MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
PATRICK J. COUGHLIN (111070)
TRAVIS E. DOWNS, III (148274)
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
     - and -
LISA C. ATKINSON (163320)
222 Kearny Street, 10th Floor
San Francisco, CA 94108
Telephone: 415/288-4545

BARRACK, RODOS & BACINE
STEPHEN R. BASSER (121590)
600 West Broadway, Suite 1700
San Diego, CA 92101
Telephone: 619/230-0800

WOLF POPPER LLP
STEPHEN D. OESTREICH
PATRICIA I. AVERY
ROBERT C. FINKEL
845 Third Avenue
New York, NY 10022
Telephone: 212/759-4600

Plaintiffs' [Proposed] Co-Lead Counsel
[Additional counsel appear on signature page.]

I. INTRODUCTION

II. SUMMARY OF ACTIONS

III. PROCEDURAL BACKGROUND

IV. THE PROPOSED LEAD PLAINTIFFS ARE THE MOST ADEQUATE PLAINTIFFS UNDER THE EXCHANGE ACT

A. The Proposed Lead Plaintiffs Satisfy The Requirements Of The PSLRA For Appointment As Lead Plaintiff

B. The Proposed Lead Plaintiffs Are Qualified Under Rule 23

1. The Claims Of The Proposed Lead Plaintiffs Are Typical Of The Claims Of The Class

2. The Proposed Lead Plaintiffs Will Fairly And Adequately Represent The Interests Of The Class

V. THIS COURT SHOULD APPROVE THE PROPOSED LEAD PLAINTIFFS' CHOICE OF CO-LEAD COUNSEL

VI. CONCLUSION

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE that on March 20, 1998, at 9:30 a.m., or as soon thereafter as the matter may be heard, in the courtroom of the Honorable Charles A. Legge, United States District Court, Northern District of California, located at 450 Golden Gate Avenue, San Francisco, California, plaintiffs Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt and the 210 other individuals identified in Appendix A hereto ("Movants" or the "Allard Group"), who purchased no less than 364,476 shares of Silicon Graphics, Inc. common stock and/or other securities, including call options between July 24, 1997 through October 6, 1997 (the "Class Period"), and have collectively suffered losses of $5,810,659 will, and hereby do move this Court for an order granting Movants' Motion To Be Appointed Lead Plaintiffs Pursuant to §21D(a)(3)(B) of the Securities Exchange Act of 1934 and For Appointment of Lead Plaintiffs' Co-Lead Counsel (the "Motion").

This Motion is brought pursuant to §21D of the Securities Exchange Act of 1934 (the "Exchange Act") on the grounds that Movants have timely filed and are the "most adequate plaintiffs." In addition, Movants seek the Court's approval of their selection of Milberg Weiss Bershad Hynes & Lerach LLP ("Milberg Weiss"), Barrack, Rodos & Bacine ("Barrack Rodos") and Wolf Popper LLP ("Wolf Popper") as Co-Lead Counsel for the class pursuant to §21D(a)(3)(B)(v) [15 U.S.C. §78u-4(a)(3)(B)(v)].

This Motion is based on this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities in support of the Motion, the Declaration of Patrick J. Coughlin, the pleadings and other files herein, and such other written or oral argument as may be permitted by the Court.

I. INTRODUCTION

Presently pending in this district are five related securities class actions filed against Silicon Graphics, Inc. ("SGI" or the "Company") and certain of its officers and directors:

The plaintiffs in each of these actions allege violations of the Exchange Act and Rule 10b-5 promulgated thereunder, on behalf of purchasers of SGI common stock and/or other securities. They also constitute all plaintiffs who filed such actions in this district, to date.

Movants submit this memorandum in support of their motion for: (i) the appointment of all Movants as Lead Plaintiffs, or, alternatively, Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt as Lead Plaintiffs in these related actions; and (ii) approval of Movants' choice of Co-Lead Counsel in the above-related actions and any other actions that may be consolidated therewith.⁽²⁾ The combined financial interest of all Movants is no less than $5,810,659 in losses.

