Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : DELL Bear Thread -- Ignore unavailable to you. Want to Upgrade?

To: jim kelley who wrote (928)	5/29/1998 1:43:00 PM
From: AlanH	Respond to of 2578

Jim, thanks for the post. If you would help me to understand how you arrived at $1738 for CPQ, I would be grateful. siliconinvestor.com As a time-saver, here's a URL for the associated system: compaq.com Regards, Alan

To: jim kelley who wrote (928)	5/31/1998 1:21:00 AM
From: Bilow	Respond to of 2578

Regarding CPQ's margins across their entire product lines... Most recent quarter (quite nasty) was Sales $5,687 Cost of sales $4,664 Direct costs were 82%, giving a margin of 18%, in a very bad quarter. sec.gov Of course in order to see whether CPQ is selling below cost, we should also take into account marginal costs, which are of course much less than the 82% given above. My own personal guess for marginal costs (and being an ex-design engineer, I have computed these numbers quite a lot) is that CPQ's average computer carries a marginal cost of 50% of sales price at the absolute most. It's just not possible to make money without having extremely low marginal costs. Most of the products I designed were built in quantities in the 100K to million range and had marginal costs of only 25% Marginal costs don't include engineering, advertising, etc., just the parts and labor costs, as well as packaging, shipping, and (sometimes) warehousing. -- Carl