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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 93.75

-0.6%

Dec 12 9:30 AM EST

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To: Bill Holtzman who wrote (1392)	5/10/1997 3:25:00 PM
From: Jeff Maresh	of 14451

Bill - Here is my take on SGI marketing. I knew a guy who was an SGI salesman since around '89 who left in mid-95. (BTW it was my cue to sell my entire position in the low 40's for a tidy profit) He said that the reason he left was because SGI's market was changing from high end to low end. When he started with the company he was sell a lot of stuff to DoD and closing $100K-$500K sales. He lamented that now he felt like a PC salesman because he was selling "onesies and twosies" to local architectural firms for CAD work at $20K/system. He didn't like the shift so he left. He thought it was rather demeaning. So if some of those folks are still with the company, they are probably feeling the same way. But I think the problems were are discussing here are MARKETING problems, not SALES problems. I am seeing some positive effects occuring on the marketing side which will eventually filter down to the sales force. For example, on the Origin server side which is where I think the future of SGI lies they are pulling some major coup de tat's against IBM, Sun and HP and that is a positive sign. I'd call this prudence. I think this beats simply sitting in their glass outhouses and launching a big marketing/sales effort that falls flat on its face because they failed to understand the market. I am seeing a pattern of such prudence by SGI management over the past few years. There are many but consider the server market for example. They stripped the graphics off of Power Challenge and sold them as big scalable Oracle servers. Once they proved the market and learned what worked and what didn't based upon direct and indirect customer feedback, they develop the Origin line. They did the same thing with O2 to combat NT boxes. So what appears to be perceived as slowness to respond by a lot of people, I perceive as careful strategic planning. Granted, I am a bit frustrated because most of the time when I talk to customers about SGI server products, they question my credibility because "I'm recommending a graphics box". But I'm willing to give them some time here to work through their marketing plan. This is one of the biggest risks I see. But throwing TJ overboard last year and the recent shake up is a good sign. Of course Bishop still runs World Trade but its possible he had his hands tied by old management. So stick around for awhile and see what pans out. Regards Jeff

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