Section 21D of the Exchange Act, as recently amended, sets forth the procedure for the selection of lead plaintiffs to oversee class actions brought under the federal securities laws.⁽³⁾ Specifically, §21D(a)(3)(A)(i) provides that, within 20 days after the date on which a class action is filed under the PSLRA,

the plaintiff or plaintiffs shall cause to be published, in a widely circulated national business-oriented publication or wire service, a notice advising members of the purported plaintiff class --

(I) of the pendency of the action, the claims asserted therein, and the purported class period; and

(II) that, not later than 60 days after the date on which the notice is published, any member of the purported class may move the court to serve as lead plaintiff of the purported class.

15 U.S.C. §78u-4(a)(3)(A)(i).⁽⁴⁾

Further, §21D(a)(3)(B) of the Exchange Act directs the Court to consider any motions by plaintiffs or purported class members to serve as lead plaintiffs in response to any such notice by not later than 90 days after the date of publication pursuant to §21D, or as soon as practicable after the Court decides any pending motion to consolidate any actions asserting substantially the same claim or claims. Under this section of the Exchange Act, the court "shall" appoint the "most adequate plaintiff," and is to presume that plaintiff is the person, or group of persons, which

(aa) has either filed the complaint or made a motion in response to a notice . . .;

(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and

(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

15 U.S.C. §78u-4(a)(3)(B)(iii)(I).

Movants collectively purchased no less than 364,476 shares of SGI stock and/or other securities between July 24, 1997 and October 6, 1997, inclusive, and have incurred out of pocket losses of no less than $5,810,659. See Summary of Movants' Purchases, Sales/Losses attached as Ex. 4 to the Coughlin Decl.⁽⁵⁾ Movants therefore have a very substantial financial interest in the relief sought by the class. Movants also satisfy the requirement of Rule 23 of the Federal Rules of Civil Procedure because their claims are typical of the claims of the class, and they will fairly and adequately represent the interest of the class since their interests are clearly aligned with the members of the class and they have retained experienced class counsel to represent the class.

Accordingly, Movants are "the most adequate plaintiffs," as defined in the PSLRA, and they bring this motion seeking that all Movants be appointed Lead Plaintiffs, or alternatively, that Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt, be appointed Lead Plaintiffs. Movants also request the Court to approve their choice of Milberg Weiss, Barrack Rodos and Wolf Popper as Co-Lead Counsel.

II. SUMMARY OF ACTIONS

Each of these five related securities class actions allege that defendants made false and misleading statements about SGI's business and financial results in order to artificially inflate the price of SGI stock and other securities to facilitate the exchange of a new SGI convertible security for $200 million of outstanding zero coupon debentures, while the defendants sold 286,584 shares of their SGI stock, for more than $7.4 million in unlawful insider-trading proceeds. ¶¶1-6.⁽⁶⁾ The complaints describe with particularity a scheme and common course of conduct carried out by defendants, set forth briefly as follows:

In April 1997, when SGI reported very disappointing results for its third quarter of fiscal year 1997, ended March 31, 1997⁽⁷⁾ -- the seventh consecutive below-expectation quarterly performance for SGI -- SGI's stock collapsed by 28% to just $12-5/8 per share. Analysts and SGI investors were furious over this situation and SGI's top management came under severe criticism. Due to SGI's poor performance over the prior seven quarters, no SGI executive had received any bonus payments under SGI's management incentive plan and the collapse of SGI's stock greatly reduced the value of their SGI stock options and holdings. SGI also faced an extremely threatening financial situation because $200 million principal amount of its outstanding zero coupon debentures had a "put" provision that would force SGI to repurchase those zero coupon debentures for $245 million in November 1998, if SGI's stock was not then selling at $33 per share. Honoring the "poison" put would plunge SGI into a cash crisis if it paid the $245 million in cash, or permanently dilute its earning power if it paid the $245 million in stock. Defendants also knew that Business Week was planning a searing exposé of SGI and its CEO, Edward McCracken, which would push SGI's stock price even lower. ¶¶8-11.

