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Technology Stocks : USRX
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To: Thomas Dremel who wrote (17614)4/24/1997 8:17:00 AM
From: Pat Buglak   of 18024
 
Thomas,

<<Another cloud is the expectations by the company in it's forward info that gross
margins will probably return to their norm - in the low 40% from the high 40%
achieved in the 1st quarter. Also, the big if - will revenues for X2 continue from the
initial momentum achieved in the 1st quarter? X2 is more like 1 1/2. Some questions
about the future that may prompt some selling?>>

USR stated that they expect gross margins to sloowly return to historic levels, not just fall back to the low 40's in one qtr. If you listened to the Conf Call, there were no revenues from the software upgrades to x2 (which i imagine will help keep gross margins high) If they were to report earnings for the june qtr (which is unlikey given the merger) margins would still most-likely be in the higher 40's. Going forwrd, USR would not speculate on margins because of the merger. If wouldn't be relevent to give margin projections on a stand-alone basis when they are being acquired. As for question about the future that may prompt some selling--we will know today, but the only thing about the qtr. that could be taken negatively is the DSO; however, the Company stated that from what has already happened during the current quarter, that # is trending downward.

happy investing

Pat
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