Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (2329)	3/20/2002 2:29:28 AM
From: Crossy	Respond to of 95531

Sun Tzu, "operating margins are reported as percentage of continuing operations, whereas GM applies to the whole revenue" Not that I know. GM is gross profit in terms of revenue. And revenue only entails coninuing operations. At least that's the way I saw it until now (having had many stocks with discountinued operations in my portfolio). But you are right to exclude the non-operating revenue. My main argument for using GM% is that its use corrects for the "size penalty" smaller firms have. When they grow beyond a certain threshold their size penalty diminishes as well. The same applies to R&D IMHO.. there is no argument that R&D must be kept constant if sales grow. In fact size enables you to actually DECREASE the required R&D in relative terms.. I don't argue with your assertion that R&D cannot be put off forever - true. But it is not conncted to size but instead on "business prospects" (that in turn are based on business roots - company history and those often cited soft skills and competencies learned) But you are definitely right. You have to cancel out discontinued operations in any context.. rgrds CROSSY