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Technology Stocks : Network Appliance

NTAP 111.48

-0.1%

10:14 AM EST

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To: Claude who wrote (5804)	1/11/2001 3:26:42 PM
From: DownSouth	of 10934

I think the assumption has been that NTAP might be forced to lower pricing somewhat because of Chameleon. I don't think that is the case. In fact, it may go the other way. NTAP has lots of head room, even with 60%+ margins, to negotiate lower sales prices without dropping published prices, I believe. I am pretty sure that they do that for bigger, more important deals already and still maintain the 60% margins. I'll bet they know the margin on every deal they do. The problem that Jeff (CFO) points out every cc is that disk drives are low margin, relative to chasis and software. So the more drive content, the lower the gross margin. This is made up by selling more software content. Disk drive upgrades to already sold systems is a killer, though.

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