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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 73.99+3.1%3:59 PM EST
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To: JDN who wrote (39146)8/9/2000 9:19:03 AM
From: Mehitabel  Read Replies (1) of 77398
 
JDN, you are absolutely correct about Chambers remarks (and repetition of them) about gross margins. That is, that Chambers said

* traditional products are holding their margins. This was given considerable emphasis

* early stage markets produce smaller margins *initially*. Over a period of time as the market develops, the products sold into early stage markets will produce margins comparable to traditional products

However, he did also say early in the call

* overall gross margins will go down a little {over the next year?)(as they did this quarter, from 64.3% to 64%) as CSCO continues to penetrate deeper into the early markets (such as optical)

In context, it was clear that gross margins were not falling overall, but that penetration of early markets produced (temporarily) lower margins

It is also true as another poster said, that the remarks about gross margins going down a little is standard boiler plate. I have heard these remarks each quarter for the last 6 quarters.

I don't recall having heard the remarks about lower margins from early markets in prior quarters, but that doesn't mean they weren't said.

It was the most bullish call I have heard in the 6 quarters I've been listening. Outstanding.

best regards
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