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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (51078)	8/23/2001 2:00:46 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 70976

Profit = revenue - costs Therefore profit - $83 million = revenue - costs - $83 million I.E. to shed $83 million in profit, you've got to decrease revenue and/or increase costs by that much. Assume that costs stay the same (cost of doing business is fixed) or go down (costs less to make fewer tools). Then the $83 million reduction in profit is due to a revenue reduction of at least $83 million. At $9 million each, $83 million is a little more than 9 steppers. That's not an unreasonable number of cancellations given the state of the industry. Katherine

To: Cary Salsberg who wrote (51078)	8/23/2001 2:01:18 PM
From: Ian@SI	Respond to of 70976

Cary, Are you trying to tell us that the gross margin associated with the sale of an incremental stepper is less than 100%? ... and that the amount realized isn't tax free? Here I was hoping a new business model had been created. Sell 1 unit to recover all fixed costs. Sell 2 units to recover all variable costs. Sell a third unit to cover all incremental taxes. Then the rest or sales are gravy flowing straight to the bottom line!!! Damn, I'd love to find a company with that business model instead of all the crud I currently hold. ;^) Ian. RE: "...an $83 million drop in revenue translates to at least that much drop in profit assuming that costs stay the same." Please review! You are far more competent than this statement suggests!