High-performance computer maker Silicon Graphics (SGI) is to lay off more than 400 employees and will restructure its business to "focus on growth areas".
The layoffs are designed to preserve what SGI described as "customer-facing activities" and move the company back to profitability.
SGI reported a loss of $35m (£21m) for the third financial quarter ending 28 March, compared with net income of $10m (£6m) for the same quarter a year ago.
The company indicated that its work in the defence sector and its Altix line of servers and clusters based on the Linux operating system were bright spots.
The cuts will reduce SGI's quarterly expenses by $10m starting with its 2004 first quarter, largely because of reductions in the company's operating expenses and improvements in its gross margin.
SGI expected to record a restructuring charge of between $15m and $20m in its fourth quarter ending 27 June.