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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Kenya AA who wrote (42837)	1/9/1999 12:23:00 PM
From: Kenya AA	Respond to of 97611

Monday's IBD ..... Just adding a few tidbits to what Red Scouser already posted: The workstation article was actually about SGI (gee, there's that name again!) and since CPQ was mentioned a few times, I'm posting the article below. CPQ was also mentioned in an "Industry Snapshot" article on data storage as one of the 3 top providers (along with IBM and EMC) of disc drive arrays and storage subsystems. It said that in 1998, this segment grew revenue 13% to $13 bil. and that shipments rose 24% to 1.3 mil. units. AAPL and DELL both made the "NASDAQ Stocks in the News" section. K SGI Breaking On Through To Wintel Computing Side Date: 1/11/99 Author: Michael Tarsala Silicon Graphics Inc. hopes its first-ever computer workstations based on popular ''Wintel'' technology will be the remedy the troubled company has been seeking. SGI on Monday will unveil workstations based on Intel Corp.'s chips and Microsoft Corp.'s Windows NT operating software - the Wintel duopoly. SGI is one of a handful of companies that until now has avoided using the Wintel architecture in its workstations, which are souped-up computers used for complicated tasks such as graphics. ''It's probably the most significant product introduction in the history of the company,'' said Rick Belluzzo, SGI's chief executive. ''We're a different company than we were a few years ago. We've realized that we have to embrace and extend technology that's available in the marketplace, rather than do everything ourselves.'' SGI says its first NT-based computer will ship in February with a starting price of $3,395. It comes with two Intel Pentium II processors, each running at 450 megahertz. Workstations with four Intel processors are expected to ship by mid-year for roughly $6,000. The machines will compete with those sold by Hewlett-Packard Co., Compaq Computer Corp. and Dell Computer Corp., among others. Company officials and analysts believe they will boost SGI's sagging workstation business. Once the ruler of the high-end desktop workstation world, SGI has fallen from grace. The company's workstations, based mostly on home-grown technology, still are among the world's most advanced computers. But for all of SGI's technical savvy, the company has lost market share to competitors in recent years. SGI has spent most of its last eight quarters in the red. In the company's first quarter ended Sept. 30, revenue was $616 million, down 20% from $768 million in the year-ago period. SGI reported a net loss of $43 million for the quarter. The company's slide is due in large part to other companies' moves to fast-selling Wintel workstations. These systems cost less than those of SGI and others that use home-made chips and operating systems. SGI's Unix-based workstations typically sell for more than $10,000. The new workstations should help SGI, says Ken McBride, analyst with Salomon Smith Barney in San Francisco. Sales of NT workstations are expected to make up 20% of SGI's total revenue in the company's fiscal year '00, McBride says. Selling NT computers should be easier than Unix machines, McBride says. The total NT workstation market increased 53% from '96 to '97, he said. In the same time period, the Unix workstation market declined 16%. SGI had been competing only in Unix workstations. Still, the new NT-based SGI computers cost 10% to 20% more than similar workstations from such price leaders as Dell and Compaq, says Murali Dharan, marketing vice president of SGI's workstation division. But SGI's design will help the new computers pack more punch for a competitive price, Belluzzo says. Analysts claim the new SGI systems are different from most others on the market. For one, the SGI machines should work with audio and video without the need for add-on cards used by most NT computers. The traditional card design can slow graphics, video and audio performance. That's due to the slow infrastructure used for sending graphics data between add-on cards and the computer's memory, Dharan says. SGI also has increased the rate at which graphics information travels inside the computer by putting relevant hardware directly into the computer near the main processor. The new SGI workstations are designed to send graphics traffic six times faster than the typical NT workstation. In addition to unveiling new machines, SGI has introduced new ways of selling them. Taking a page from Dell, SGI will sell its new NT computers direct - a change from the company's typical sales methods. The NT workstations will be manufactured off-site by Huntsville, Ala.-based SCI Systems Inc. SCI will receive orders electronically from SGI's sales force, the Web and computer resellers. The computers then will be shipped straight to customers. ''This isn't just about a product,'' Dharan said. ''It's about an innovative way of doing business for SGI. Otherwise, we wouldn't be viable long- term.'' Computers and new sales methods alone won't save SGI's business, warns Peter ffoulkes, an analyst with market researcher Dataquest Inc. in San Jose, Calif. The company has made some strides in trimming expenses and introducing new products since Belluzzo became chief executive in January '98. But it's important the product launch goes well, ffoulkes says. ''If for any reason this doesn't go as well as the company would like, it's going to be much more of a challenge getting SGI back on track,'' ffoulkes said.