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Technology Stocks : Silicon Graphics, Inc. (SGI)
SGI 91.52+0.9%Nov 28 9:30 AM EST
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To: brushwud who wrote (628)1/15/1997 3:45:00 PM
From: Simon   of 14451
 
SGI Employee making personal statements. All facts are publically available.

I'll tread carefully here, trying to stick to what is obvious without inside knowledge. As an external person to Cray I suggest the following :-

NEC supports its supercomputer business as fringe activity.

Cray is the market leader in the REALLY high end of supercomputing (mid-range supercomputers are a different, more widely contested market which is why the T3E line merges into the SGI Origin line on our roadmap).

Hence, NEC is on the weaker market position, and will feel higher margin pressure than Cray. Cray cannot sell supercomputers at a loss regularly since that is their only market, and despite secrecy on deals, general word does travel in these circles. The deals concerned in this NEC anti-dumping suit are truly high end supercomputers, which is the core of Cray's business.

So put that lot together, and try to guess the liklihood of NEC selling at a loss to secure a Cray customer, and the liklihood of Cray cutting its throat by setting a margin cutting precedent.

I make no statement on any specific deal or situation, simply an observation of the facts.

I'll also add that Cray's complete dominance in the really high end shows extremely strong technology (and hence people), which combined with the brand name and client set are the three invaluable assets that Cray had on arrival in SGI.
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