Berkshire Hathaway Class B Message Board

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Non-Tech : Berkshire Hathaway Class B

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To: The Duke of URL© who wrote (1545)	3/8/2004 3:48:49 PM
From: Jurgis Bekepuris	Read Replies (1) of 1652

>McLane has a currently profitable business who's gross >is about to double and whose costs are somewhat fixed Distributor's costs are "somewhat fixed" when it doubles the sales? I don't believe so. >business that in your eyes has a good chance of failure I did not say "failure". I said that it probably will not give much benefit to BRK. I would like to see an informed opinion on why this is not true. So far you have not provided any good arguments. Do you understand what it means to operate a business with 1% pre-tax profit margin? Take a look at any of the greatest companies. All of them have yearly earnings fluctuations higher than 1%. (You can look at any BRK companies too). Which does not matter much to any company that with fluctuations earns 11-13% pretax. It does matter to a company which may earn -1 to 1%. The only positive I see is what I already said: McLean is largest, possibly cheapest and meanest (since it has BRK behind its back) distributor. This may provide it enough leverage to climb above 1% pretax. We'll see. Jurgis

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