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Technology Stocks : Silicon Graphics, Inc. (SGI) -- Ignore unavailable to you. Want to Upgrade?

To: D. Miller who wrote (6332)	7/30/1999 4:20:00 PM
From: Jim Davison	Read Replies (2) \| Respond to of 14451

Hello again fellow long-termers. I have also been holding the stock for a while with a target price of $19. All of us have been hammered over the last three years. I remember when SGI and SUN were neck and neck. SGI's downward spiral started with the purchase of CRAY, erosion of the UNIX workstation market. For years the gospel has been the idea that migration to NT would be the company's salvation. Some of us were critical of chaining the company's future to a chipset they couldn't control and an operating system that was controlled with Microsoft. Both worries have turned out to be true, and the stock suffered some more. Four months ago I shed a considerable amount of SGI after their conference call suggested confusion and disarray at the to levels of command. All that said, I think it is important to take a hard look at SGI in the long view. Although SGI has lost some of the high-tech edge it once had, it is still capable of rolling out incredible products such as the amazing NT workstation. Although slow to ramp up, I believe this product will gain increasing acceptance, and will be a moneymaker for years to come. SGI has finally gotten serious about the real cash cow of this decade -- servers. The high-bandwidth SGI machines are prefect for video and other high-bandwidth applications that can't be touched by existing manufacturers. Changing the SGI name is one way that SGI has shown a willingness to really defend and increase it's market share in this essential area of business. Finally, nobody seems impressed by the fact that SGI beat its numbers by a mile -- and did it without revenues from the Flat Panel display (which seems to be a small fraction of revenue anyway) and without substantial acceptance of their NT products which are still really in their infancy. They did this by trimming and streamlining their operations. Although we all remember the anomalous high quarter a few years ago that suckered us into thinking the company had blasted off -- this is a new CEO and new circumstances, and I think a bit of optimism is more appropriate than the lingering hangover we have all had for the last three years. Pretend you are a new investor looking at the company for the first time. Right now, the company doesn't look bad at all. They have new, hot technologies, still have a nice 700 million in cash, are well positioned with growth sectors of the industry, and just had a surprise profit. To me, this is no half-empty cup. I have been bruised with SGI many times, and may sell a bit more at $19, but as investor skepticism is overcome, I think we will see the potential for considerable upside on this stock that could rapidly develop an attractive PE. --JD