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

To: vincent bilotta who wrote (4183)	1/24/1998 2:25:00 AM
From: Jim Davison	Read Replies (2) \| Respond to of 14451

vincent, I agree in principle that SGI should be able to take its great technology to the masses. However, they have always been able to get their best profits from small, specialty markets that would pay extra for hot machines. This quarter they slashed prices on O2 workstations and barely kept their workstation market share, and nin the conference call, they mentioned their actual earnings dropped on lower margins of profit. Now sales are 51% servers, and 49% graphics. Sun and HP are launching very effective ad campagnes against SGI's O2 graphics workstation and underselling them. The R12000 chip won't ship unil the last half of the year, and SGI's NT machine will probably gut their own O2 sales, so SGI will have to bet the whole game on the server side for the next one, maybe two quarters. I think they have some great servers that had be marketed effectively, but the big bandwidth isn't needed by every ISP in the phone book -- so they are going to remain a nitch product for a while. Fortunately, SGI still has a treasure chest with $665 million bucks. I hope they use some of it to buy some of their own stock back, or develop a computer manufacturing plant in El Paso or Korea or somewhere so they can churn those things out more cheaply. I get the impression from the converence call that they are trying to get some shareholder value from MIPS -- maybe as a spinoff. But don't be surpised if the next news we hear is . . . more layoffs. --JD