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Technology Stocks : Novell (NOVL) dirt cheap, good buy?
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To: E_K_S who wrote (17102)9/10/1997 3:57:00 PM
From: Bob Pratt   of 42771
 
Eric, while a service that includes installation/configuration/etc. of Border Manager and the rest of a customer's network would certainly be profitable, remember that the margins for service are very different than the margins for software. Gross margins (exclusive of cost of sales) for software are often in the 80-90% range or higher. Services are generally much lower. The difference is that the incremental cost of selling extra boxes of s/w is just the cost of manufacturing the box, while the incremental cost of each service customer is hiring a body to perform the service.
Service isn't bad, but it is different, and a service business would have a very different balance sheet than a s/w company.

Bob
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