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MOUNTAIN VIEW, CA-Computer hardware maker Silicon Graphics Inc. is subleasing its 500,000-sf Amphitheatre Technology Center campus here to the Internet search engine firm Google Inc.

SGI, which in May announced 400 layoffs (10% of its employees), says it will consolidate its operations onto its Crittenden Technology Center campus also in Mountain View, where it will lease more space. Google, which will relocate its 800 employees to the Amphitheatre Technology Center campus and still have room for future expansion, has not said what would become of its current headquarters at 2400 Bayview Dr.

SGI says it will vacate the Amphitheatre campus in stages beginning this month and complete the relocation by August 2004. The lease transactions are expected to result in a net reduction in SGI’s facilities occupancy costs of $14 to $17 million per year beginning in July 2004. Meantime, it will cost money, according to the company’s SEC filings.

During the transition period, SGI says it expects to make a $1 to $3 million net investment in costs associated with the move, and will recognize additional non-cash charges currently expected to total approximately $18 to $20 million. In subsequent years, SGI will record additional non-cash charges currently expected to be approximately $3 to $8 million per year over the term of the sublease.

How much more space SGI will need to lease at its Crittenden campus is either not yet known or not yet being made public. “(The sublease and relocation) reflects our determination to bring expenses in line with revenues within the organization,” said Bob Bishop, chairman and CEO of SGI. “Consolidating our headquarters operations within our Crittenden campus will also allow us to create a more collaborative work environment for our headquarters employees, while maintaining our presence in Mountain View.”

At close of trading Friday, shares in SGI stood at $1.21 a share, up $0.06 on the day but $0.65 off its 52-week high of $1.85 that was achieved in late March of this year. Its 52-week low of $0.56 dates back to October.

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