Hey, Amazon Critics: PCs Will Sell
She goes on to write, "Spokesman Bill Curry says that Amazon expects the PC store, which will open in the latter part of this year, to 'bring a high dollar contribution' to the company. But growing sales hasn't been Amazon's problem; it's those elusive profits. Consider that Dell Computer (Nasdaq: DELL), the most efficient PC maker and maybe the most efficient manufacturer period, can only muster 18% profit margins on PCs. Are these the kind of high-profit businesses that will hasten Amazon's move into the black? Hardly."
My first point of contention: 18% profit margins would be exceptional and well above the average S&P 500 company's profit margin, which is just around 6%. Second point: Dell might earn 18% on PC sales (I don't believe so, though), but its overall profit margins are only 6.6%, and it was still one of the best-performing stocks of the 1990s and is now worth $66 billion. When will people realize that high margins aren't the be-all and end-all to a great business? Third, Dell actually makes computers. Amazon is just offering a link. You click the link, you buy a computer from Dell.
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