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Fire Your Stock Analyst!: Analyzing Stocks on Your Own by Harry Domash

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Gross Margins

Since gross margins gauge the difference between a firm’s product costs and selling price, companies with lower production costs or in-demand products that command higher prices should report higher gross margins than the competition. Table 11-8 compares software vendors Microsoft and Oracle’s recent gross margins

Table 11-8. Gross margins for Microsoft and Oracle.
Fiscal YearMicrosoft (%)Oracle (%)
20018674
20008871
19998865
19988868
19978673

The gross margins reflect the vastly different competitive situations facing the two firms. Microsoft sees virtually no competition since practically all personal computers come with Microsoft Windows operating system already installed. Oracle faces competition from SAG, Siebel Systems, and PeopleSoft, ...

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