Formerly About Applied Materials Message Board

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Politics : Formerly About Applied Materials

AMAT 252.25

+0.9%

Nov 28 9:30 AM EST

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To: Katherine Derbyshire who wrote (24448)	9/20/1998 8:18:00 AM
From: Duker	Read Replies (1) of 70976

Katherine, Really noisy quarter you are comparing. First, in the year ago June quarter, the company did not exactly have a clean "system-wide balance sheet"...(combine the channel and the company's own inventories...the artful balance between over-production and short-term gross margin improvements...a balance that CPQ has managed to screw up royally over the past several years). This has the effect of boosting GM -- the exact magnitude of the boost is not determinable ... though my guess is that if you got Earl Mason really drunk, he could tell you within a 40 bpts. Second, I believe the company took some down-time in the second quarter of 98. Two weeks I believe? This clipped a bunch more from the GM line...not amortizing those nasty fixed costs... Third, I am sure there were some "sizeable incentives" to flush the channel that depressed GMs further. I do not disagree that, using CPQ's model (whichever one you want to choose), GM are likely to trend down in a competitive environment...but, it is a pretty tough comparison without a bunch of footnotes...most of which I am probably missing...but directionally...the point is the same. --Duker

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