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Hi Jim. Last Friday and this morning I added on to my existing long
position in SGI. So, what I write below is really an exercise in self rationalization, trying to convince myself that I made the right move.
Some time ago I gave a simple fundamental analysis arguing that buying
SGI at 15 is almost a one-sided bet. That was my left brain speaking.
My right brain was very much concerned with the remaining (short term)
uncertainties: Who'll be the new CEO? Will employee turnover increase? Will SGI buy back shares? Will Wall Street go crazy? ... all in all, the normal torture of facing risk, and trying to strike a balance between fear and greed.
Through somewhat diligent research, including reading the postings on
this thread, one gathers quite a collection of good impression about the prospect of SGI. A haphazard listing would include items such as:
(a) Ed and the board had set the right strategy. Finding a good CEO to execute the strategy is not impossible. [I imagine a lot of potential candidates will jump at the chance.]
(b) NEC and Philips are going to make MIPS the platform for consumer electronics. [Last Friday's news.]
(c) SGI's marketing is getting more aggressive. Last week I saw its ads in Infoworld and in The Economist for the first time. Also, the postings here indicate that SGI's salepersons are addressing their past failings.
(d) AT&T will be using SGI boxes to host internet sites. There is great hope the telecom guys know what technology will be good for them.
(e) Microsoft is not invincible. It does not really have that much edge when the play is away from the desktop. It's expansion tactics have been rebuffed by other big players. [Visa and banks want open systems, the cable guys want open systems (see last week's Business Week), the telecom guys want open system. ... SGI can play with MSFT.
(f) Oracle and others will help sell the big servers.
(g) The fiber channel guys, and the set top box guys will help make the paradigm of power server both cost and technically effective.
..., etc.
All in all, these buzz collectively gave the impression that the right conditions are in place for SGI to really take off. This is of course my right brain speaking. ... I guess investing after all cannot be totally rational. My ultimate justification buying SGI is this: (parapharsing Wittgenstein) If I don't believe in SGI, then there is nothing in the world of investment that I can believe in.
Aside: Recently on this thread there's some discussion on dead cat bounce. If my memory serves, Alias Research started 1992 at 12, ran up to 16, but near the end of the year it dropped below 3. You could not find a deader cat. Well, the bounce was that SGI brought Alias
in early 1995 for about 34. ... I certainly won't mind if this dead cat SGI will bounce the same way.
Regards,
Mak |
