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Technology Stocks : Intel Corporation (INTC)

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To: Tenchusatsu who wrote (75106)	3/2/1999 4:53:00 PM
From: kash johal	Read Replies (1) of 186894

Tench, Re Margins Perhaps you don't understand the margin game. 50% gross margin means that you sell at 2x your cost. So if K6 costs $120 and PII mobile costs $500 lets say. At 50% margin the net difference in sales price due to $380 difference in cost needs to be $760. In addition everybody charges lower margin on lower priced devices and gets higher margin on the higher end parts. It's trying to compare Celeron and PII prices. Margins for Intel and the PC vendors are lower at low end and higher at high end. In addition Toshiba has to set it's price when looking at the competitiion. There are lots of K6-2 333 mobiles out there now in the $1200-$1800 range. SO they have priced themselves appropriately and are offering a larger screen. I bet if you look at PII mobile prices they are all in the $2500 range. So they have a competitive solution their. In terms of gross margin dollars they make more with the PII's and I am sure they wish they could only sell the higher end machines. In this case the price is also being set by the market, just as it should be. Regards, Kash

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