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Technology Stocks : Silicon Graphics, Inc. (SGI)
SGI 92.07-1.5%Nov 11 3:59 PM EST
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To: Jane Hafker who wrote (10019)5/7/2002 5:12:42 PM
From: Maher Sid-Ahmed  Read Replies (1) of 14451
 
Jane the reason the stock is moving lower is mainly due to:
1. Extremely weak management team. Bishop cannot be trusted as a manger. Although, he has purchased 100,000 shares out of his own money to show confidence in the future of the company, he has not be able to deliver quarter sales as per his estimates. The 100,000 shares he bought convinced some investors that this was going to be a great quarter - it turned out to be a weak quarter.
2. Sales falling quarter to quarter.
3. Negative book value.

There are however some positives:
1. New products with the possibility of increasing revenue.
2. Government contracts.
3. Alias/Wavefront which could be worth more than the market cap of SGI.
4. An impressive list of customers.
5. $200 million in cash and some real estate.

The big question, can these guys deliver? So far no.
They have pissed away all their real-estate and over $600 million in cash over a short period. They are now rebuilding their cash position and trying to maintain a break-even. They are still not out of the woodwork and may have a way to go to prove themselves, and hence ranked by most analysts except one as a hold. One analyst recommends it as a strong buy, but I would take this with a grain of salt.

If they cannot improve sales they should sell the company. The company with Alias/Wavefront should be worth about $1 billion or ~$5 per share.
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