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To: John Koligman who wrote (129659)3/9/2001 10:04:41 AM
From: Tony Viola  Read Replies (1) | Respond to of 186894
 
John, Andy Bryant, CFO, said the predicted drop in GMs was due entirely (maybe he said almost entirely) to the predicted drop in revenues. I believe he said ASPs were holding up.

Tony



To: John Koligman who wrote (129659)3/10/2001 7:30:52 PM
From: Paul Engel  Read Replies (2) | Respond to of 186894
 
John - Re: "In regard to Intel, I'm a bit surprised not to hear a peep out of anyone on the thread concerning the rather substantial drop in GM. "

Intel's gross margins are highly dependent upon SALES/Manufacturing VOLUME.

Intel's (they are not alone) depreciation and fixed costs are spread over the number of units they make and sell.

As this number drops off, the overall COST of each unit increases - rather dramatically.

Hence, as the cost/unit goes up, the gross margin drops - even if ASPs remain constant.

Paul



To: John Koligman who wrote (129659)3/10/2001 10:59:14 PM
From: brushwud  Read Replies (1) | Respond to of 186894
 
I recall Bryant talking about a 10-15% revenue drop, but nothing about GM collapsing (or did I miss it?). Seems like a rather large red flag to me.

They expect gross margin to be 51% plus or minus a couple of percent, which leaves open the possibility it'll be below 50%. That is surprising, and I wonder if their overall GM has ever been that low since 1974. The previous top management would have taken more decisive action to cut costs.


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