," with product life cy-
years often reduced to a year and
a half.
"To move . faster and faster,
you have to get bigger and big-
ger," he said. -"The cost of every-
thing is going up, and the pay-
back cycle is faster. You either hit
or you don't. There's no such
thing as a small success."
- With such fluid conditions,
"you have to redefine your mar-
ket space," said Conrad Leifur,
technology analyst at American
Express Financial Advisors Inc.
"If Cray had been smarter -in do-
ing that in the late . '80s, they
would have gotten into the work-
station business."
-With stock that reached more
than $100 a share during that
period, he added, "Cray had the
potential to buy Silicon
Graphics."
Larger companies have more
opportunities to experiment with
partnerships, pricing and distri-
bution, a distinct advantage in
what Smaby.calls "the early stage
Star Tribune map
-
of the third wave" of computing.
West and Cray recognized ,;a
much, sacrificing their indepen-
dence for mass.
In this new time, the appetites
ofcommunications and technolz
ogy company aren't liked to;bg
sated soon. As Scott McNealy,
chief executive of Sun Microsys-
tems Inc., said, "You have luncji;
or you are lunch." •
I EDINAImammal
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00
Cr 04.
1970 Rahncliff Ct.
• Eagan
S.W. Corner of Cliff Rd & 35E
68& 6442
VISIT at
Your Own Risk!
"Endless Corridors of TERROR!
• LARGEST Indoor Fright -Filled Experience!
• WIN a Terrorific Trip for 2 each Weekend!
• FREE Classic Horror Film Screening!
• FREAKY Climbing Wall.
•ENJOY Strange Brew at the Toadstool Bar.
• HAYRIDES and BONFIRES Available.
• CALL to Attend the Phantom's Feast! -•
MORE BOO FOR YOUR BUCK! . .
. Presented by he MN Renaissance Festival
Call the SrCKtINE at 612-445-7361
- Oct. 17-20, 24-27, 30-31, 7 pm to 11 pm.
Adults $9.95 Children (5-12) $4.95
Discount Tickets Available at ja.
- Follow Hwy. 169 South to Hwy 41 est
Company. founder was genius,
say Cray Research officials
By Sue Hegarty
Staff Writer
Officials at Cray Research in Eagan
are calling their company's founder,
Seymour Cray, the father of the super-
computer and high performance com-
puting industry.
"He was a creative and technological
genius who continued to push himself
and those of us privileged to have been
his colleagues," stated a Cray press re-
lease. "He ranks with Edison, Ford,
Marconi and Bell as one of the seminal
thinkers; inventors -and business pio-
neers of modern times:'
Cray;-71-,,- died =Oct:=5 =1996,-from in-
juries suffered in a car accident in Col-
orado Springs, Colo. on Sept. 22.
He was born in Chippewa Falls, Wis.,
in 1925, the son of a city engineer.
He attended college at the Universi-
ty of Minnesota and earned a bachelor's
degree in electrical engineering in
1950.
One year later, he earned a master of
science degree in applied mathematics.
He went to work for Engineering Re-
search Associates of St. Paul before be-
coming co-founder of Control Data Corp.
in 1957.
In 1972, he founded Cray Research to
design and build the world's highest per-
formance general purpose supercomput-
ers. He served as director, chief execu-
tive officer and president from 1972 to
1977.
Seymour Cray
_ He relin-
quished his roles
in the 1980s in
order to devote
more time- to
computer devel-
opment ideas.
He is the in-
ventor of a num-
ber of technolo-
gies that have
been patented by
the companies
for which he
worked.
h .
1�� 1989, . a started:Cray Computer m__ _.
Colorado Springs. _ Eagan -based Cray Resea_rch-merged-
last February with Silicon Graphics Co._
of California. Cray has about 1,000 em-
ployees in Eagan. '
Cray is survived by his wife, Geri;
daughters, Susan Borman of Eau
Claire, Wis., and Carolyn Arnold of Min-
neapolis; son, Steven of Chippewa Falls;
and a sister, Carol Kersten of Rochester,
Minn.
A memorial service was scheduled
Oct. 12 at Cray Research's Riverside
Systems Building in Chippewa Falls.
Memorials are preferred to Chippewa
Area Supercomputer Museum, c/o Les
Davis, 7352 178th St., Chippewa Falls,
WI 54729 or the Seymour R. Cray
Memorial, University of Minnesota
Foundation, 1300 S. Second St., Suite
200, Minneapolis, MN 55454.
After supercomputer
success, Cray was slow
to meet market changes
From. its beginning in 1972,
Cray has been of key interest to
the federal government, which
used Cray computers to design
nuclear bombs and for secrecy -
cloaked spying activities. In the
1980s, Cray.moved into the main-
stream with supercomputers that
designed commercial airliners,
predicted the weather and elec-
tronically crash -tested : car de-
signs before the cars were built.
As the market for high -end super-
computers costing tens of mil-
lions of dollars diminished at the
end of the Cold War, Cray sought
to sell lower priced supercomput-
ers costing a few million dollars
to industry. But it was slow, to
adopt new massively parallel su-
percomputer designs in which
hundreds or thousands of low -
rw' IT
,r,x
cost computer chip processors
are hooked together. And its',,t a-
ditional supercomputer' market
faded away sooner than expected.
As a result, the company suffered
financially, losing $226.4 million
in 1995 on revenues that..plum-
meted 27 percent to $676.2;mi1-
lion.
•
A Cray Research timeline
1972
1981
1985
1989
1992
1993
1995
1996
Company
founded by Sey-
mour Cray; he
begins work on
Cray-1.
Revenues top $100
million for the first
time; earnings hit
$18 million. Stock
trades on the New •
York Stock
Exchange. Employ-
ment is 761.
Research by Star Tribune Staff Writer Ann Merrill
Cray-2 arrives.
Employment
climbs to 3,180.
Cray's only U.S. competitor, Control
Data's ETA Systems, shuts down
after losing $100 million in.1988.
Seymour Cray leaves Cray to head.
up a spinoff venture, Cray Com•
-
puter, which ultimately seeks pro-
tection under Chapter 11 of the
U.S. Bankruptcy Code.
