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Technology Stocks : All About Sun Microsystems
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To: Tony Viola who wrote (18200)7/26/1999 6:47:00 PM
From: cheryl williamson  Read Replies (2) of 64865
 
Tony,

Well, Tony they disclosed their setup & manufacturing costs
vs. wholesale prices for their Pentiums and Celerons. It's
not too difficult to calculate the gross margins from that,
especially when the wholesales price differential is so
large.

The reason?? Setup costs on a per-processor basis are not
that much less for a cheaply made processor than for an
expensive one. That's why INTC keeps trying to target its
chips for high-end servers, and the reason for the development
of Merced.

The average price of a PC has gone from over $2000 to under
$1000 in eighteen months. It isn't too hard to understand
that if you're buying PC for $950, it doesn't have an $850
Pentium in it. If it does, someone is taking a loss on the
sale or INTC is slashing its prices on expensive processors
because of market pressures and the price is much lower than
$850.

You'll notice that DELL, INTC, & CPQ have all stumbled in their
earnings growth expectations in the last year. CPQ stumbled
more than other PC makers for the reasons you mentioned.

Fortunately for HWP, they have a good instrumentation and printer
divsion, otherwise they would be toast. Their share price
uptick in the last month or so is based on the expected breakup
& also on the exiting of Lew Platt. Their stock hasn't done
anything for the last few years, so I don't give the recent rise
much weight.
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