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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 84.66

+0.9%

Nov 19 3:59 PM EST

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To: Esvida who wrote (3195)	10/26/1997 12:59:00 PM
From: David Mosley	Read Replies (4) of 14451

This is all a very unexpected development... The question I have is what is a realistic takeover price? SGI has a cash value of $10-$11 per share, right? Then you figure the company who buys will naturally assume they have better marketing than SGI (who wouldn't?). So say the buyer can squeeze $1.50-$2.00 earnings per share out of SGI's products, along with gain the technology base. Shouldn't a takeover be around $30 or more per share? I haven't really seen any big takeovers like this in the computer segment for a while... I think most of us on this thread own this stock because we think it really isn't fairly valued. I personally thought (given competent marketing, probably the hardest part of a company to evaluate) that SGI could be worth $35 to $40. Certainly the analysts have been predicting earnings in that region for the last 5 quarters, until SGI kept 'stumbling.' SGI could probably be appealing for any company who felt they were falling behind in the technology race. Sun and IBM make sense. But McNeely and McCracken hate each other, right? That makes it tough to say whether Sun would really consider it. All could be pointless speculation. What if SGI wants to stay independent? Can they really recover with a reorganization? They probably only have another year before their servers become less competitive. And who's going to put critical business applications on SGI machines when they may go under or be taken over? Any thoughts?

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