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Technology Stocks : Silicon Graphics, Inc. (SGI)
SGI 93.81-0.5%Dec 12 3:59 PM EST
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To: Leonard Golub who wrote (2007)7/25/1997 9:35:00 AM
From: Jeff Maresh   of 14451
 
Leonard - You bring up some interesting questions on BTB. If you want a fair comparison on BTB, compare SGI with SUNW, DEC, IBM, and perhaps HWP since these are SGI's direct competitors in the Unix server market. Please post the numbers if you have them. You can argue the BTB two ways. If there is a declining BTB, you can argue 1) manufacturing problems have really been straightened out and they are getting product out the door, or 2) demand isn't strong. I believe 1) is the case here.

>1. The book to bill is weak at .84. It looks as if the last qtr, while excellent, was
>merely executing on producing product ordered in the qtr. before. Contrast this with
>Dell who gets the thing made THAT DAY, thereby reducing its backlog to basically
>0.

I like the guidance SGI gave to analysts this time. I think it's almost ridiculous that stock prices move so much based upon beating the ACE. It's some number that analyst's pull out of thin air. If you beat expections, the stock soars. If you don't beat it by 5%, the stocks gets pounded into the dirt. Mr. Market doesn't seem to care about year-over-year comparisons anymore. MSFT is a master of downward guidance to continually beat estimates. The strategy really works.

>2. Can mgmt continue to make improvements or will they get fat-headed from
>beating estimates that they purposefully gave no guidance on in order to surprise?

Regards
Jeff
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