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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: miklosh who wrote (16719)	6/3/1998 2:27:00 PM
From: Wayners	Read Replies (2) \| Respond to of 45548

The thing about Navy contracts is that just because a contract is awarded for $1B itdoes not mean that the winner of the contract will actually ever get the $1B. The Navy often issues contracts with an upper ceiling limit like $1B and then the Navy orders against the contract for whatever quantity they need. I've seen Navy contracts for services get awarded with contract amounts of $5M where the contractors are only guaranteed a minimum delivery order amount of $250,000. COMS has to get real follow-on orders for product/services from the Navy. Another consideration is the low margins the Navy would allow for service contracts. An equipment purchase would most likely be different where orders would be based on lowest bidder at a firm fixed price. In order for COMS to win the overall contract, assuming its an equipment only contract, COMS would have had to come in with a low number to beat the competition. Then again, maybe the Navy went sole source to COMS in which case they will make good profit. Anybody have more information about this contract award?