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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: If only I'd held who wrote (30746)	4/16/1999 1:23:00 PM
From: J.Y. Wang	Read Replies (1) \| Respond to of 122087

I agree that the overhead should be a great deal less. However, ALL net banks' overhead will be a great deal less! And if you have no barriers to entry, many banks will get into the net bank business where their overhead will be a great deal less, thus crushing margins. The name of the game is not how large your overhead is, but how large your overhead is compared to your competitors. If you have no barriers to entry, your competitors will be in the exact same business you are in and their overhead will be exactly the same as yours. The bottomline is margin. No barriers to entry == sht margin. Look at the companies with the most significant barriers to entry: MSFT and INTC. MSFT's net* margin is over 35% and INTC's net margin is about 30%. MSFT and INTC's barriers to entry are so large that it's almost incomprehensible. Most companies have net margins of about 5-10%.