Z.O.,
Typically, margins are more robust on more mature products than on the newest additions to the product line. This is not always the case but usually is for revolutionary additions to a company's products.
For example, there's probably not an awful lot of ongoing R&D expense decreasing the TDM margins at this point. Nor is there a lot of investment in new plant, processes, training, manufacturing staff, marketing, etc. as a product reaches the end of its life cycle.
On the other hand, all of those factors and more are highest at the beginning of the life cycle for a new product. Customer support, warrantee expense, marketing, sales, demo/evaluation costs, etc. are highest and decline as the product is accepted by the marketplace.
This tends to be true for all companies and all products (excluding long established commodities) not just Newbridge.
So, IMO, the Margin analysis given in Yesterday's earnings call would not have surprised even the least gifted analyst on the call.
FWIW,
Ian. |
