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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.94

+1.1%

Nov 28 4:00 PM EST

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To: slob who wrote (11278)	1/1/1998 7:26:00 AM
From: sepku	Read Replies (2) of 77400

>>>I want to understand why CSCO seems to be able to generate over 70% gross margins while all the competition sit at around 30 to 40%. <<< Actually, the rest of the competitions' gross margins sit around 65% on average, currently. And I believe CSCO's gross margin is in the high 60s...68% or 69%. Simple economies of scale -- CSCO can produce more, more efficiently. That's one of the perks from being #1. CSCO makes up 53% of the networking sector's market combined market cap. 1998 is going to put the squeeze on the competition's margins, particularly in areas where CSCO is pushing aggressively for market share at virtually any cost. For example, RAS port prices are falling rapidly due to CSCO entering the market with an "anything for a sale" strategy and slashing prices. This will reflect on competitors like ASND who will see a reduction in gross margin from 65% to perhaps 64 - 62%, as a result, by conclusion of Q2/98. Style Pts.

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