The company announces a
foreign installation of its high -
end supercomputer at the
European Centre for Medium -
Range Weather Forecasts in
Reading, England. By fall it
cuts 650 jobs, citing slow-
ness in the industry.
Chairman and
CEO John Rollwa-
gen departs.
The company loses $226.4 mil-
lion, cuts staff by 13 percent and
restructures. In May it names
corporate turnaround executive J.
Phillip Samper its new chairman
and CEO. In November, it sells its
Cray Machining Center in
Chippewa Falls, Wis.
Silicon Graphics'
Inc. buys t i.e Ea-,;
gan-based%uper-
computer maker.
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n AREst • 7 263 91/a
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n AmSIP 1,20 140 11'/4
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n Anacmp 7/32
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n Analog s 25 2300 28'/2 -1
o Analysts .60 20 61 311/ -1
o AnoorCm 951 53 i +1%
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o �itgebnt: j 1974 Oa-1h
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0 AngSA 1.32 112 681/4
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n Asarco .80 5 2588 297/s
o ASEA .60 151 1021/2 3/4
n Ashland 1.10 941 371/a -13/4
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a Cdnocg .50 104 33
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n CarnvCp .36 18 3452 281/4 -3/4
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n CarsPir 5 140 183/4 1/s
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n CascNG .96 20 101 157/s
o Caseys .10 23 929 22743 -4354
oCasinoAm 6 547 57/s 143
o CashroD a 77 909 261/4 -114
o CasMagic 891 31/22 -352
o CasRswt 1/4'
o CasnRec 48 161 235 -1h
n Caterp 1.40 12 8264 691/4 33/4
n CedrFr 2.30 13 158 383% +343
o Cellex9 n 269 33/a +1/4
o Cebldab 1 84 1'
n CentEn .80 16 2215 83/4 +1/4
n Centex .20 18 2599 291/2 1/2
o Centocor . • 14424 30 43
n CenSOWst1.74 13 8237 273% 1/4
o CFidBk 1.20 13 169 333/4 3%
n CenHud 2.10 11 248 291/2 3%
n CenLAEI 1.50 13 213 26 '
n CeMPw .90 17 1037 143/4 -1/4
n CVtPS .80 9 77 141/a
n CntyTl .33 18 584 343
n Ceddlan • 34 1068 451/4 1h
n Chmpin .20 5 5437 417% 33/4
o ChrmSh,_ -_ _ ; 13880_315he_
n Chase 1.80 13 21773 73 -25%
o CNcTch 26 72 91 +1/4
n ChmBnk 2.00 1021605 701/2 -233
n Chspk .80 7 571 263 -3a
n Chevron 2.00 20 9766 561/4 -1
o ChldBrd 218 121/4 -1/x
n Chiquta .20 47 1061 131 +1/4
o Chiron u6374 1161/4
n ChkFull 11 1003 51/s
n ChrisCr 1.02 58 107 425% 1/4
o DSC 18 48417 30 -1'/e o Frdri1B .64 17 70 351/4 - 1//
n DTE 2.06 13 11040 35'/2 +3/a o Fu000 346 31/4 +113
o DalgCp e . 36 831 247/e n FundAm .20 14 783/4
o Daka 10 2163 19743 -343
o Daktron 83 126 41/a 1/e
o Damark 522 613/4a the
n DameMr .12 14 13 12543 o G&K .07 28 181 25
n DanaCp .92 11 1743 313/4 +1/4 n GATX 1.72 11 193 451/2
n Danaher .08 19 955 34 -1 n GTE 1.88 17 14423 433a
n Darden n .16 2878 121/4 11/2 n Gabelli 1.00 2326 95/a +'/e
n DataGn 4592 171/4 +'/e n GabGIoM .25 96 6743
o Daltrey 334 n Galoob 33 901 153/8
n Datapt 347 11/a o Gambro .22 ' 3 ' 223/4
o Datscp 15 427 231 -3/4 o GameFn a 41 259 12
o Dauphn 1.06 14 130 29'/4 +1/4 n Gannett 1.40 20 1527 68
n Day1Hd 1.78 16 2012 747% -14 n Gap .48 23 u7478 513 +1/4
o DBerr .85 17 518 333/4 o GannGph 5%
n DeanFd .72 14 1609 263% o Gate2000 14 14363 311/2 +3/a
n DWDsc .88 11 3870 551 -13/4 n GenCrp .60 13 2135 13
n DWGI .60 817 81/4 n GnData 1294 12
n Deere s .80 14 5843 391/4 n GenDyn 1.50 14 784 611 -1343
o DklbGn .80 30 126 67 n GenElec 1.84 2017893 781 -11
o DellCpt s 13 25237 357/a +3/a n GnGrth 1.92 14 u654 ' 22'/2
n DelmPL 1.54 12 696 221/4 1/2 n GnMID 1.88 24 3155 58%
n DeltaAir .20 11 8900 777/a -21/4 n GnMotr 1.60 7 36375 517/s +1
n Dakota 1 A8 18 1723 331/4 1/4 n GM E .60 29 5021 56 -3/4
ADept58 9 2016 201/4 -1 n GM H .96 20 2648 55343 ,-343
h Destec 21 145 121/4 n GPU 1.88 12 3355 333/a -/
o DstFear 56 791 41/2 +'/e n GenlRe -2.04 14 2727 1443/4 -11/4
o DevTech n 11/2 n GenSignl .96 18 1807 371/a -3%
n Dexter .88 14 356 233% 343 n Gensco 1215 5 +1
n DiagPd .48 21 86 365/a 1/4 o Genetinst 716 651/4 1/2
