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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: don kramer who wrote (2398)	9/24/1998 5:16:00 PM
From: Diamondcutter	Read Replies (1) \| Respond to of 6439

Relative to settlements, part of the 1997 and Medicaid proposals have been that the payments MUST be made with pricing increases--raise prices and reduce consumption, especially by the supposedly more price sensitive minors. Thus, although if one raised retail prices by $0.35, you also have to adjust for reduced consumption. Many believe there is a .4 elasticity and so a rough 15% price increase (average retail of $2.30??) would mean a one time decrease of 6%. Net net, the impact on near term profits would be far less than if the settlement was paid out of their current earnings but with a more negative effect longer term because of the smaller user base. Diamondcutter