To overcome this desperate situation, during the fourth quarter of fiscal 1997, defendants inflated SGI's revenues, net income and EPS by inducing certain customers to accept millions of dollars of early shipments of computer workstations and servers, offering these customers huge price discounts, extended payment terms and the right to return product they could not resell to enable SGI to pull in revenue. As a result, SGI reported strong fourth quarter fiscal 1997 results well in excess of Wall Street analysts' expectations. ¶¶12-13, 60.

On July 24, 1997, the day before the Business Week exposé hit the streets, SGI announced in a press release its extraordinarily good fourth quarter 1997 results, with revenues and earnings per share ("EPS") far in excess of analysts' expectations. Without disclosing that SGI's fourth quarter sales cannibalized first quarter 1998 revenues, defendants falsely attributed SGI's spectacular results to "strong demand" for its server products, its successful product transition and its management team's excellent "execution." In addition, defendants falsely represented that strong demand for SGI's products had continued during the first quarter of fiscal year 1998, and that SGI would report revenues of $900-$950 million and EPS of $.20-$.21 for the first quarter of fiscal year 1998. ¶¶14, 30.

SGI's spectacular fourth quarter results allowed SGI's top executives to pocket hundreds of thousands of dollars in incentive bonuses. The force of the negative Business Week exposé was so blunted that SGI's stock soared by almost 50% on July 25, 1997, to $27 per share, later advancing to its Class Period high of $30-5/16. ¶¶15-16.

Riding SGI's stock price gains following the release of SGI's surprisingly strong fourth quarter results, SGI quickly closed an offer to exchange the $200 million in outstanding zero coupon debentures for a new SGI convertible security without the put feature, thus avoiding the risk that exercise of the "poison" put in November 1998 would gravely injure SGI's financial condition. ¶¶20, 79. While unwitting investors were exchanging or buying SGI's artificially inflated securities, defendants took this opportunity to sell 286,584 shares of their personal holdings, pocketing over $7.4 million in illegal insider-trading proceeds. ¶¶21, 90-92.

Ultimately, SGI could not perpetuate its misrepresentations. On October 6, 1997, SGI suddenly revealed that instead of the $900-$950 million in revenue and $.20-$.21 in EPS for its first quarter of fiscal year 1998, ended September 30, 1997, that defendants had previously misled investors to expect, SGI would suffer a huge loss of about $36 million. Defendants explained that SGI's strong fourth quarter fiscal year 1997 results had been the result of pulling in orders from future quarters and that the first quarter of 1998 would suffer a huge revenue shortfall as would later quarters. ¶¶6, 23, 82. On these revelations, SGI stock lost 36% of its value. On December 2, 1997, plaintiffs commenced the first of these five related securities class actions for violations of §§10(b) and 20(a) of the Exchange Act to recoup their losses.

III. PROCEDURAL BACKGROUND

The Reiser action, the first filed of the related cases, was filed on December 2, 1997. Pursuant to §21D(a)(3)(A)(i) of the Exchange Act, the Reiser plaintiffs published the required early notice to class members on December 2, 1997. See Coughlin Decl., Ex. 6.⁽⁸⁾ Other actions were filed on the dates set forth at page 2 of this motion.

As amended by the PSLRA, the Exchange Act requires early notice to advise class members of their right to move this Court to be appointed "lead plaintiff," and provides that any member or members of the class may so request this within 60 days of publication of the early notice. Further, §21D(a)(3)(B)(i) of the Exchange Act requires that the Court decide this motion within 90 days from the date of the publication of the early notice in the Reiser action, or as soon as practicable after deciding plaintiffs' Motion to Consolidate Cases for All Purposes (filed concurrently herewith). See id. On December 2, 1997, early notice was made in the Reiser action and, as provided by the Exchange Act, Movants now request this Court to appoint them lead plaintiffs.