n DialCp .64 21 3960 30 1/a n GenuPrt 1.34 17 2217 433/4 5%
o Dlemetrc 379 5'A -1% o Genzym 7012 741/2 +1/2
n DiaShm .56 21 3295 303A -11/4 o Geores 17/1e
n Diebold s .68 24 900 393/4 +3/4 n GaGulf .24 . 7 1186 321 33/4
o DIglIrrt 19 1194 287/e -i n GaPac 2.00 6 7611 66543 -13/4
o DIg11Bk1 621 4 a GiantFd .74 20 479 33
n Digital 2811124 725/a -2 o GibsnG 322 147/e 1/4
o DigMic 190 10143 +1/2 n Gillette s .60 2910623 53 -1'%
n Dillard .12 14 5976 303/4 33/4 a Glatflt .70 11 233 161 -1/2
n Disney .44 25u12808 65 n GlaxoWel1.19 21 5585 28
n Dole .40 646 381 -3/4 n GIobM • 28 30186 83/4
n DomRes 2.58 17 1975 413/e -3/4.. n GIdWF .38 13 2221 52
n D0naldan .32 18 147 27% +1/4 n Gdrich 2.20 18 u643 7635
n Donlley .72 19 1346 3635 1/2 n Goodyear 1.00 12 4012 481/4
o Dotmbt 12 80 17/a +1/a o GouldP :80 26 1409 21743
'n Dover s .60 21 992 471/4 -3/4 n Grace .50 24 3753 67
n DowCh 3.00 10 6641 77743 -13/4 n Greco a A3 13 263 191/2 -1h
n DowJns .96 20 582 383/4 11 n Graingr .92 19 412 683A -13/4
o DresB 12 397 93/a the n GrdCasn a 15 4461 307/a +45
n Dressr .68 23 11814 281 1/2 o Grand wt 184 8/re
o Ore*. 117/a +'% n GrndMet 1.15 13 709 271% 1/2
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n Jacobs
n JRiver .60
oJapnAr .11
n JeOPks 1.44
nJenCrg •
n JNuveen .72
n JohnJn 1.32
n JohnCn 1.64
n Jostens .88
39 21 41/4 -3/23
22 u630 291/4 +'/a
36 9183 271/e +18
10 13743
15 789 56'/e 1/4
18 488 9743 +'%
13 182 243/4 11/4
2516000 933/4 +1/4
15 708 72 -15/a
19 1308 221/2 11/2
1K
o K-tel 36
n KLM .95 11 190
nKmart 26311
31A
333/4 1A
71/s
n KN Engy 1.04 17 u468 311/4 +1
n KU Engy 1.72 15 237 295% 1/4
a KV Ph A 293 167/a -3/4
o Kehler .18 39 122 12% +1/A
n KCtyPL 1.56 13 8905 253/4 11/2
n KCSou .40 22 1312 46'/4 -343
n KaufBH .30 21 620 153/4 1/2
n Kayd0n .48 15 55 335% +3/a
n Kellogg 1.56 23 1656 771/4 -11
o Ke8yRus 46 3 +'h
o KellySA .80 16 592 283/4 1/4
n KmplGv .57 474 7543
n KerrMc 1.64 1609 603/a ?%
n Keycorp 1.52 11 2164 363 33/4
n Keylnt .74 24 804 207/a -/
n KimbClk 1.84 15 9516 77'/2 -13/4
n KingWd 12 1088 413/4 1/2
o Kinnard 7 75 4 -'%
o KirinBr • 1.16 5 1201/2 • +1
n KnghtR 1.48 21 829 687/a 13/43
o Koala 20 217 121/4 -IA
n Kohls 34 295 593/4 +'h
n Kroger 14 2886 37 -45
n Kubota 1.19 • 1271/2
n Kuhlm .60 19 522. 141A._+143.
n Kyocer 1.07 259 133 -11
ILLY:
n LA Gear 802 21/2
n LGE 2.22 17 208 431/2 11/4
n LSI Log s 2013257 371/2 743
o LVMH .73 82 451/2 33/4
n LaZ Boy .76 14 723 29 -1
nl arrnca fW 91 20 11
n MMM T:5 [U ro[o7 Wrw -rv2-
a MinnMul .76 48 127/a Ye
n MhmPL 204 13 202 28 11/4
a MinP pfA 5.00 70
a MlnPpfB 7.36 1011
a MinnT2 .59 103%
oMWrtc .10 23 368 181/4
n MirRsrt 24 914 421/4 +1/4
n MitsbBk .09 54 211/2 +143
o Mitsui 1.72 1 1791/2 1/2
n Mobil 3.70 19 9579 110543 -33/4
o MOCN 24 19 68 107% 1A
o Modine .60 11 382 243/a -1'/e
n MolBio 576 93/4 +343
o Molex s .06 25 2463 347/s +1/23e
n Monrch .20 56 40 113A
n Monsan 2.76 22 4488 1363A -11/a
n MonPw 1.60 24 2095 217/a +1/2
n Monted 23 57/a
MonSt 1.44 175 183/4 1/8
a MoogA 15 322 173/4
a MoogB 181/2
n Moore .94 9 1395 193A
n MorgSts .70 12 2747 49543 -13/s
n Morgan 3.24 13 u8639 83143 +3/4
n Morrison .37 14 736 16543 -35
n MorKnd , 610802 11/4 -11/4
n Mortonlnt .52 18 4440 381
n Motorola .40 20 16993 573/4 -5/a
oMmPld=n 11 100 25+1/2
n Munsng 34 87% -14
n MurpO 1.30 38 76 42343 11/2
n Musidd 28 505 21/2
o Mycogn 167 183/4 -1/2
n Mylan s .16 20 4892 193 13/43
n NCH
o NEC
a NFC
n NIPSCO
n NL Ind
a Nabors'
n NACCO
n Nalco
o NamTai
o NashF
n NtAust
o NCNB
n NatlCity
o N8Cph
n NData
1.20• 12 31
.54 103
.69 3
1.68 14 1092
.10 8 336
21 -1468
.72 8 134
1.00 15 1732
.02 8 145
.72 11 173
54'%
601/4
111/2
377%
13743
131/8
57
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11
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3.01 92 463/4
1.70 7 88 21
1.44 11 u2197 34
.38 19 12 191/2
.30 38 3626 33543
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n PayCsh 636 4
n Penney 1.92 14 4953 47343 -1
n Pennzol 1.00 604 39 -33
o Pentad's 1.00 14 820 27 11/4
n PeopEn 1.84 15 526 32 +1/s
n PepBoy .19 23 3079 301/2 +343
n PepsiC .80 33 23314 65. ?%
