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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: Sam Mak who wrote (510)	12/13/1996 10:46:00 AM
From: Marshall Delano	of 14451

I saw that. That makes three buy recommendations in the last month: Goldman Sachs, Worth Magazine (year end issue)and now JPM. It is interesting that they specifically mention the O2 work station and the Origin servers as reasons for JPM's recommendation. These products must be showing real strength. In SGI's 10Q (quarterly financial filing with the SEC) which I read the other day points out that these new products may eat into higher end products which are more profitable as customers who would normally buy more expensive products are drawn to the O2s because of their capability vs. price. Last quarter revenues were flat for all the reasons the company cited. The company says their second and fourth quarters are usually the strongest. The year over year second revenue growth will be a key indicator of SGI corporate health. We can then look at profit margins to see how much the new products are canabilizing the old. SGI real strength is terribly difficult to determine but we should have some solid indications over the next two quarters.

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