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Technology Stocks : CSC Computer Sciences Corp
CSC 69.010.0%Apr 10 5:00 PM EST
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To: Orwell who wrote (105)4/30/1999 4:37:00 AM
From: Seeker of Truth  Read Replies (1) of 125
 
Why are profit margins so low? Much of their business comes as a result of competitive bidding. You might ask, you get what you pay for
so why doesn't CSC quote higher prices so it can do business more
profitably? The problem is that installing and maintaining new systems
is something of a gamble. Many, maybe most, customers don't know how to estimate their risks. If they were really that knowledgeable they
might do the job themselves. So they tend to be more sensitive to
price quotes which everybody including those they report to can
understand. They are less sensitive to the quality of the work because
that is 1, in the future, not tangible now and 2, not relatively
assessable by them. In a truly long term relationship, quality of the
job is highly appreciated. But these days, the decision makers are
often changing so there may be a long term relationship between CSC
and organization X but it may not translate to a mutual trust because
the individual decision makers have no long term appreciation of CSC.
You heard it from the president of IBM recently, IT services is the
place to be. But I doubt if IBM can get a 10% profit margin. It's
a growing business, all right, but not a high margin one.
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