n PerkEl .68 28 942 483A
n PerkF 1.30 14 147 123A
o PetFood 317 31h -Ye
n Pfizer s 1.20 27 8660 66 -2
n PharUpj n .27 30 9196 421/2 -11
n PhelpD 1.80 6 5968 611/2
n PhilMr 4.00 15u209031001/2 +35
n PhilipsEl .80 9 2574 423/4 -'/a
n PhilPet 1.22 19 7593 35 -1/4
o PlotoC 22 4 +5
n Pier 1 .16 23 597 13
o Pinktn 15 377 181/2
n PinWst . 1.00 13 1474 285% 3.5
n PlonrEl .21 19 20343 11/4
n PionHiB .80 26 1785 561/2 +1
n Pionint 1.08 33 14 1%
n PlperJa1 .30 8 50 143% +1/4
n PitnyBw 1.38 13 u9073 51
n PlacerD .30 15992 285/a +1
n PlaybyB 71 u824 10543 +543
n PlumCrk 1.96 12 338 263/4
n PlyGem' .12 262 163k 33/4
n Polarise .60 14 .632 30% -3/4
n Polaroid .60 70 2797 453/4 143
n PlcyMg 581 521/2 1/4
n Polygr .54 23 105 581 -11/2
n PopeTal .76 190 131 11/2
a PortSys 289 11%
n PortGC 1.28 23 1304 31 11/2
o Pawls 514 1545 +44
n Potltch 1.66 11 553 41743 -343
n PotmEl 1.66 41 11604 265% +3/43
n Praxair .38 20 9274 351/2 -3/4
n PrecCst .24 21 214 401 1/4
o PrcOptCp 13 68 1'/2
n Premark 1.08 13 3058 53 -3/4
n Premrin .50 24 -578 321/2 11/2
o PriceCst 18 8334 173/4 -1/213
n Pride 89 23/4 11/2
n ProctGm 1.60 21 12748 831 +Vs
n ProgCp .22 14 529 471/a +343
n PSvCoI 2.04 13 2651 35'/4
n PSvNM 10 779 18 1/4
n PSEG 2.16 11 20309 29 -11%
a PbSt 12 1.32 11 8 19 1/4
n PugetP 1.84 13 1062 25 343
a SunNur 154 21/8 'he
o SunGrds 28 2910 34
n Sunstrnd 1.20 30 850 7435 ?%
o SunResc 2115 31/2
n SunMn . 5687 11/2
n SunTrst 1.60 15 1368 731/4 -1
n Supval .98 14 1781 321/2 +3/4
oSurgLar 814 23/s -/e
o Sybase 14718 34 ?%
o Symntc 49 10088 13143 -343
n SyblTc 23 1175 40 +3A
o Synthe 26 291 415/3e -/e
n Sysco .52 22 1972 321/2 -1
o TCA .56 24 137
n TCBY .20 ' 333
nTCFFna .83 22 501
n TCW .84 271
n TDK :54 52 18
n TECO 1.06 16 1482
n TJX .28 28 u4369
n TNP .88 7 121
oTROLm 22 607
n TRW 2.20 13 1151
oTSllrrc .18 25 ' 14
n Tambd 1.84 21 647
n Tandem 12 1985
n Tandy .80 14 3675
n Tanger 2.00 18 56
oTchnal .58
Livestock
lalLeIllp
n UCarb.7
n UnElec 2.5
n UnPac 1.72
n UnTex .20
n Unisys
n Unisy pf 3.75
n UHMrCr .03
o UHrtg
o UtdNews .90
o USv*k .86
n UsairG
o US BcOR 1.12
a US Biosci
n US Filter
o USHhhC 1.10
n USHme
o USSe18 n
n US Surg .08
n UnTech 2.20
o Unitrin 2.20
n Univar .30
n UnvslCp 1.02
n UnvFd 1.00
o UnvHsp
o Unvlm
n Unocal -.80
o UPenEn 1.25.
n USLIFE s .93
o UtahMed
n UtiliCo 1.76
31
41/8
38314 +1h
91/4
501 +1
251/2 3%
2P/4
201/4 1/a
1335 3i5
88143 3A
1814
48343
10'/8
43'% -11
241/4 +1/8
13'/4
'Cattle - Calves Hogs Shee
Monday. 689 - 1441 11
Week ago 465 - 1735 34
2 weeks ago 635 - 1504 38
Year ago 560 - 1725 20
SOUTH ST. PAUL, Minn. (AP) (USDA) Monday
Cattle: 550. Compared to Thursday, there we
not enough early sales of slaughter steers
heifers to establish prices. Compared to Frida
slaughter cows were steady to firm, with instant
TUESDAY, FEI3RUARY 27.• 1996
Minnesota
reaction
"In the Cray case the
best that can be said is
that it's a friendly
acquisition and the
comrninnent is not to
slash and burn and
disrupt, but just the
opposite.
"Silicon and Cray are a:
nice fit beCause it gives
one company a broad
range of product at a
time when the
industry is going hard
in both directions:
desktop and
supercornputing. Both
companies are very
progressive; innovative
companies on the
high -end side of ;
computing."
— Rick Krueger, president of the
Minnesota High Technology
Council
Employees
Many workers
fret future
as rumors
prove true
By Sally Apgar • •
Star Tribune Staff Writer
For more than a month; ru
mors have been hissing
• through the halls of Cray Re-
• search Inc. that the superciam-
•, puter company was scouting
for a "strategic alliance" that
would position it to compete
in the future.
But Monday, many employ-
ees were shocked when they
fired up their desktop comput-
ers and found e-mallan-,4„,
nouncing that the Eagan -
based tompany would be
quired by Silicon Graphics Inc.
nf Mountain View, Calif.
,
1- 'Fittingly, employees of
high-tech company learned of
the acquisition in high-tech
ways. By 7:30 a.m., a story ex-
plaining the merger was on '
Cray's World Wide Web site,
which gets about 17,000 to
18,000 hits a month.
