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From: es1@cunixb.cc.columbia.edu (Ethan Solomita)
Subject: Re: Commodore Business Machines
Message-ID: <1991Jun24.144636.1002@cunixf.cc.columbia.edu>
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Reply-To: es1@cunixb.cc.columbia.edu (Ethan Solomita)
Organization: Columbia University
References: <7471@vela.acs.oakland.edu> <1991Jun24.003834.4258@cunixf.cc.columbia.edu> <1991Jun24.122603.3272@news.iastate.edu>
Date: Mon, 24 Jun 1991 14:46:36 GMT

In article <1991Jun24.122603.3272@news.iastate.edu> taab5@isuvax.iastate.edu writes:
>   Question: if Commodore has no money to spend, then how could they have
>spent more that $100 million in 1990?  
>
>   Answer: you are absolutely confused about the idea of corporate profits.
>You are confusing profits with "(net sales) - (cost of sales)".
>
	You're right. I'm confused. I have no idea what I said
that has made you confused, but it often seems a very easy task.
I am not confused at all. Total profits in fiscal 1990 was $5
million. Commodore also has DEBT. They also have stockholders.
Making $5 million on close to $900 million in sales is pathetic.
Luckily they are doing much better recently. Hopefully, if it
continues, Commodore will be in a better position in terms of
money. For now, though, money is somewhat tight.

>   The profit for a company is the amount of money left over after all 
>corporate costs (marketing, R&D, maintenance of buildings, salaries, etc..)
>are subtracted from the total sales.  Commodore could easily spend more 
>on advertizing in the U.S. by either diverting funds from other sources 
>or raising their costs of sales.
>
	That should read and, not or. By definition, spending
more on marketing (which includes ads) raises cost of sales. To
spend money on ads, they'd have to divert money from elsewhere.
Where would you recommend? Cut back on R&D? Fire some more
people? Or maybe they should cut back in Europe where they are
actually doing well?
	Commodore Business Machines (the U.S. division) is barely
profitable, if at all (Commodore doesn't like to release that
info.). There is a reason Copperman is gone. To turn the U.S.
around requires MAJOR work, not another few million here and
there, but a lot of millions, and that is hard for Commodore to
justify.


>   Commodore really is in solid financial condition, and is not "on the
>verge of bankruptcy" in any way.  The last time I looked at Commodore's
>assets:debt ratio, it was very, very low.  For all practical purposes,
>Commodore is debt-free.  

	You mean very, very high, right? 8-) Commodore is nowhere
near bankruptcy. No one here has said that. However, Commodore is
also not flowing with green either. There isn't money to be
thrown around. And Commodore is not debt free. Last I looked, the
ratio was about 2:1, which is very good, but not perfect.

	-- Ethan

FF buckets of bits on the bus,	FF buckets of bits.
Take one down,			Pass it to ground,
FE buckets of bits on the bus.