By Tiernan Ray
Hewlett-Packard Enterprise (HPE) this afternoon said it will purchase venerable supercomputing technology maker Silicon Graphics (SGI) for $7.75 per share, for a total consideration of $275 million, net of SGI’s cash, driving SGI stock up $1.62, or 27%, to $7.60, in late trading.
Hewlett said the deal will be neutral to its earnings in the first full year following consummation, which is expected in Qof HPE’s fiscal year, the September quarter.
Hewlett’s Antonio Neri, the head of its “ Enterprise Group ,” remarked that “SGI’s innovative technologies and services, including its best-in-class big data analytics and high-performance computing solutions, complement HPE’s proven data center solutions designed to create business insight and accelerate time to value for customers.”
Here’s further rationalization from Hewlett:
GI products and services are used for high-performance computing (HPC) and big data analytics in the scientific, technical, business and government communities to solve challenging data-intensive computing, data management and virtualization problems. The company has approximately 1,100 employees worldwide, and had revenues of $533 million in fiscal 2016. The explosion of data — in volume and variety, across all sectors and applications — is driving organizations to adopt high-end computing systems to run compute-intensive applications and big data workloads that traditional infrastructure solutions cannot handle. This includes investments in big data analytics to quickly and securely process massive data sets and enable real-time decision making. High-end systems are being used to advance research in weather, genomics and life sciences, and enhance cyber defenses at organizations around the world. As a result of this demand, according to International Data Corporation (IDC), the $11 billion HPC segment is expected to grow at an estimated 6-8% CAGR over the next three years1, with the data analytics segment growing at over twice that rate. SGI’s highly complementary portfolio, including its in-memory high-performance data analytics technology, will extend and strengthen HPE’s current leadership position in the growing mission critical and high-performance computing segments of the server market. The combined HPE and SGI portfolio, including a comprehensive services capability, will support private and public sector customers seeking larger supercomputer installations, including U.S. federal agencies as well enterprises looking to leverage high-performance computing for business insights and a competitive edge.
SGI’s CEO Jorge Titinger spoke of the company’s “high-performance data technologies and analytic capabilities, based on a 30+ year legacy of innovation,” saying they “complement HPE’s industry-leading enterprise solutions.”