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Silicon Graphic Internat (SGI) |
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WIKI ANALYSIS
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The company has a high margin, high performance computing division which makes up 34% of its sales. Its flagship product, a super computer which has memory most others cannot even approach, gives it 50% gross margins, and SGI also repairs these super computers. The company also provides space and power efficient servers for data centers. This is a lower margin commodity business, but demand is incredibly strong, because the services provide the backbone for cloud computing. Amazon (AMZN) and the military are major clients of Silicon Graphics in this space. Finally, SGI's storage business is on fire, and is the area of the company that can be thought of as a tech value play that is not a value trap, because it has real growth.
The company's quarter was ignored, in spite of its fantastic 26 cent earnings beat, its 23% increase in revenues and the 180 basis point increase in growth margin. Cramer thinks SGI is a $30 stock masquerading as a $14 stock, and would get into SGI before TheStreet wakes up and takes notice.
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