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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 92.96

-0.9%

Dec 15 3:59 PM EST

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To: Bill Holtzman who wrote (2857)	10/6/1997 8:04:00 PM
From: Jeff Maresh	of 14451

Hi Bill - and everybody who is still not wild eyed.... I'm not a short-termer so this to me is a marginal issue. Historically they are ironing out issues that are not recurring. Last year it was Cray integration. In April it was manufacturing. From what we know at this point, both of those are solved. The technology is sound and at least on the server side they've broken every significant record that counts in the last 9 months. Noted that some have been retaken but that's pretty typical in this business. As I've stated for over a year now, MARKETING is the key to survival of any tech company and I've noted my skepticism on numerous occasions. Top technology isn't necessarily what wins the game but it sure helps. The fact that they don't have a presence in trade rags or the big database shows has worried me all along. But they have a server line that is viable for 3-4 years so I'm STILL not that concerned but less bullish than I was a couple of months ago. If they act as aggressively on marketing as they did to develop technology, focus on web and database servers, and manufacturing, they will be successful. But it is going to take 6 months to put an effective marketing campaign together and a lot more cash. What does bother me is that they could have warned at the meeting at the beginning of September and didn't. They obviously knew about the shortfall back then. Just as they've tried to establish credibility with Wall St., they do the same thing again that got them in the dog house the first time. The effect here is that without out trust from analysts and institutions, they aren't going to recommend or purchase the stock and the PE will remain lower than it would otherwise. So at this stage of the game, we could be looking at another 3 quarters (assuming marketing comes together) before the stock moves quite a bit higher. It will continue to be maligned by everybody until they start 1) to be forthright with analysts and 2) can show that they really can put 2 or 3 good consecutive quarters together. I will reevaluate at the end of the year and see where marketing is. They stated a quarter ago that they were hiring another ad firm but so far it looks like business as usual. If there aren't visible signs of good marketing by the end of the year, I will reconsider my position. They have to be more aggressive than Sun, HP and IBM if they are going to eat their lunch. Regards Jeff

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