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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: V Lakshman who wrote (2021)	7/25/1997 12:11:00 PM
From: James M. Bash	of 14451

> He expects 10%-plus profit margin I believe he was referring to operating margins, which for this last quarter were 12%. For deriving earnings you would need to use net margins (after taxes, etc), which for last quarter were 9%. Also, yesterday's statement shows the most recent "common and common equivalent shares used in the calculation of net income per common share" to be 183.5M. So: 3,663 * 1.15 * 0.09 / 183.5 = $2.07 eps which at a share price of $36 (1.5 PSR) would give a P/E of 17, which still doesn't sound too out of line. (Of course, this is all presuming he is correct in his predictions and guidance; as we all know he has been off in the past...) The other thing to consider is their tax rate for this last quarter was 21% (I'm guessing due to tax loss carryforwards), so presumably as their tax rate gets back to normal their net margin would shrink some. Anybody have any insight as to how fast this will happen?

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