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Technology Stocks : Creative Labs (CREAF)
CREAF 0.411+11.2%Dec 8 12:12 PM EST
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To: Vanni Resta who wrote (7837)1/7/1998 9:52:00 PM
From: Fred Fahmy  Read Replies (1) of 13925
 
<one of the main goals in managing a business (and looking for investments) is always margin expansion. With all due respect to you, I have the impression you are not aware of this.>

Based on your response, "I have the impression" that you know very little about managing a business or what the ultimate goal is. I also get the impression that you have no experience working in a financial area. Margin expansion is NOT usually the primary goal. Some of the best known and successful companies (such as Intel) have always had a strategy of maximizing margin dollars not margin percentages (do you understand the difference?). The quote below is directly from Intel's annual report

"The Company's goal continues to be to grow gross margin dollars. Intel's current gross margin expectation for 1997 is 60% plus or minus a few points. However, the Company believes that over the long-term the gross margin percentage will be 50% plus or minus a few points....>"

Of course all else equal higher margins are always better and everyone wants to have the highest margins possible and expanding margins but this doesn't mean that this is the goal or focus. Intel and IMO CREAF understand that sustained increased profits can only come from increasing revenue which often comes at the expense of reduced margin percentages.

Good luck,

FF
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