A 4 p.m. teleconference in
the company's cafeteria '
hooked employees up by satel-
lite to top executives of both
Cray and Silicon Graphics. The
teleconference was set up so
employees could ask ques-
tions, but reportedly not one
asked what was on everyone's
mind: Will there be layoffs?
•"People are in denial," said
one employee who attended
the teleconference but asked
not to be named. Management
"successfully put a happy face -
on it and said not many jobs
would be impacted and people
believed it. They wanted to be- '
lieve it."
The teleconference ended
in cheers and applause; not in
anxious whispers.
"I'm positive about this,"
said David Hoist, who has
been with Cray more than sev-
en years. "I think Silicon is a
strong company. And the two
companies are very comple-
mentary. One does desktop
computing and the other su-
percomputing."
Todd Pisek, who has
worked for the software divi-
sion about eight years, said, "I
have absolutely no idea
whether there will be any lay-
offs. But I'm not going to wor-
ry about it. There's always an-
other place to go."
Despite the rumors, many
employees questioned said
they were blindsided by the
news and baffled about their
job future. Many employees
contacted by phone or in the
company parking lot were so
worried they asked not to be
identified.
One such employee said,
"There's a strong sense among
some of us that we sold out a
little cheaply. And no one
wants to see Cray not be inde-
pendent anymore. And despite
what [management isl saying
right now, we all know this is
going to impact a lot of em-
'• ployees. There are going to, be
layoffs.", y: ,
•
StarTribune
.,1l2Z191
: The deals
Two Minnesota companies with headquarters in Eagan — West Publishing and Cray Research - were swallowed
.companies Monday as the worldwide rise of giant information companies and the demise of bigcom ut uP by bigger
acquired by Thomson Corp. of Canada; Cray will be taken over by Silicon Graphics Inc. of Mountain ViewSCalif. ued West will be
esear
Supercomputer firm has
price tag of $736 million
By Steve Alexander
Star Tribune Staff Writer
• Cray Research,' the Twin Cities area's proudest
_ `. claim to cutting -edge computer technology, fell
victim to changing times Monday with the an-
nouncement that it will be acquired by California -
based Silicon Graphics Inc: (SGI) for $736 million'in
• cash and stock:•
• While supercomputer manufacturer Cray is re-
covering financially after its worst year ever in 1995,
its prospects beyond 1996 were unclear and its
customers were beginning to question whether they
should buy from a company that might not survive.
While Cray disputed that its customers were losing .
faith, some analysts confirmed it.
Cray officials said the firm's board, which had
been seeking strategic alliances.with several other
firms, accepted an unsought acquisition offer from
- '° SGI, a manufacturer of workstations that rival the
performance of Cray's smallest supercomputers;
'The acquisition would make SGI:the leading firm
in supercomputing and 'the only one that could
offer everything from a $10,000 workstation "to a
Craysupercomputer: costing tens of millions of
dollars.
Turn to CRAY on D7 for.
CRAY RESEARCH
about 7,000 employees in more than 120
offices around the world.
"They've been one of the real success
colleagues had experimentedstories of the computer industry ...
gu with a- Sili-=(though) they've faltered a little bit
•con Graphics server and had come away recently," Smaby said. "Their growth has
• unpressed. • slowed somewhat: It's no longer breakneck
of. "We were able to dodata transfers .in `but -just accelerated ::. (and) their stock
and rout of the server at 500 megabytes ` prices have reflected that.
JULIO OJEDA-ZAPATA STAFF WRITER fact, with an increasing share of its busi-
ness coming from film companies. Last .-
year, it agreed to build a film production
More than a year ago, Silicon Graphics facility with DreamWorks, the studio
chief executive officer Edward McCracken :. formed by director Steven Spielberg,
} was met with disbelief and derision when • movie producer Jeffrey Katzenberg and
he told a supercomputing conference that' music producer David Geffen.
his company could compete with the Silicon Graphics was founded by James
Crays of the world. :.• ;Clark, a computer
:"In what was essentiallythe ke ote . P expert who left Stan
keynote ford; University in 1981 to' develop and
f. address of the conference, he, said that Sib.: market 3-D computer graphics technology.
icon Graphics' high -end workstations were-, `The company pioneered a line of 3-D ter-
:; capable of doing supercomputer -class cal-. ' mina's and workstations in the early
'' culations," said University of Minnesota •
computer expert Matthew O'Keefe. "At 1980s. :�
the time, there were a few chuckles Since then, Silicon Graphics has blos-
audience. People thous thought,'He can't bin •
s.the .Dined into an industry heavyweight with
$ serious., „ , . .. ; -; i; '-11-:
But O'Keefe already was a believer.
About a year earlier, he and his university
Silicon Graphics made
.'
desktops superpowered
Silicon Graphics has faced increasing
competition. from. .such rivals as Hewlett-
Packard Co:, which bought another super -
computing firm in September, and the
Intel Corp., which recently unveiled Pen-
. tium Pro chips that narrow the perfor-
atnming-language that has set the Inter-
net on its ear ' = ' and several dozen other companies recent-
But Silicon Graphics is hardly a. Net ly threw their support behind Moving -
also-raiOt=has a-bot-selling line of .Web- . •• Worlds, which is -competing with proposals
_ FORCE •products such as the Indy from Microsoft and other companies to
workstation, which.costs, no: more. than a become the nest VRML standard "�,
high-end:PC_ for creating and maintain. - Silicon Graphics also has worked'with ..
ingWorld-Wide Web sites. .- such companies as 'AT&T and Xing Tech-.
