Irv - Here are the latest earnings revisions. Hopefully it will save some folks from jumping off a cliff for at least another quarter.
As to the issue of the backlog being down by 6% over last quarter, you can look at it two ways. If you are a bear, the argument is that bookings are down. If you are a bull, the argument is that manufacturing finally got their act together enough to keep up with sales. I'm in the latter group.
As far as when SGI will rebound, the way the shortfall was handled this time was not in the best interests of the shareholders and IMO will damage shareholder trust of management. So I'd say its going to take 2 quarters of delivery as expected of management before people start to believe in it again.
As for the ongoing problems, what we are seeing here is still not atypical of high-tech companies. Judging by all of the whining, hair pulling, hand wringing and other forms of generic vitriol on this thread, it appears that a lot of these folks are naive about product cycles and unexpected problems that are part and parcel of the high tech industry. Granted, this is a long and difficult time for SGI and the shareholders, but I wouldn't write off the company yet.
The margins are definitely lower and this is not **necessarily** a bad thing for the short term. I have a copy of an excellent report written by James E. Moltz of C.J. Lawrence dated 4/24/96 entitiled "Buy a Bulldog". The report discusses about 35 companies that have a history of lowering margins even to the point of losing money to get more market share. His recommendation is to buy these companies when they go through one of these phases. MOT is the only high-tech company on the list because CJL deals mainly with the stuff that would interest their institutional investors. But he casts the bulldogs in a favorable light and recommends buying them when they go through one of these cycles. IMO SGI is in the middle of such an exercise now. I do hope that the steep year-over-year increase in SG&A expenes are more "S" than "G&A".
Regards
Jeff
MOUNTAIN VIEW, CALIFORNIA, U.S.A., 1997 APR 17 (NB) -- By Bob Woods.
Silicon Graphics, Inc. [NYSE:SGI] said revenues for the third quarter
of fiscal 1997 were $909 million, compared to $677 million in the same
quarter a year ago.
On a pro forma combined basis, Silicon Graphics and Cray Research
revenue grew 15% from the $788 million in the comparable quarter a year
ago.
SGI's net earnings per share was $0.09 per share excluding Cray
Research merger charges. These charges consisted of approximately $6
million of merger charges relating primarily to the purchase accounting
effect on gross margin from the write-up of inventory and service
contracts to fair value at the time of the Cray Research merger, and
other merger related expenses of $2 million.
The company's net income for the third quarter after merger charges was
$11 million, or $0.06 per share, compared with net income of $53
million, or $0.31 per share, in the third quarter of fiscal 1996.
Newsbytes notes SGI released its quarterly figures after Thursday's
stock market close.
SGI: JOSEPHTHAL LYON has reiterated estimate for fiscal year
ending 06/97 of $0.93 on 04/09/97
SGI: JOSEPHTHAL LYON has reiterated estimate for fiscal year
ending 06/98 of $1.98 on 04/09/97
SGI: JOSEPHTHAL LYON has reiterated estimate for long term EPS
growth of 25.00% per year on 04/09/97
SGI: JOSEPHTHAL LYON has reiterated estimate for quarter
ending 03/97 of $0.28 on 04/09/97
SGI: JOSEPHTHAL LYON has reiterated estimate for quarter
ending 06/97 of $0.57 on 04/09/97
SGI: HAMBRECHT&QUIST has reiterated estimate for fiscal year
ending 06/97 of $0.63 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for fiscal year
ending 06/98 of $1.50 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 03/97 of $0.22 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 03/98 of $0.35 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 06/97 of $0.46 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 06/98 of $0.51 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 09/97 of $0.26 on 04/10/97
SGI: HAMBRECHT&QUIST has reiterated estimate for quarter
ending 12/97 of $0.38 on 04/10/97
RECOMMENDATION CHANGES:
SGI: Major Broker reconfirms the recommendation as Strong Buy
on 05/05/96 |
