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Technology Stocks : Cascade Communications (CSCC)
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To: Andreas Helke who wrote (3404)4/4/1997 11:03:00 AM
From: Dee Jay   of 3743
 
Andreas, you put your finger on the critical factor - margins. So long as these companies can continue to produce leading edge products they'll be able to maintain the lofty margins we've been used to seeing and which drive the stock prices higher. As the products mature and as competitors fashion me-too products, prices drop but margins less so because of economies of scale, etc.
Being at the leading edge is where it's at - involving risk-taking and incredibly smart managements as to where the technologies are headed, coupled with a deep understanding of the customers' needs.

If you understand the customer (RBOCs, for instance) and their culture and MO as relates to adoption of technologies, bullet proof operating requirements, etc. you can maintain the favored vendor status while helping them to migrate to more effective/efficient products. The "real estate" issue alone is an important consideration, IMO.
Dee Jay
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