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Technology Stocks : Intel Corporation (INTC)

INTC 36.78

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Nov 26 3:59 PM EST

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To: Gary Ng who wrote (62509)	8/15/1998 12:17:00 AM
From: Jim McMannis	Read Replies (2) of 186894

Gary, The margins in any viable business are directly proportional to the volume and overhead. For instance, Costco needs 14% and Sears needs closer to 40%. Intel has been in the position of being able to get high margins because they have been close to a monopoly. I've considered manufacturing a certain niche computer but I thought someone would beat me to it...they haven't yet. Selling price would be around $500. Let's say cost was $400. ((500-400)/500)*100=20% profit margin. Is that enough? Depends how many you sell. If I sell 1 million, that 100 million gross profit. Out of that I have to pay all the other expenses not included in manufacturing. Probably do OK. If I only sell 1000 of these units...I have a gross profit of 100k. Probably not enough to carry the costs of R&D, tooling, sales, telephones, rent etc. very long. If I can only sell 1000 of these units I need a lot higher gross margin or I can't make it. Microcenter knows what they have to make per unit. Jim

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