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 : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: jach who wrote (18922)	11/5/1998 11:18:00 AM
From: DownSouth	Respond to of 77397

>Next year, the new high-speed startups AVICI, NETCORE, JUNIPER will intensely compete with CSCO. Sounds like more acquisition fodder for CSCO, if these guys have good technology. >Remember, when there is a gross margin like 65%, it's a big temptation for other companies to come in. The reason that CSCO can command a 65% margin is that the barriers to entry are so large and their cost of sale is so small. >The big boys as well as the startups can go for 50% margin and that will effectively drop gross margin for CSCO. It is normal for a rapidly growing market to experience margin erosion. Growth can easily compensate for decreasing margins. Also, CSCO has proven that it is smart enough to acquire new technologies that command high margins. So as technology X experiences declining margins, technolgy Y commands high margins.