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

To: Al who wrote (3246)	10/28/1997 12:41:00 PM
From: James Tarifa	Respond to of 14451

Thread, The following is from Briefing boys before the market open today. I agree with their comments. 08:30 ET ****** SILICON GRAPHICS INC. (SGI) 15 1/4 CLOSED. Workstations, server and supercomputer systems designer and supplier posted a 1Q loss in line with the warning that it issued earlier this month. However, there are still no news on the restructuring plan the company is expected to announce which may include the dismissal of CEO Ed McCraken. The company reported that it lost $0.20 a share in the fiscal 1Q excluding charges, in line with the projected loss the company cited in early October when it warned that longer selling cycles associated with the enterprise business would affect its quarterly results. In the year-ago period, the company earned $0.07 a share on an operating basis, on revenues of $766 million. This time around, revenues were flat at $767.99 million, which were in line with the announcement the company made on October 6, but participants are still awaiting the cuts in operating expenses to a level consistent with current business conditions. In the latest fiscal quarter, Silicon Graphics also took $17 million in charges related to the company's acquisition of ParaGraph International and other merger-related expenses of $2 million. Including these charges, SGI lost $0.31 a share in the 1Q, versus year-ago loss of $0.13 a share. The stock gave ground yesterday, in keeping with the overall tone in the market, but the stock is not likely to react much to the financial news until further disclosures are made regarding the company's plan for cutting costs to make expenses line up better with its current revenue levels. The bet is also that any restructuring plan may not include Mr. McCraken who has overseen the turn in fortunes at the company and which the board of directors appears to have lost faith in his abilities to make a difference. The company is currently scheduled to hold a conference call regarding its financial results on Thursday after cancelling its Tuesday meeting, and thus the stock is expected to be in limbo until then, only drifting with the overall negative tone in the market at the moment.

To: Al who wrote (3246)	10/28/1997 1:17:00 PM
From: brushwud	Read Replies (1) \| Respond to of 14451

Interesting point you made about the IBM stock buyback. I looked up an article about it at yahoo.com which doesn't indicate that they actually bought stock today, only that they had increased the amount they may buy back by $3.5 billion. The article also says they bought back stock in the third quarter. Back in 1991 or so, Compaq made an investment in SGI in the form of around $100 million of convertible preferred stock when Rod Canion (founder of Compaq) was still in charge, and it looked like they might develop more of a relationship long-term. Then the management of Compaq changed, and SGI bought back the convertible preferred a year later. After the MIPS merger with SGI was announced, it turned out that there was an SEC rule that prohibited a stock buyback within 90 days of a purchase for stock. SGI wound up having to replace equivalent securities to what it had bought back from Compaq with other investors (of which there were about eight) in order to complete the merger. And with the MIPS albatross around their neck, their stock was worth a lot less, so it cost them about $50 million extra. Just a little problem McCracken and Meresman blundered into in 1992. I'd never heard of such a rule before it happened to SGI and I'd like to know more about it, including whether the 90 days is both before and after a merger and/or announcement of a merger. But if IBM bought back stock within 90 days, that might make it hard (or dumb) for them to do a buyout of SGI for stock now. I imagine long-term investors would rather trade for stock than cash so they can time their own sales instead of having it all handed to them at once. And I wonder if Thursday makes 91 days, or if IBM is signaling lack of interest in making a $3.5 billion investment in SGI by announcing they'd prefer to invest that amount in their own stock? If not IBM, then maybe HP, as suggested in posting #3000.