Hewlett Packard Enterprise is buying SGI in a $275 million deal that it hopes will give it a major boost in big-data analytics and high-performance computing.
It is the latest surprise development at HPE, which has continued to make big changes since it was formed in the break-up of the old Hewlett-Packard last year.
The deal to buy SGI, announced Thursday, fits with HPE’s goal to expand its data analytics business. It will also make HPE a bigger player in high performance computing, a growing part of the server market.
SGI has roughly 1,100 employees worldwide. On Thursday, it reported a net loss for its last fiscal year of $11 million, on revenue of $533 million.
“Not only will the acquisition of SGI strengthen HPE’s position in the high-growth big-data analytic segment, it will also extend our presence in HPC verticals,” including government, life sciences, higher education and research, manufacturing and supercomputing, said Antonio Neri, head of HPE’s Enterprise Group, in a statement.
SGI’s in-memory high-performance data-analytics technology, in particular, will bolster HPE’s position in the HPC server market, the company said.
HPE faces challenges of its own since the split from HP’s printer and PC group. Like other legacy technology companies, it’s been struggling to adapt to the new business model of cloud computing.
So far this year, HPE has killed off its public cloud service and announced plans to spin off most of its IT services division into a new company jointly owned with CSC. It’s also seen several top executives announce plans to leave the company.
This deal isn’t the first time SGI and HPE have joined forces: SGI’s NUMAlink interconnect is part of HPE’s Integrity servers. What remains to be seen is whether acquiring a storied name like SGI can give HPE the boost it needs.
First and foremost on the positive side are SGI’s continuing advancements in HPC and analytics products based on Intel silicon, said Charles King, principal analyst, Pund-IT.
“That is highly complementary to HPE’s technology and business focus, meaning that it should be easy for the companies to find common synergies,” King said.
Another significant benefit is the price.
“When you consider some of the lofty valuations of recent IT acquisitions — many of which were unprofitable or marginally so — HPE’s purchase looks like a terrific deal,” he said. “That will be especially true if projections for continuing healthy growth in sales of HPC and advanced analytics solutions come to pass.”
The transaction is expected to close in the first quarter of HPE’s fiscal 2017, which ends in January.
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