Silicon Graphics is the major force ''� r iiolo Co
behind _Moving?Worlds asystem for dis- a provider of -Net -based
audw: and. video `software, to ;i•evolutaonize -
playing Iona' .Vutual Reality: how sounds and images •are transmi•tted
neapolis-based Grou ,-"If has.do ModelingB (VRML)-imagery'on ;over`com uter;
y. p - ae the. Weh Netscape;Communications, cre- < P phoneand•cabhe networks
SO by allowing, scientists and en ' ears t� 'SGI earned $225 million on revenues7of
gin ator,of the popiilatt Navigator browser, $2.2fbi11ion for last .fiscal a �°
-have supercomput#4;power. tin'4heie.desk Y ar
.. .. � t ` N •u � t -.- ,, ,a F�7.%!• >1c'Y
tops, allowuig them to -visualize
they were simulating:: It's-' a _whole new..
paradigm in computing "
But Silicon _Graphics still needs'Cray
'Research, Smaby said:. '
Its decision to acquire�the.Kagan-b
frm..provides''an entree-into.the iiiarki
• - for $2-million-and-over fcomputers and
•makes°"Silicon Graphics more competitive.•
with. the. IBM. and 'the•Hewlett Packard „
and"the-Digital.Equipments," •Smaby=said`;._
"It gives it more substance and more::
breadth;:-more>respectabilityr and credibil.
tv in coroOrate America "
Supercomputer
market share
SiliconCraphics
Enterprise supercomputers
1995 market: $668 million
Average selling price: more than $1 million
Cray 39%/SGI 1%
Fujitsu �•,
IBM PPS \5% ,
NEC
• Intel SSD
Convex/HP
Other.
lq \
Departmental supercomputers
1995 market: $1,243 million
Average selling price: $100,000 to,$1 million
SGI 35%/Cray 10%
DEC Nl°b
IBM PPS
Other
Convex/HP W°I°
-Source: Smaby Group, Inc.
;per. second, which compares- with a per-. -
' 'sonal-computer rate 'of no more than 3 to
`4" megabytes, the assistant professor'of•-
' electrical engineering recalled. "It
rather shocking. These were data rates we.
associated only with supercomputers.
:: Though the speeds of Silicon Graphics' .mance gap between PCs and workstations.
individual workstations are still slow com- - • : Another growing threat is workstation
pared with those of full-fledged supercom- manufacturer Sun Microsystems, which is
puters, "now it's only by a factor --of 3 or 4' • one of this year's high-tech successes
instead of .10 or 100," said O'Keefe, assis ;because of the -.revolutionary Java pro- •
Ont.; director" of the university's ,Laborato
ly for-Corriputational Science and Engi
nearingAnd•when •you consider that they
cast *10 times less, you're coming out
ahead." -. -.
_.7.7.,Such developments have led lone Twin
Cities analyst to describe Silicon Graphics :_.
of Mountain View, Calif.; as -,"the Ciay :•-,
Research of the .1990s. ' "
"What Silicon -Graphics has -done is
democratize .the, whole supereomputing..r_
`market;" said Gary; Smaby=of= tlie'Mln
ALEX LEARY/PIONEER PRESS.
CRAY
♦ CONTINUED FROM LA
Cray nameplate would continue
= and perhaps be .applied to
some SGI products. after the two -
stage merger is completed by
June 30. . : ment and .aerospace companies -
- "We intend to continue to man- turned to cheaper machines made
ufacture Cray's products here and _;: •. by; companies such as Silicon
do design and development work • = • Graphics, Intel Corp. and Sun -
here," he said. "We value the : - - Microsystemf;
es:
mployees of the company. • • For 1995 • Cray reported a loss
They're a big'part of what this - of $226.4 million, and its revenues
merger is about, making sure. . --fell 27 percent to $676.2 million, x:
they're around to continue their ,,: including $188 million in onetime
great work. ••
:.The combined company's .annu-
al
-But customers placed orders in
'revenues should grow by about . . record amounts after Cray target-
30 percent a year, he said. Per- ed customers with a need for less
share earnings, should grow by -. ;.,powerful computers.`
more° than SCI's ."11 percent to . • Its orders for 1995 totaled $650
14- percent" goal, the company • . million, up 12 percent over 1994.
said Some $437 million of those orders
"And that does not imply -we're were not filled at theend.`of the. ._
looking at a:;fundamental downsiz- • year, the highest -level -Of' year-end
ing'of-the company;„: dermoluk- backlog: in the company's -history;
said. .".We to • • - More-than•:40 percent of Cray's
,employment -here gomgup-or -business. came from new cus-
down..But .this is,not:`an�overlap •. torners. more:
than
.half from
:-situatio ._ _�.
n :where someone moves ,newly announced products.
.; .intandnooks • to get, rid .of; -large • -. • .More;recently,- though, some
parts ofa company,: In.•this.case, • customers have, reportedly put off
we don't have thatYmuch'over- • delivery,- expressing.worries about
lap ff
-' ,Cray and' SGI said. the fit Cray s-long-terns chances.
Y :"Although I-think'they would:.:
• together well, strategically..and have rebounded without:help, ': -
culturally y �, when•the•customers start to
"There's some overlap, said stretch -out buying decisions, when
Cray�President Bob-Ew.ald.`."But:..: the: customers .start to hesitate, ::
not: a..tremend- amount'1The that's disastrous," said Rich Par -
businesses war ,''more comp emen- tridge, • analyst at -D.H.: Brown
4WD t _ 1
Associates'im<Port'Chp_ster • N V
opposed to building the most pow-
erful computer: We'll take care of
that part of the equation."
The Cray acquisition greatly
improves SGI's competitive posi-
tion against Hewlett-Packard,
puting, the highest performance IBM, Digital' Equipment and
computing in the world," other companies that offer prod -
McCracken said. "It's a national • uct lines that run from desktop
asset. People have come to asso- machines to supercomputers.
ciate the Cray name with Ameri- "SGI has been very strong in
can leadership in computing and • desktops," said analyst Gary
..; the security of the country itself." Smaby of the Smaby Group. "But
Silicon Graphics (SGI) said it ; .. • they don't have the sales and sup-
-.was too early to tell exactly how port infrastructure of their well -
the companies will fit together heeled competitors. And they're
;,and what the impact will be on _ . looking to Cray to give them that
Cray's employment. About 2,800 • • ability at the level of multimil-
of Cray's: 4,225 employees work lion -dollar systems."
yin Eagan or ,Chippewa Falls, Wis. _Since its founding in 1972, Cray `. s
But McCracken said the .com has dominated the supercomputer
biped company, which would industry and was the U.S. Stan-
-employ about 10,700 people, prob- dard-bearer .in a contest for brag
ably won't need to fire anyone. , - - ging rights about who made the
"We think we can support this . world's fastest computers.
