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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 92.28

+2.4%

Dec 10 3:59 PM EST

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To: kvogel who wrote (1222)	4/25/1997 11:02:00 AM
From: Jeff Maresh	of 14451

Kvogel - IMO the effect of rumors/newscasts on stock price has more to do with PSR than the validity of the rumors/newscasts. SGI currently has a PSR around 0.7. INTC and networking bunch range from PSR 7-15. According to Fisher's historical analysis, these high PSR stocks are on the edge to begin with. Given a high PSR stock I think rumors/newscasts can have a sizable effect. >A negative > perception can have a sizeable effect on a stock even if it is not well founded. Just >the notion of competition from INTC scared many of the Networking stocks even >though they certainly aren't getting into the systems or switching business. Where are you coming from with your comment about SUNW? A lot of hysterical folks last week were hoping for the same thing. SGI current assets net of long-term debt is $1,594M. Their market cap is $3.4B. Sun has $2,887M in currents assets net of LTD and a market cap of $10.7B. So by the numbers, it is definitely within SUNW's grasp. However, I think by the time that SGI has a couple of good quarters which is the minimum amount of time to put such a deal together, SGI's market cap could be more than double the current value. And do you think it would be a friendly takeover? Also, I think Sun would have difficulty coming up with a seamless product line unless they simply trashed Solaris and all of their hardware. Hey, this might not be a bad idea afterall. ;-) >Also I can't believe SUNW is >not looking at SGI as a takeover candidate at these prices. Regards Jeff

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