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Technology Stocks : Citrix Systems (CTXS)

CTXS 103.90

0.0%

Nov 2 5:00 PM EST

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To: David Lawrence who wrote (5090)	2/26/1998 10:01:00 PM
From: Robert Scott	Read Replies (1) of 9068

"The 7-year-old developer (CTXS) of applications for managing computer networks told money managers Wednesday that its gross profit margins of 90 percent throughout 1997 may last another 18 to 24 months. After that, the figure, which equals revenues minus the cost it takes to make and sell goods, should fall to around 30 percent. That's roughly in line with gross margins among its more established industry peers such as Shiva, Novell and Microsoft, Chief Financial Officer James J. Felcyn told CBS MarketWatch." The writer of this is obviously not a financial correspondent. He is confusing gross profit margins with operating margins. I believe that the 90% gross profit margin will come down slightly but the key is operating margins at 30% - this is where the pressure will be - they have run close to 50% which is excessive over time and this is what the CFO commented on last year as being unsustainable. As long as the decline is managed, it will not be a problem for the stock price.

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