, level of people," said McCracken, It was founded by Seymour
„who holds engineering degrees ,: Cray, a computer designer who
from Iowa State and Stanford • left Control Data Corp. to try his
universities. "There are some syn- new ideas for very powerful
ergies there."--- . • machines. He left to spin off a-
Tom Jermoluk, SGI president, second supercomputer company,
said Cray's local operations will : • Cray Computer Corp., in 1989.
remain. And he promised that the ;x But that company went out of
:business •after filing for bankrupt-
cy protection last March.
.In recent years, Cray Research .
";-has suffered as the U.S. govern -
Researcti, Smaby said.'" •'
Its decision to acquire the Eagan -based
firm provides an entree into the -market:•',_
-for '$2-million-and-over-computers and : °
makes "Silicon -Graphics more competitive y:
with the. IBMs and the Hewlett-Packards
and the Digital Equipments;" Smaby • saidd�
"It gives it more substance and more
breadth; more respectability and credibili '"'
ty in corporate America." ,
Silicon Graphics has a major share of •:,
the visualized computer market, in wtuch `'
souped -up 3-D workstations are used to �Lar
design everything from autos and air-
planes to Terminators and tyrannosaurs."
Anyone who recalls the rampaging beasts4;._
in "Jurassic Park," the thumping heart m
"The Mask" and the Forrest-meets-JFK
scene in "Forrest Gump" has seen SilicoAs.
Graphics technology in action.
Silicon Graphics has become a major
player in the entertainment industry, in
e rampaging'beasts of
Crays Wisconsui wor
FROM NEWS SERVICE and STAFF REPORTS
On their way to work Monday, many • Cray Research Inc. work-
ers in Chippewa Falls, Wis., heard news reports of the company's
sale to Silicon Graphics. : -.• : , ,
When they got there, they read the words they'd hoped to hear.
"Plans are to maintain Cray activities and employees in exist- ,
ing locations," workers were told in a letter announcing the
merger. "SGI will retain the respected Cray brand name . and
establish Cray as an independent business unit with a substantial-
ly intact management, work force and sales force, with consider-..
able autonomy."
Silicon Graphics, a California -based company, announced it
would buy supercomputer maker Cray Research for about $730
million.
David Slowinski, a computer scientist at•Cray's Chippewa Falls
facility, said it appears that most of the employees he knowsare
optimistic about the change:. .. _
"We've been told they won't be downsizing. And they (manage-
72 .. , Comput:
er architect
rour Cray, a former.,:~
Control Data
employee; teams
"up with associates:::
to found Cray
Research, head-
quartered in
Chippewa Falls,
Wis. Its mission:.
. making large-scale,:-.%
scientific and engineering computers,
March 1976 -Cray, Research` makes.
its first public:stock offering and ships Its
. first product; the CRAY 1
1978 -Cray receives'its first cornmer
cial customer order and opens its first °'.- -
international operation, a.business center
in the United Kingdom.
-,y, 4
"Jurassic Park"'were•SIIIcon Graphics creations
s it„•
ers nuoye
ment) said there might be some manufacturing Move to Chippe-
wa Falls. I don't know about Eagan. But people there are feeling
positive, too . i'. however; until details are known people will be`
concerned."
Workers at the Eagan headquarters were briefed late Monday
afternoon and generally were unavailable for comment. The
company .declined requests for newspaper -access Jo- company
grounds. -' . •.
"My impression is that the technical people are feeling pretty
happy," Slowinski said. "There is a shortage of technical talent in
the industry. Right now people aren't being prepared for layoffs."'
Development officials say the sale should mean good things for
both companies. '
"We're hoping the new company will stabilize the work force.
in the Chippewa Valley and eventually grow it as well," said
William McCoshen, secretary of the state Development Depart-
ment.
This report contains material from the Associated Press and Staff Writer Don
Ahern:. ... a..
982 ,::--.Cray discontinues its•origins
CRAY1 system, replacing it withthe (
a supercomputer three to five times
faster than its predec•essor and th•e first
•
to feature "multiprocessing operations.:
June 1985 - The advanced CRAY 2
computer system debuts. Manufacture of,
the line is dropped four years later, but:
maintenance and support functions
continued.
March 31, 1987 -Cray stock'
reaches its all-time high, $1245/8.:
1989 Cray Research spins off the •
CRAY-3 project with founder Seymour Cray
leaving to create Cray Computer, By
1995, the spinoff company is in.
bankruptcy proceedings.
— Cray begins to feel the effects
of the Cold Wars' end, with government's°°:
agencies and weapons laboratonescut
ting back on supercomputer purchases
June"1990 Cray enters the mini
supercomputer, market by ,corripleting th
acquisition of Supertek Computers:
d 4 }
ebruary 1992 During Twin 'Cities
fund-raising stop, -Vice President Dan
Quaylestops at Cray Research to tour
company and address employees (below).
RESEARCH, INC.
•
Cray and SGI :Y . ,
said�the Y
`together well, stra tegicall -A
nd
culturally Y a
"Thecae's some Qt-
'Cray president;.'&
:not. a' treirien
' busmessies
tart". Cray -domes=at rfiefcomp i
market from;:the very liigh E
he said, --`selling some mach n
I -that-costFtens of uu1L
lars ;•
M-
kiab
maiket'i
.paters; =f�
con. Graphcs
I�
ut
machines°Lig $100 00ui_.� w Cra
Y mean
et.share,and Gray IO:per_,::
cent.
_ "We seek to design h-perfor=
, manse Systems-and=leverage ,the,- .:
technology down::(to other-- man
Ikets),"Ewald said.' "SGI _comes =: from the other _direction,_pushmg
price. and performance envelopes
i In the middle is cohere we. believe`: • there is treipendous.-synergy and:.
potential to.create a mu
million, sGI had a 35_'000: to:.S2:.
mark P��? cent.,
potent companymuch, more-.„
1 We will have mputersmalll board.e
i way from the desktop to the --�.,
biggest and most powerful corgi-;_ _
Iputers in the universe." .