IV. THE PROPOSED LEAD PLAINTIFFS ARE THE MOST ADEQUATE PLAINTIFFS UNDER THE EXCHANGE ACT

A. The Proposed Lead Plaintiffs Satisfy The Requirements Of The PSLRA For Appointment As Lead Plaintiff

The "most adequate plaintiff" provision of the PSLRA provides that a court

shall appoint as lead plaintiff the member or members of the purported plaintiff class that the court determines to be most capable of adequately representing the interests of class members (hereafter in this paragraph referred to as the "most adequate plaintiff") in accordance with this subparagraph.

15 U.S.C. §78u-4(a)(3)(B)(i). Moreover, the Exchange Act, as amended by the PSLRA, provides

that the most adequate plaintiff in any private action arising under this title is the person or group of persons that --

(aa) has either filed the complaint or made a motion in response to a notice . . .;

(bb) in the determination of the court, has the largest financial interest in the relief sought by the class; and

(cc) otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure.

15 U.S.C. §78u-4(a)(3)(B)(iii)(I). Thus, a "member or members" of the class or a "person or group of persons" may combine to constitute "the largest financial interest" and thereby jointly serve as the "most adequate plaintiff." Id.; see In re Diamond Multimedia Systems, Inc., Sec. Litig., No. C-96-2644-SBA, slip op. at 2-4 (N.D. Cal. Jan. 13, 1997) (proposed lead plaintiffs can pool together their shares to form the largest financial interest), Coughlin Decl., Ex. 7.⁽⁹⁾

Pursuant to §21D(a)(3)(B) of the Exchange Act, Movants respectfully request that all Movants be appointed Lead Plaintiffs, or alternatively, that Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt be appointed Lead Plaintiffs (hereinafter referred to as the "Proposed Lead Plaintiffs"), in these related actions.⁽¹⁰⁾ The Proposed Lead Plaintiffs also respectfully request that the Court approve their selection of Co-Lead Counsel for the class.

During the class period, the Proposed Lead Plaintiffs collectively purchased no less than 364,476 shares of SGI stock at prices artificially inflated by defendants' false and misleading statements and have collectively suffered losses in excess of $5,810,659. See Summary of Movants' Purchases, Sales/Losses, attached as Ex. 4 to the Coughlin Decl.⁽¹¹⁾

The Proposed Lead Plaintiffs are qualified to represent the proposed class. Each of them has signed and filed a sworn certification of their review of the complaint and authorization of its filing, and is willing to serve as a representative party on behalf of the class. In addition, the Proposed Lead Plaintiffs have selected and retained counsel highly experienced in prosecuting securities class actions such as this to represent them. See the firm resumes of Milberg Weiss, Barrack Rodos and Wolf Popper, attached as Exs. 14-16 to the Coughlin Decl.

Accordingly, Proposed Lead Plaintiffs satisfy the prerequisites for appointment as "lead plaintiffs" pursuant to §21D(a)(3)(B).

B. The Proposed Lead Plaintiffs Are Qualified Under Rule 23

Section 21D(a)(3)(B)(iii)(I)(cc) of the Exchange Act provides that the lead plaintiff or plaintiffs must also "otherwise satisf[y] the requirements of Rule 23 of the Federal Rules of Civil Procedure." With respect to the qualifications of the class representative, Rule 23(a) requires that the claims be typical of the claims of the class and that the representative will fairly and adequately protect the interests of the class.

As detailed below, each of the Proposed Lead Plaintiffs satisfies the typicality and adequacy requirements of Rule 23(a), thereby justifying the appointment of the Proposed Lead Plaintiffs.

1. The Claims Of The Proposed Lead Plaintiffs Are Typical Of The Claims Of The Class

The typicality requirement of Rule 23(a)(3) is satisfied when a named plaintiff has: (a) suffered the same injuries as the absent class members; (b) as a result of the same course of conduct by defendants; and (c) their claims are based on the same legal issues. See, e.g., In re Cirrus Logic Sec. Litig., 155 F.R.D. 654, 657 (N.D. Cal. 1994); In re Activision Sec. Litig., 621 F. Supp. 415, 428 (N.D. Cal. 1985).

