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Technology Stocks : Trimble Navigation
TRMB 80.26-3.7%Dec 12 3:59 PM EST
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To: arun gera who wrote (2637)7/27/1998 3:10:00 PM
From: Yin Shih  Read Replies (2) of 3506
 
I think you made an error as you haven't accounted for manufacturing staff in the 1100 employees.

But the point you made about the bulk of revenues coming from large ticket items is interesting if the numbers are close to what you mentioned. Basically large ticket sales tend to have longer sell times as they require more hand-holding, paper-pushing, higher sign-offs and so on, which does make the revenue stream lumpier as the effect of statistical fluctuations in the buying process are more obvious. Larger ticket items also tend to require more R&D as you need to add the value that justifies the bigger price tag. The tradeoff is that larger ticket items also have the higher gross margins.

Trimble's product mix strategy seems to be to make as much money as it can off the big ticket items at high gross margins but let others sell the competitive high-volume stuff by licensing its technology or selling core GPS components to OEM's at higher volumes/lower marketing cost/lower gross margins. Since the OEM's are in effect just a few customers making big total $, critical buying decisions, Trimble has to spend significant marketing effort in making those sales and are just as subject to the revenue fluctuations from them as with their other big ticket items.
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