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Technology Stocks : Silicon Graphics, Inc. (SGI)

SGI 93.78

+1.7%

Jan 9 9:30 AM EST

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To: Don Green who wrote (5620)	1/21/1999 7:26:00 PM
From: Bill Holtzman	Read Replies (3) of 14451

Don I listened to part of the conf call. They have an interesting arrangement for buying back shares. By contract, another firm buys shares for them and then SGI must buy these shares at the purchase price from the firm within three years. They pay $1 per share for each year the firm holds them. My take was that in this way nothing shows on the SGI books until they exercise. As long as the stock goes up, they bought at almost no cost some three year LEAPS. They had the option of buying as many as 10 mil sh this way and had already signed up for atleast half of that. So they keep their $700 mil in cash, and stand to make a lot of money if the stock goes up. $10 mil a point. I think we were both surprised to see folks jumping in to SGI on such a lousy day for stocks. Short memories! And they only beat the estimate by a bit. Next quarter will be the crossroads where they can separate from the past. Bill

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