At least, the known universe:: --
The deal, Ewald said, lets each
I company concentrate_ on what it:
i does best •: - - • •. ,• •, :
• "This will allow Cray people• to really focus on the high end,' he . r. said. "And Silicon Graphics' pe0.. -
ple can spend more time on high
!performance visualization and _,.-
iscaling up desktop computing; as
are 29; 1
John Rollwagen;
Cray CEO `: is'no
• nated for depot
commerce `secretary ,:
by"President Clinton.:, -
He withdraws four
months later after
•critics stall nomma "
tion"by raising ques=
tions about 'various ;,
Cray business activi
ties.
January'1996'=
Cray Research
reports fourth -guar-
ter losses of $25.6
.million,. or. $1 per" :1
share
Feb. "26, 1996. Silicon Graphics
purchase of Cray Research is announced:'
ueuver expressing worriesabout^
Cray's •long-term chances. .;.
`•`Although:I think they :would
have: rebounded without help,:-
whenr;the customers. start.,to..::.
stitieteh -out:. buying
decisions,;whei
the Customers..start -to hesitate
that's:disastrous "said Rich ar;
tridge,',aclalyet•at DI Brovi
Associates: iri"Port: Chester!":
,Several- Wall Street analysts
-'weren't overly keen on the deal,
downgrading -than. recommends
tions:on Silicoli Graphic's. stock;',
which tumbled 8• percent,,and .was
•
t:'the: second -most -active issue :on
.'the=New York`_Stock Exchange:;_-' -
It closed down. $2:13 a -share to;;
$25.38: Shares •
while, climbed $3.25 to $28.50. ; .'`
One analyst.said the company
might have a hard ti-..- -
+ue selling
the deal on Wall Street;.- r
"When you're buying a compa. ,
ny- that had 'its;:heyday in the:'80s;'
.and;you're w •.
•
whY'huy sthemhe?"the game,
have to come up•
i said. They 11
reasons: with compelling
why the ;Cray franchise
"and.ofganization are cornplemen
tart to SGI and will improve.
overall margins." '- _ - .
Conrad Leifur,- an analyst for
. American Express Mutual Funds
in Minneapolis, which owns about
3 percent of SGI, liked the deal,
though.::..,;:;
"It makes financial sense," he
said. "It should add to their earn
ings. And longer -term, there are
potential strategic benefits, relat °=
ed to the fact. that they'll have a .; `
lock on the high end of the com--
puting market." .
The Associated Press and Bloomberg `
Business' News contributed to this , IPnnrf_,
•
MARK co: PHICLPS /ASSOCIATED PRESS
ecu Extives`of Silicon'Graphlcs'and Cray,
Research gather Monday for the pur
chase announcement. From the left are
Cray President Robert Ewald, Silicon
chairman Edward McCracken, J. Philip
Samper, Cray chairman, and Thomas
Jermoluk, Silicon president.
•••
Sir& -v16.•=4311211b
Eagan mayor ho e ul over future of West, Cray
-•
By Jim Adams
'Star Tribune StaftWriter
-;•' Eagan Mayor Tom Egan wants
• to believe the recent buyouts of
Cray Research and West Publish-
ing will assure viability for the
city's two largest taxpayers.
"It adds stability for two very
important corporate residents
and taxpayers of Eagan," Egan
said. "But it does raise a certain
level of concern for the future,"
especially concerning Cray,
which employs about 900 in Ea-
gan.•
Egan remembers all too well
what happened to Sperry Corp.,
which in the 1980s used tax incre-
ment •financing to construct
buildings to house 3,700 employ-
ees on its 212-acre site in Eagan.
Since then, Sperry has merged
with Burroughs, sold off several
divisions and now employs fewer
than 1,000 workers in Eagan, the
mayor said.
<r+
Egan, who heard merger rum-
blings a month before the $3.4
billion West deal was announced
Monday, said he is cautiously op-
timistic that West will remain a
major employer at its 264-acre
headquarters. He said West,
which has 6,700 workers, recently
added 300,000 square feet to its
1-million-square-foot facility. •
"That indicates to me West's
intention to continue to have a
major physical presence in Ea-
_
gan," Egan said: He said that - community center for which pay about $3.
buyer Thomson Corp. of Toronto West contributed money. .
has promised that West will con- Egan is less optimistic about
tinue to be based in Eagan and the future of Cray Research,
that its legal document publish- which was sold to Silicon Graph-
ing business will expand. ics of Mountain View, Calif., for
When. West. moved from.$736 million.
downtown St. Paul to Eagan in "I sense a threat that Cray may
1992, it was placed in the single- relocate workers elsewhere,"
use commercial category, earning Egan said. "It is more likely to
it a lower tax rate than property slim down because of redundan-
used for multiple projects, such cy in what they and Silicon
as a shopping center/apartment. Graphics do.
development. The company re- He said Cray dedicated its 212-
ceived no other financial induce- acre location in 1990 and re-
ments, the mayor said. • ceived no tax increment financ-
_ Egan said he is concerned that ing or other inducements from
the loss of local ownership may Eagan. •
mean less support for community West is Eagan's largest taxpay-
projects, such as the YMCA and er and employer. The firm will
•
5 million.in propel
ty taxes this yearjpcluding abo4t
$400,000 to Eagan, Officials said.
West • is . Dakota •. Countys
fourth-largeSt tapayer- and:.Cr4y
its sixth-largeit,:.gaid-Onnty
sessor Marvin PiiijiiThe'coiitycs
three largest taxpayers are •INISP,
Burnsville Center and Dakota
• ...•
Electric.
Cray is Eagan'ssecond-largest
taxpayer and seventh -largest ein-'
ployer, said .• '.Filiance.: Director
Gene VanOVerbeke.. AhOut
$233,000 of its $2.1 million_ tax bill..
this year will go to the cIty. Cray
and West account for about
percent of the city's :tax reveriiie,`:
VanOverbeke said• .
•
• ---,.. , ..•-.
FoLeK
5.Tsi bS