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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (7652)	10/21/2003 4:52:13 PM
From: BWAC	Respond to of 25522

They do have a monopoly. Its all based on how mnay times you can leverage your deposits to borrow from the Fed at under 1% and loan back out. Think Interest spread.

To: Proud_Infidel who wrote (7652)	10/21/2003 5:10:45 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 25522

>> Looking at their financials alone, one would think they have a near-monopoly. I mean, even MSFT's margins are in the 30's some quarters Brian, look at the marginal costs/revenue. Say a fatcat millionaire wanting to celebrate his AMAT profits is building a mini-mansion, and he goes to the bank to borrow $1,000,000 at 5% mortgage. The bank needs to have 8% reserve on the loan, so it needs to attract $80,000 in deposits. They pay approx 1% on savings accounts. That's $800/year. The bank collects $50,000 in mortgage interest. Which one has a better margin, C or MSFT ? Sarmad

To: Proud_Infidel who wrote (7652)	10/22/2003 12:09:09 PM
From: chomolungma	Read Replies (2) \| Respond to of 25522

I am not comparing C to AMAT. My question was how can a company in a commodity business make such huge profit margins? Yes you were by concluding that you can use the same yardstick (ROS) and applying it to two very, very different firms. A 24% ROS is great for a manufacturing firm, but not necessarily for a financial firm who's P&L statement looks very different. My cousin is a dentist. He probably does about $600,000 a year in fees. His office expense is about $200,000 a year and his taxes about $150,000. So he nets $250,000 for a 42% profit margin. Are dentists monopolists? You can't compare a service firm to a manufacturing.