The claims asserted by the Proposed Lead Plaintiffs are typical of the claims of the members of the proposed class. Each of the Proposed Lead Plaintiffs, as do all members of the class, allege that certain of SGI's directors and high ranking officers violated the Exchange Act by publicly disseminating false and misleading statements about SGI during the Class Period. Each of the Proposed Lead Plaintiffs, as did all of the members of the proposed class, acquired SGI securities at prices inflated by defendants' misrepresentations and omissions and was damaged thereby. Typicality exist here because the claims asserted by the Proposed Lead Plaintiffs are based on the same legal theory and arise "from the same event or course of conduct giving rise to the claims of other class members." In re United Energy Corp. Solar Power Modules Tax Shelter Inv. Sec. Litig., 122 F.R.D. 251, 256 (C.D. Cal. 1988). Accord Blackie v. Barrack, 524 F.2d 891, 902-03 & n.19 (9th Cir. 1975).

2. The Proposed Lead Plaintiffs Will Fairly And Adequately Represent The Interests Of The Class

The interests of the Proposed Lead Plaintiffs are clearly aligned with the members of the proposed class, and there is no evidence of any antagonism between the interests of these individuals and the proposed class members. As detailed above, the Proposed Lead Plaintiffs share substantially similar questions of law and fact with the members of the proposed class, and their claims are typical of the members of the class. The Proposed Lead Plaintiffs have amply demonstrated their adequacy as class representatives by signing a certification, filed with the Court, affirming their willingness to serve as and assume the responsibilities of a class representative. In addition, the Proposed Lead Plaintiffs have selected counsel highly experienced in prosecuting securities class actions such as this to represent them.

V. THIS COURT SHOULD APPROVE THE PROPOSED LEAD PLAINTIFFS' CHOICE OF CO-LEAD COUNSEL

The PSLRA vests authority in the lead plaintiffs to select and retain lead counsel, subject to court approval. See 15 U.S.C. §78u-4(a)(3)(B)(v). Thus, the Court should not disturb the Lead Plaintiffs' choice of counsel unless necessary to "protect the interests of the class." 15 U.S.C. §78u-4(a)(3)(B)(iii)(II)(aa). The Proposed Lead Plaintiffs have selected the law firms of Milberg Weiss, Barrack Rodos and Wolf Popper to serve as Co-Lead Counsel for the class. These firms possess extensive experience in the area of securities litigation and have successfully prosecuted numerous securities fraud class actions on behalf of injured investors. See Coughlin Decl., Exs. 14-16. Thus, the Court may be assured that, in the event this motion is granted, the members of the class will receive the highest caliber of legal representation available.

VI. CONCLUSION

For all the foregoing reasons, Movants respectfully request that the Court: (i) appoint all Movants as Lead Plaintiffs, or alternatively, Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt as Lead Plaintiffs in the above-captioned related actions, pursuant to §21D(a)(3)(B); and (ii) approve the Proposed Lead Plaintiffs' choice of Milberg Weiss, Barrack Rodos and Wolf Popper as Co-Lead Counsel for the class.

SIL-GRA3\DDH06229.brf

1. On January 14, 1998, the Court issued an Order relating the Reiser, Zove, Kerr and Allard actions. See Declaration of Patrick J. Coughlin in Support of the Allard Group's Motion to be Appointed Lead Plaintiffs and for Appointment of Lead Plaintiffs' Co-Lead Counsel ("Coughlin Decl."), Ex. 1. Plaintiffs in the Chiu action filed a Notice of Related Cases on January 22, 1998. See Coughlin Decl., Ex. 2. Plaintiffs in the Allard Group respectfully request that the Chiu action be related to the Reiser, Zove, Kerr and Allard actions.

2. Movants concurrently file herewith their Motion to Consolidate Cases For All Purposes and request that the Court consolidate all related actions pursuant to Rule 42 of the Federal Rules of Civil Procedure.

