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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED
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To: Dealer who wrote (4794)10/1/2000 4:40:35 PM
From: Mannie  Read Replies (1) of 65232
 
To: hueyone who wrote (32681)
From: Malcolm Bersohn
Sunday, Oct 1, 2000 10:08 AM ET
Reply # of 32699

Like everybody that posts here I oppose a one parameter view of companies. In that context I wonder what people think about the
following: Sales/employee. This works out to about $400,000 currently for NTAP, $500,000 for Merck, and about a million for
SSTI.(!!!) Some businesses automatically have these high ratios and this parameter can be ignored. For example,oil companies
operations are highly automated; employee's salaries are a small % of their expenses, which include huge capital outlays. We can
eliminate such companies as being nontech, let alone non-gorilla. But among the gorillas maybe this could add some interesting
insight?
One factor that could influence this ratio is the extent of outsourcing. This obviously increases the Sales/employee count ratio. But
if the outsourcing was less efficient than doing it in house then there should be a reflection in the growth of profits. So we might
assume that in comparing two excellent companies that each have optimized their amount of outsourcing.
Does anybody have employee counts for various gorillas?
Is the ratio important? I suspect that a steady increase in this ratio would reveal the importance of intellectual property and the
scaling thereof. Many other parameters are important also, of course.
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