A Quote by Clayton Christensen
How could Digital's collapse be so precipitous? It's because, in many ways, financial performance data is misleading. As you move up to the top of the market, you're getting rid of the less profitable products at the low end and adding business with more attractive margins at the high end. The rate of unit volume growth might be tapering off as you pursue these smaller markets, but your margins actually look better. So Wall Street rewards your stock price until you hit the ceiling.
Quote Topics
Actually
Adding
Attractive
Because
Better
Business
Ceiling
Collapse
Could
Data
Digital
End
Financial
Getting
Growth
High
Hit
How
Less
Look
Low
Many
Margins
Market
Markets
Might
Misleading
More
Move
Off
Performance
Price
Products
Profitable
Pursue
Rate
Rewards
Rid
Smaller
Stock
Stock Price
Street
Tapering
Top
Unit
Until
Up
Volume
Wall
Wall Street
Ways
Your
Quote Author
Related Quotes
Think how weird profit margins are: We've got high unemployment and financial crises - and world record profit margins. People think the American market is very cheap. We don't. The market quite incorrectly gives full credit to today's earnings.
The underlying strategy of the Fed is to tell people, "Do you want your money to lose value in the bank, or do you want to put it in the stock market?" They're trying to push money into the stock market, into hedge funds, to temporarily bid up prices. Then, all of a sudden, the Fed can raise interest rates, let the stock market prices collapse and the people will lose even more in the stock market than they would have by the negative interest rates in the bank. So it's a pro-Wall Street financial engineering gimmick.
If you just look at the data, you are led to believe that things are getting better, rather than worse. That's why the fall is really precipitous, once you hit the ceiling.
Just as the music industry couldn't combat the financial impact of digital piracy, major corporations will have to rethink how to maintain margins when many of their most profitable items can be easily manufactured at home.
Percentage margins don't matter. What matters always is dollar margins: the actual dollar amount. Companies are valued not on their percentage margins, but on how many dollars they actually make, and a multiple of that.
Every time I started a business and the people told me I was an idiot, I ended up making a lot of money. Si Redd used to say me, "Boy, you gotta be where they ain't." What that means is that you find areas of low competition because high competition means lower margins, and lower margins mean less profit. So we were always looking for places where we can be unique. If the thinking is out-of-the-box, people may not understand because they have not seen it before... Therefore you are an idiot.
In the U.S., PC-makers have no incentive to lower prices because it kills their profit margins. They keep adding new features like high-end retina displays and faster processors to justify their high prices.
Back in the '60s and '70s, data were scarce, and while analysts knew that companies with fat gross margins lagged those with thin gross margins early in bull markets - and overachieved in the later phases - they couldn't do much about it.
The farmers are older; they are under financial stress to produce more margins, yet they keep getting less.
I always like to tell people who are interested in the business, and the acquired wisdom I give my children, is to stay out of show business. There are better ways to lead your life. You might end up being happier and spend more time with your family and make more money if you don't work in the film business.
Imaginary testing is unreliable, and in many cases, it's a huge waste of time and energy. In truth you just don't know what will happen until you try. You may start a business, and it could take off in ways no one could predict. Or it could be a complete failure. You could ask for a date and end up with the partner of your dreams. Or you could be rejected cold. It's great to visualize what you want, but you never really know what's going to happen until you act.
When an entrant competitor attacks the low end of any market, the rational reaction of the incumbent firms is to abandon rather than defend it - because the low end is the least profitable of their possible investments.
The low-ceiling price bazaar for sexual relief was a street called Middie Alley. You could barely get a pushcart through this avenue. Top price-twenty-five cents.
Things are going better: there is more growth, less deficit, more competitiveness, better margins for companies, more purchasing power for workers.
When all is said and done, what must be remembered is a newspaper is a business. It used to be a fabulous business that made extraordinary margins. It's now a very good business with appropriate margins.
Wall Street can be a dangerous place for investors. You have no choice but to do business there, but you must always be on your guard. The standard behavior of Wall Streeters is to pursue maximization of self-interest; the orientation is usually short term. This must be acknowledged, accepted, and dealt with. If you transact business with Wall Street with these caveats in mind, you can prosper. If you depend on Wall Street to help you, investment success may remain elusive.
Related Authors
Allen W. Wood Quotes
American
Professor
Glenn Reynolds Quotes
American
Professor
Gordon S. Wood Quotes
American
Professor
Helene Cixous Quotes
French
Professor
Jeffrey Pfeffer Quotes
American
Professor
Jerry A. Coyne Quotes
American
Professor
Michael Hudson Quotes
American
Professor
Richard A. Falk Quotes
American
Professor
Robert S. Kaplan Quotes
American
Professor
Ruth Simmons Quotes
American
Professor
Seyyed Hossein Nasr Quotes
Iranian
Professor