3. Congress amended the Exchange Act by the Private Securities Litigation Reform Act of 1995 ("PSLRA"). These amendments are contained in §21D of the Exchange Act, 15 U.S.C. §78u-4. A copy of §21D of the Exchange Act, 15 U.S.C. §78u-4, is attached as Ex. 3 to the Coughlin Decl., filed concurrently herewith.

4. All emphasis herein is added unless otherwise indicated.

5. The Certifications of the members in the Allard Group are attached as Ex. 5 to the Coughlin Decl.

6. All "¶_" and "¶¶__" references are to the Complaint in Reiser, et al. v. Silicon Graphics, Inc., et al, Case No. C-97-4362-CAL, filed on December 2, 1997.

7. SGI's fiscal year begins on July 1st and ends on June 30th.

8. Section 21D(a)(3)(A)(ii) provides that if more than one action on behalf of a class asserting substantially the same claims is filed, only plaintiffs in the first-filed action are required to publish the early notice. The 90-day period for the selection of lead plaintiff is calculated from the date of the publication of the first notice.

9. See also City Nominees Ltd. v. Macromedia, Inc., No. C-97-3521-SC, slip op. at 5-7 (N.D. Cal. Jan. 23, 1998) (same); In re Read-Rite Corp. Sec. Litig., No. C-97-20059-RMW, slip op. at 4-5 (N.D. Cal. May 23, 1997) (same); Malin v. IVAX Corporation, et al., No. 96-1843-CIV-MORENO, slip op. at 4-8 (S.D. Fla. Nov. 1, 1996) (holding the plaintiff group with the largest number of shares is the most adequate plaintiff under the PSLRA); Zuckerman v. Foxmeyer Health Corp., No. 3:96-CV-2258-T, slip op. at 5 (N.D. Tex. Mar. 28, 1997) (eleven individual plaintiffs with the largest financial interest collectively appointed lead plaintiff); Chan v. Orthologic Corp., No. CIV 96-1514 PHX RCB, slip op. at 13 (D. Ariz. Dec. 19, 1996) (plaintiffs from five separate actions collectively appointed lead plaintiff); Powers v. Eichen, Civ. No. 96-1431-B(AJB), slip op. at 1 (S.D. Cal. Nov. 15, 1996) (eight individual plaintiffs collectively appointed lead plaintiff), Coughlin Decl., Exs. 8-13.

10. Plaintiffs also respectfully request an order authorizing Lead Plaintiffs and their Co-Lead Counsel to designate one or more Lead Plaintiffs to give testimony on behalf of the class in subsequent proceedings to streamline the proceedings and avoid unnecessary and costly discovery or expense to the class.

11. The losses collectively suffered by Raymond Allard, Richard Buck, David Chiu, James Letner, Jayant Ishwar, Lief Erickson, Thomas J. Luechtefeld and Preston H. Britt are $1,256,062. Coughlin Decl., Ex. 4.

I, the undersigned, declare:

1. That declarant is and was, at all times herein mentioned, a citizen of the United States and a resident of the County of San Diego, over the age of 18 years, and not a party to or interested in the within action; that declarant's business address is 600 West Broadway, Suite 1800, San Diego, California 92101.

2. That on January 29, 1998, declarant served the THE ALLARD GROUP'S NOTICE OF MOTION AND MOTION TO BE APPOINTED LEAD PLAINTIFFS PURSUANT TO §21D(a)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND FOR APPOINTMENT OF LEAD PLAINTIFFS' CO-LEAD COUNSEL by depositing a true copy thereof in a United States mailbox at San Diego, California in a sealed envelope with postage thereon fully prepaid and addressed to the parties listed on the attached Service List and that this document was forwarded to the following designated Internet site at:

3. That there is a regular communication by mail between the place of mailing and the places so addressed.

I declare under penalty of perjury that the foregoing is true and correct. Executed this 29th day of January, 1998, at San Diego, California.