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Technology Stocks : CSCO - Cisco Systems
CSCO 74.72-0.7%Jan 7 3:59 PM EST
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To: damniseedemons who wrote (27)12/12/1996 9:25:00 PM
From: Lev Belov   of 69
 
>>I used to wonder about what was so bad with lowering margins (by selling lower-end/commodity items), as long as revenue increased? I still don't get it....why isn't it better to have lower gross margins, and higher revenues?<<

I believe there are 2 problems that have to do with this:
1. Prices quickly going down
2. Moral aging

To operate in a low-margin computer-related business you have to be brilliant in managing your inventory and forecasting demand. Higher initial margins allow selling excess or obsolete inventory at still profitable prices.
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