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richardosborne

09/04/03 9:44 AM

#44331 RE: MaryinRed #44330

MIR....I think you know that I don't hype and I try to be objective on most issues, but I'm sure I fail sometimes.

Now, with respect to gross margins. In the past they have been skewed with obsolete inventory, sales of products at perhaps a loss, possibly development and/or tooling costs added to the cost of goods, and many other events that do not represent a normal business activity.

I suggest we put aside the debate of gross margins for x number of quarters, until we see some normal product sales, unaffected by abnormal conditions.

Now if we continue to generate margins in the range of 5-7%, then we will have a serious problem, unless the revenue amount would increase to many millions to offset all other costs and still yield a profit, probably unlikely for the foreseeable future.

On the other hand, if we begin to generate margins of 15-25%, then the success probability becomes more achievable.

All the comments of the past are meaningless in so far as trying to apply them to the current products under development, and assuming they all go to market with some degree of success.

Your thoughts?