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To: Joey Smith who wrote (43448)12/31/1997 6:46:00 AM
From: nnillionaire  Read Replies (1) | Respond to of 186894
 
A related article in today's WSJ shedding some light on margins of the low priced PCs.

interactive.wsj.com

Good Investing



To: Joey Smith who wrote (43448)12/31/1997 12:05:00 PM
From: Paul Engel  Read Replies (1) | Respond to of 186894
 
Joey - Re: " I'm estimating 65%: $45 to make the chip and they're probably selling them to Compaq for $100....am i close?"

My guess is that Intel's cost - die/package/test - is in the $30 to $35 range.

I would assume that Compaq is getting these for $70 to $75.

Paul



To: Joey Smith who wrote (43448)1/2/1998 12:13:00 AM
From: Joe NYC  Read Replies (1) | Respond to of 186894
 
Joey,

Paul, what's you guess on gross margins for these systems? I'm estimating 65%: $45 to make the chip and they're probably selling them to Compaq for $100....am i close??

I think it costs somewhat less to make them and Compaq pays $60 to $70 for them.

It is an ok profit margin, but it is far less then what Intel expects. For every 2 of these $65 CPUs they sell, they lose a customer for a $300 CPU.

Joe


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