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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: ron delany who wrote (63868)	9/3/1998 1:32:00 PM
From: Paul Engel	Read Replies (3) \| Respond to of 186894

Ron - Re: " How do price cuts help profit margins?" The THEORY is that the lower prices will stimulate sales. Consider the following "example". If Intel sold a 450 MHz Pentium II for $950, how much could they sell at this price ? If they sold ONE, they indeed would have good margins on this ONE device. However, if they reduced the price to, say, $400, the product would be much more affordable and sell in much higher volumes. Selling "millions" at this price will expand profit margins vs, selling just a few at $950. As for an "across the board 20% to 30% cut, Intel usually cuts SOME CPU prices by that amount but much lower cuts are made on the bulk of the processors. The BIG cuts generally are done on the most expensive CPUs - which have the most margin to begin with. Paul