I've been long SGI for a while now, and missed several appealing exit points, particularly last summer. The question I have for the thread, is does SGI have a real future now? I really don't think so from what I've seen lately. It really does depend on what Belluzo does. Several things seem obvious at this point.
1. Graphics is still a strong point for SGI right now, but the question is, will people need SGI's for graphics applications in the future as the Intel architecture gets more and more capable? Doubtful.
2. Sure, there will always be high-end users, but that market is growing slowly compared to others - Cray was no cash cow, and never will be.
3. This NT computer that you guys are hyping... how precisely is that going to help? Does anyone really think SGI will make money on a machine like that? They are just entering the market way too late. Are they really going to have comparable tech support to competitors? Be able to mass produce it? Are they used to marketing machines like that? It's a machine that will be a complete change of mindset from anything else SGI makes. No way this thing will be successful. How many companies have pulled off something like that, in any business? Now how many companies have royally screwed up doing the same thing? That would be like my specialty chemical company buying a pharmaceutical - it just won't work at all. I'm thinking the NT machine is a gamey proposition.
4. MIPS - should be spun off, that might boost the stock up to my exit point! Whoo Hoo!
5. Challenging SUN is absolutely hopeless. SGI clearly doesn't have the marketing oomph to do it, and they've already missed their window. That would have been the last 2 quarters of f&*k ups. SUN is one of the gorilla's, and SGI is just a chimp picking up the scraps.
6. What can Belluzo possibly do? Can SGI really change from a high margin model to a low margin model, and penetrate a market already full of well-branded competitors? Uhhmm... NO.
7. I must say, I would like to see an ad campaign, it will help the stock out, but for an irrational reason. I mean, it makes sense for Intel to do ad campaigns, since their market is the entire American population. But SGI's market segment? It seems awfully small to use a mass marketing tool. Even for the NT machines. I haven't seen too many Intergraph commercials. The only reason Sun and Oracle are advertising is because they can't stand to let Intel and Microsoft be the only companies to advertise to the masses.
Anyway, you guys take it easy on me, remember I am still long for some reason. I'm looking for some good rebuttals to convince me there is hope. Of course, if the price pops up, I'm out regardless. SGI has let me down too many times. Maybe I'll consider getting out at 20. It could edge up there if Belluzo announces a lot of changes.
What I can't understand still is how they could have had a $.60 quarter, and then had all earnings dry up. Were they scaling up operations in expectation of the coming storm, and then found absolutely no demand? How could it happen?
Maybe they should focus on their core business, whatever the hell that is nowadays. I hope it's not still graphics. It's hard to see how their high-end biz, servers, graphics machines, MIPS, and software biz all dried up at once. They've got their hands in a lot of pots, and it's difficult to see where the honey is. If there is any honey. You'd think if anything that having this mismash of businesses would make for consistent earnings - HAH! OK, I'm rambling now. |
