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@mcarney @cacaca the point I was making was that I don't need a lesson in accounting, my experience makes no difference. Good try deflecting, but this is too basic for any experience to matter, whether I'm a CPA or a 6 year old. My point is ridiculously simple - gross margin can be used as a means to gauge some dynamics of retail mark up, all things being equal. It's really not an opinion, but a statement of fact. Your analysis is based on a unbelievably misinformed assumption that makes the entire article worthless.
2 years ago on Best Buy is crazy, just not like a fox
@mcarney and finally, per your last sentence - I agree it's moronic, just as moronic ad your entire analysis. It makes no sense to write an article based on a completely thoughtless assumption, you may as well have just made that statement.
@mcarney 2) I understand accounting a lot better than you. As I said, all things being equal, a lower manufacturer GM implies a higher distributor GM. I understand this is simplistic, but it's a hell of a lot better way o back into the analysis than assuming laptops and iPhones have the same mark up in the channel.
@mcarney @cacaca I can't believe I'm still here, but your logic is mystifying. 1) as you jay said "to assume they are standard across all devices or channel partnerships is naive at best." Sorry to go all caps here, but YOU'RE ENTIRE ARTICLE IS BASED ON THIS ASSUMPTION. My entire point is that to compare iPhone and laptops is moronic. Thanks for making my point. 2) I understand
@David Mayes @cacaca yes, his analysis is pure caca
@mcarney @cacaca Oh geez.... under what accounting method would the pricing of products not be included in gross margin???? Apple makes less gross margin on a computer because it sells it into the channel at a higher implied margin for the retailer - this is part of the reason for differences in GROSS margin. To say it another way, Apple books its revenue at the price it sells into the channel - a retail markup would be implied in gross margin. A lower margin would generally imply a higher margin for the retailer, all else being equal.
Also, it doesn't matter what the average accessory sale amount is, I assure you they make money under pretty much any scenario.
Good try, and thanks for the thoughtful rebuke of my comments on your assumptions. Oh wait, you didn't have one.
@mcarney @cacaca "I clearly addressed [margins] within the article". If by clearly you mean you made a likely absurd assumption based on the most successful item in recent technology history - one that, moreover, as you bewilderingly mentioned, has COMPLETELY different economics given the subsidies associated with it. You know what they say about ASSumptions. This one is glaringly wrong.
For proof, go read Asymco (an informed writer) and take a look at his analysis around the margin structure of different Apple products. Guess what? They're different. Why? A lot of this is likely due to different wholesale pricing dynamics. I know, that's totally cray cray, but it's true.
Therego, lets assume they need to sell substantially less accessories to make up the loss (which likely is closer to breakeven than a $50 loss). I'd guess that's the average consumer gets a $100 case and $200 of software / other accessories. Assume a 20% margin and we're in the clear from a profit perspective. Substantially. Throw in the service contract, huge margin, and we start seeing some real cash.
Carney, once again demonstrating the depth of a jacuzzi and business acumen of a 6 yr old. Even if they break even or lose nominal money on the computer sale, what do you think the margins of a service contract, a case and a couple packages of software are?
The fact you've made me advocate for Best Buy, one of the most poorly run companies I know, demonstrates how flawed this analysis is.
There's a decent amount of irony in that last paragraph given Larry Ellison, Steve Jobs and Jeff Bezos all have traditional (1 class) governance structures and seemingly are able to run their companies just fine without control (understanding Apple's history, in the end it worked well). Maybe it's not a coincidence that they don't have dual class shares.
2 years, 6 months ago on Won’t Someone Please Think of the Activist Shareholders! The World Needs More Yahoos
@mcarney @cacaca @neoganda We'll agree to disagree on what will be an expception vs. the rule. If VCs turn down good investment opportunities because of a shareholder base that can easily be siloed and has no governance rights then they aren't doing their job. Heaven forbid this impact their lives.
2 years, 7 months ago on Companies Can Crowdfund or Raise VC, But Not Both
@mcarney @neoganda So VC's won't be investing in companies that have demonstrated successful business metrics and strong growth profiles simply because it's a headache and the companies raised "dumb money" as a seed round (when the VC's themselves probably wanted to see if the model could be proven before investing)? This makes no sense.