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Technology Stocks : Network Associates (NET) -- Ignore unavailable to you. Want to Upgrade?

To: santhosh mohan who wrote (1798)	12/9/1997 3:32:00 PM
From: Ojing Eo	Respond to of 6021

No, I don't know the breakdown into direct vs retail. on sec.gov pg 18-19 says electronic distribution as a portion of all distribution is slipping. The Company has historically distributed the majority of its products electronically, and as a result, its cost of net revenue has been low relative to other software vendors. The Company's cost of net revenue includes the cost of media, manuals and packaging for products distributed through traditional distribution channels and third-party royalties. The cost of revenue fluctuates slightly on a quarter to quarter basis depending on the percentage of revenue that is distributed electronically versus traditional channels. As a percentage of net revenue, cost of net revenue increased to 7.6% from 5.9% in the nine 19 <PAGE> month periods ended September 30, 1997 and 1996 respectively. The increase in cost as a percent of revenue is attributable to an increasing percentage of the Company's products being distributed through traditional distribution channels. To the extent this trend continues, the Company's cost of net revenue would increase and, accordingly, gross margins would decrease. See "Results of Operations -- Cost of Net Revenue."