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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 87.31

+3.2%

Nov 21 3:59 PM EST

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To: Jim Davison who wrote (1621)	6/17/1997 6:25:00 AM
From: Jeff Maresh	of 14451

Hi Jim - They are changing their marketing strategy as they reinvent the company. There were statements made over the past 6 months that they were going to do more targeted advertising - which the WSJ is not. They also made a statement during the last conf call that 45% of their sales are through partners. They appear to be moving more in this direction since they just closed this recent deal with another reseller. IMO this may be the most effective way to penetrate new markets. The continuous full-page ads in trade rags (particularly database) by all of the major players go mostly unnoticed by decision makers. IMO they could make more inroads by having a bigger presence at the big trade shows. If they partner with some big solution providers (Andersen Consulting, KPMG, etc.) they might penetrate those markets better than advertising in nontrade pubs. For database systems, they have to convince the techies that evaluate the equipment and right now they haven't sold enough systems to draw a lot of attention. Everybody buys Sun, HP, and DEC for 64-bit systems. >Most recent issue of >Byte doesn't even carry a single SGI ad -- probably revenge for Byte's screwed-up >benchmarking tests of their O series, but still kind of low-profile for a company that >used to take out full-page Wall Street Journal ads. I wouldn't expect them to be fully ramped up until the end of Q1 at the earliest and end of Q2 would not be unreasonable. These are big rollouts and it takes time to ramp up production. Remember that 80% of everything they are shipping is O-series now, they have undergone a major reorg, and they have a new Info Mgmt System. It's going to take some time to work the bugs out of the new system. But I think they have made the aggressive changes necessary to compete in these new areas. IF things are managed properly, they will pay off. >Maybe their real problem is in the manufacturing area. Any thoughts here? Regards Jeff

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