Corporate Communications Corp. Publication ---- All
February 18, 2003
Average Daily Vol.
Silicon Graphics is a leading
provider of high-performance solutions for complex data
management, video and visualization applications. The
company’s products deliver advanced 3-D graphics
and computing capabilities for engineering and creative
recommending Silicon Graphics for the following reasons:
The Company has completed a turnaround of its business
over the past 18 months under the new management.
This is especially true with regard to Silicon’s
product offerings and its research and development.
On 2/18/03 the company announced it received a
contract for $26 million from the U.S. Department
of Defense. Additional revenue is expected from the
contract over the next several years.
From a financial viewpoint, the company’s
position has strengthened considerably whereby Standard
& Poor’s recently upgraded the company’s
The Company’s video and visualization products
have gained increasing acceptance outside the scientific
community. A major customer over the recent past has
been the motion picture industry. The need for high-resolution
graphics has dramatically increased as the industry
employs more “special effects” and the
medium is moving towards digitalization.
While corporate IT spending has been slow, the
company’s Government business has been robust.
This sector represents 30%-40% of Silicon Graphic’s
business. SGI has recently received orders from the
U.S. Government for its Early Warning System.
New orders have been secured from India, Malaysia,
and Sweden, and new domestic orders have been received
from Ford Motor Company, Lockheed Martin, John Deere,
and the National Cancer Institute.
Currently, the company has gross revenues of $1.3
billion and we estimate earnings of 12 cents per share
for the fiscal year ending 6/30/03. SGI has cash of
$1.09 per share.
UPDATE: King Pharmaceutical (KG) announced its most
recent financial results on 2/18/03. The company reported
quarterly earnings of $0.41 per share on an operating
basis, exceeding the consensus estimated by $0.02 per
share. The company did take a one-time charge but we
continue to like the stock at $15 and believe our target
price of $21 will be achieved.