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Profit margins in computer retail are low.
Wipro's software margins exceed 30%, but its margins in computer hardware are only about 5%.
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Likewise Digital Equipment focused on its profit margin in computer-aided design and manufacturing software only to be destroyed by its lower margin but higher volume competitor AutoCad.
Yet Unisteel Technology of Singapore (USTL, $1 Singapore, 57 U.S. cents) has turned this unlovely commodity product into a high-margin component in computer hard drives, digital cameras, cell phones and Microsoft's game consoles.
Analysts who are worried about the pressure on profit margins in the personal computer business were pleased to note that HP's earnings beat Wall Street's expectations.
He saw only fierce competition and thinning margins in HP's personal-computer business, although it was the world's biggest, and proposed spinning it off.
Sarvadi insists margins will get better as volume grows and investments in computer systems and organization are spread over a bigger base.
(See: "Lenovo Unbowed By U.S. Slowdown") Deutsche Bank cut its rating on the stock to "hold," owing to narrower operating margins in the fourth quarter and the computer maker's warning that it will be impacted by higher material and labor costs.
(See: "Lenovo Unbowed By U.S. Slowdown") Deutsche Bank cut its rating on the stock to "hold" due to narrower operating margins in the fourth quarter and the computer maker's warning that it will be impacted by higher material and labor costs.
But my point is that, at least in computers, margins promise to be huge in the Soviet Union for many years to come, so there is no need to think of computer-integrated or just-in-time styles of production; quality suppliers do not have to be everywhere, quality standards do not have to be ubiquitous, the finish is of secondary importance.
And profit margins of 10 percent or more by some estimates are very attractive to companies battling it out for the single-digit profit margins in the maturing businesses of personal computers and cell phones.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com