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Technology Stocks : Vari-L (VARL) -- Ignore unavailable to you. Want to Upgrade?

To: JBruin who wrote (1080)	7/21/1999 10:57:00 AM
From: Robert Sheldon	Read Replies (1) \| Respond to of 2702

1)Existence of substitute products Not an issue. VARLs products are patent protected. Also remember that the operating performance of VARLs components tend to far ahead of its competition. 2)Barriers to entry PHDs in the areas that VARL works on are hard to come by. VARL would like a few more but has had difficulty finding high quality folks (its current gaggle is an incredible line up). VARL has been fine-tuning its products for the US military for over four decades. The learning curve is pretty steep. 3)Availability of substitute products If you can stomach poor performance I guess that this is one area of issue. Most folks these days want their base stations and handsets to work well . . . not to have a “probability” of failure. 4)Bargaining power of consumers & 5)Bargaining power of suppliers In an industry where there are component shortages, I would expect to see no more of a decline in average selling prices than normal to components in general. In fact, VARL has maintained a premium over that of their competitors in the base station market. However, as the industry in general average selling prices should be expected to decline. This is a moot subject however as VARL enters the handset market. As I mentioned above, VARL has been able to get a 10% to 15% premium for its products over that of its competitors. As they move into handsets, I would expect this premium to narrow, but future handset orders will really drive growth. In that sense, with very large orders, consumers may be able to bring prices down. We will see.