Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Mathon Dabasir who wrote (3610)	11/19/1997 1:39:00 AM
From: rumboman	Respond to of 14451

Re: SGI purchase of Alias:Wavefront. I tend to agree with you that in the long run SGI might wish to consider spinning off(hopefully to shareholders rather than a sale or IPO) AW; I believe that for a long period of time, SGI purposely avoided applications software to avoid competing with those who developed applications for their machines, and I believe this position still has substantial validity. Also, creating 3D software appears to require extreme amounts of creativity, and I am not totally sure being attached to a hardware co., even a technologically wondrous one, fosters the best possible environment. On the other, I see no reason to rush; for starters, imho, it makes quite a bit of sense to wait until Maya is introduced, even perhaps holding off until the unveiling of the Maya NT product. Also, a potential problem with a spinoff is that Microsoft, if it wished, could cause a bit of trouble for an independent AW. I believe that the reason SGI bought both cos back in l995 is that if it had only bought one, the other co. would have been potentially destroyed. I have no idea how the negotiations went but this fact probably gave SGI some leverage in dealing with the situation; that is, SGI might have implicitly told Alias that unless it agreed to a buyout, SGI would pay a large premium for Wavefront and promote Wavefront products. I have already indicated that I do not believe that SGI overpaid for Alias, which at the time of the merger, had a dominant position in high-end 3D industrial design and entertainment software. One minor correction to my previous post about this subject: the growth rate for Alias revenues in the quarter ending April 30, 1995, was 83% over the prior year's quarter, not 89%(latter figure was the increase in product revenues alone, not counting service and maintenance).

To: Mathon Dabasir who wrote (3610)	11/19/1997 2:11:00 PM
From: John M. Zulauf	Read Replies (1) \| Respond to of 14451

Mathon, "incompatible" from a source standpoint was essentially irrelevant. Each team was pursuing next generation projects. One was further along a became the basis of the combined next-gen. The other team was repurposed to reproduce "the-best-of++" the previous generations product. Resulting in a far rich set of capabilities than either could have produce alone. Why both? I don't know, critical mass? Alias Research certainly needed a So Cal presence, Wavefront was behind in the surface modelling area (though if you want to see lots of ex-Wavefront software in action, look at "Starship Troopers", the particles are all "Dynamation" and really look great -- actually apparently the vast majority of that movie's CG is Alias\|Wavefront software based). Maybe they were afraid of losing SoftImage entirely to NT and want to protect market share. By acquiring both A&W, the protected 2/3 of the market for IRIX. Why so much? Both Alias and Wavefront were serious, successful and fiercly independent. Remember that software companies also tend to have much higher margins than hardware companies. Why not spin them off? I'm sure that's a question that's been asked. My guess is that they believe the expect ROI justifies the continuing investment. As SGI doesn't break out divisonal numbers, there's no way for you to know, however. As an aside, everyone online was blaming Cray for the SGI bad quarters. However what wasn't known to the stockholders until it was announced at the stockholder meeting was that Cray had in fact made every quarterly earnings committment since the merger. Certainly we bring more than cash to the table. Our customer relationships are very strong, our understanding of our marketplace formidable. As closely tied ISV, we can help them set stragetic technology goals, and act as a test bed/alpha/bed site for new products and technologies. As for SGI going NT... SGI has an NT strategy in place, and products of some sort planned for the next fiscal year. The O series products still have life in them and customers buying them. I've seen no indication of SGI turning into an NT only house in the foreseeable future. Certain at least the server market requires a non-NT solution -- know of anyway to build 64 bit, 128 proc systems on NT? There isn't one, and won't be for years, even after Merced ships. How long from the 386 and 32bit proc, to Windows 3.0 (a 32bit O/S) years. Unofficially, john