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Technology Stocks : TAVA Technologies (TAVA-NASDAQ)
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To: Rob L. who wrote (8530)1/7/1998 2:10:00 PM
From: Karl Drobnic  Read Replies (2) of 31646
 
Quality of Revenues: The CFO's statement yesterday threw cold water on our hopes for big revenue increases, though it would still be a 40% increase over last year's 2Q. So Step 2 is to reflect on the Revenue Mix. That will show in profit margin. Hardware sales generate big revenues, but profit margins are 7% to 10%. Consulting services generate smaller revenues, but profit margins are 42% to 70%. If revenues are flat, but the mix changes substantially in the direction of consulting services, we are on track. Adding 30 engineers indicates to me that the mix is rapidly changing to consulting services. Then back out the ramp-up costs for Y2K, and we have numbers that will excite institutions and brokerage houses. Revenue mix is very important at this juncture.
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