|Inverse Relationship |
As Cisco's margins have steadily increased, margins of the chipmakers that supply it have sagged
|Company||March 01||June 01||Sept 01||Dec 01||March 02||June 02|
|Source: Credit Suisse First Boston estimates, company data.|
Masdea estimates that over half the increase in Cisco's gross margins came about through forcing price concessions out of suppliers (with the remainder due to better inventory management and a shift to higher-margin products). "While we do not necessarily believe pricing pressure will escalate, we certainly view the current level as sustainable," he wrote. "It also suggests that if business does accelerate, component vendors may see less of the benefit than in past cycles."