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Technology Stocks : All About Sun Microsystems

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To: Stormweaver who wrote (18193)	7/26/1999 6:00:00 PM
From: cheryl williamson	Read Replies (4) of 64865

James, Sigh... Ok, I'll try once more..... INTC's gross margins for their low-cost processors are about 1/30 that of their Pentiums. That means they have to sell 30 celerons (I believe that's the name) for each Pentium to attain equity in gross margins. As the market moves to lower-cost PC's, that means an increasing percentage of PC's sold will use the lower-margin processors, thus lowering PROFITS for PC makers. They can still make money, at least for now, but the days of booming profits for PC makers are over. That's why CPQ is selling for about 1/2 the price it was last year, and why DELL stock hasn't gone anywhere and is still stuck in the low 40's. Even the "great behemoth" from Redmond is having trouble breaking 100, and hasn't done so well since the internet boom started last year. So, the conclusion that the market has made is that PC makers won't sell enough units to make up for their collapsing gross margins. 25% year-on-year growth isn't going to do it if prices keep getting cut in half. Now do you get it??

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