Kirk's Market Thoughts Message Board

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Non-Tech : Kirk's Market Thoughts

COHR 174.82

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1:56 PM EST

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To: Sun Tzu who wrote (11395)	6/10/2021 4:18:26 PM
From: Kirk ©	Read Replies (1) of 26779

I believe you spread the SG&A over REVENUE not unit cost as a $50,000 a year custom cancer therapy would take much more overhead than a $1 pill. Or in my old business 25 years ago, a $5 infrared transceiver consumes far less SG&A per unit than the HP workstation that was maybe $35K fully loaded with memory that I used to design the transceiver. Using my rudimentary skills at balance sheet analysis from PFE's last earnings report, it appeared the 200M or so $20 vaccines sold to the US government allowed them to spread overhead enough to keep paying the nice dividend despite spinning off the cash cow generic business that most thought would lead them to slash the dividend as they became a growth company. There are all sorts of lost opportunity costs from stretching management too thin to cost of capital to ramp production for something sold at breakeven, etc. which is why they spun off the low margin generic business in the first place. I'd love to know what these costs are and hopefully someone reads something or knows something to explain it.

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