Originally posted by sigma:
Originally posted by RT and his SE:
Originally posted by sigma:
Originally posted by RT and his SE:
Originally posted by JaTo:
Originally posted by Pete D:
Originally posted by ODC:
Exxon's profit margins are slightly above 10%. That means they sold about 80bn worth of gasoline.

That's pretty low margins for any industry. For comparo's sake, Microsoft makes 30%-40% profit margins off it's software.



Comparing Microsoft with Exxon (or any petrol company) is absurd, they aren't in the same industry, have totally different cost structures and don't have similiar products just to start. Not to mention that the demand for gas is largely inelastic and that gas is a commodity....



Margins are margins and profit is profit; no, MS is not a commodity-based company, but for people screaming about the amount of money being made (a few pennies on the dollar) in gas sales vs. at least HALF of a dollar going to the bottom-line on SW, it again BEGS the question of people's perception on what "screwing" really is.

You are absolutely right; COST STRUCTURE does play a HUGE role in margins and therefore profits. What kills me is that these companies are building equipment to find oil (no mean feat in of itself) and once it's found, they build equipment that plows MILES through rock, mud and sand to suck up oil, pipe it or transport it sometimes thousands of miles away which after getting piped through refractionating towers and "crackers", then makes it's way through yet another form of transportation to the gas station where the consumer fills up.

It takes a s**tload of investment to do the above and the fact that it's still only $2-3/gallon amazes me.



MS sold 17 million copies of XP in the first 2 months after rollout. IRC we consumers buy 250 million gallons of gas a day. When's the next time you'll buy a new OS compared to your next fill up. Would you rather get 30% every 2 or 3 years or 8% every 3 days?



Would you rather pay 10% of each paycheck in taxes or just pay 10% of your gross in April all at once? It's the same thing. 30% is 30%, 8% is 8%.

If it'd make you feel better, you can ask Exxon if they'd be willing to shave 8% off the price now and just bill you in 2009 for 8% of all the gas you've pumped the past 3 years. It'd be exactly the same amount of money either way.

Or, better yet, let them hit you for 30% 3 years from now. After all, it's okay to pay 30% if you've only got to pay it every 3 years.



There's a flaw in your math.
Let's say you buy a copy of full XP home for $149 and keep it for 3 years. MS profits $44 year one and nothing in year 2 or 3.

You put $20 in the tank. The oil company profits $1.60 (assume 8 cent profit per dollar). 3 days later you do the same thing and so on for a year = $197 x 3 years = $597.
Now imagine profiting 24 cents (assuming $3 a gallon) on 250 million gallons every day of the year!
Consumable vs durable goods.
Make more sense now?



There's no flaw in the math. So, Exxon makes more profit? There's a whole lot more work and costs in supplying you with 2000 gallons of gasoline over 3 years than supplying you with a piece of software.

Over the course of 3 years you paid MS $149 and they pocketed $44 in profit. Over the same 3 years, if you pumped $20 in gas every 3 days as in your example, you paid Exxon more than 6 thousand dollars for their goods, 40 times what you paid MS. They should, and BETTER be making more than the same $44 you gave MS.

Go to your bank. Ask them to borrow $6000. Tell them that, after 3 years, you'll pay them $6,044 -- an extra $44 for their help. Tell them that "MS only made $44 off me the past 3 years, that should be good enough for you too." See how quick they are to take you up on that.

Or, let's say that you own a small business. You need 40 copies of XP @ $149 each (roughly $6000, the same that you paid for your gas). MS just pocketed $1700 in profit on the same sales of just $6000 where Exxon only pocketed $597. Which company do you want to invest in?

What's your solution? That Exxon should only make 0.5% margins because, over 3 years, that's about the same dollar amount of profits that MS would make with 30%? It's clear that you've never invested a dollar in your life.



Lets see if I can make it clear for you because you clearly don't understand and you clearly know nothing about what I'm saying or who I am.
Which one cost you more? My point is that to the individual consumables like gas at 8% are much more costly than durables at 30%. Is it becoming more clear yet?
Whats good for business is not always good for the economy and visa versa. I don't need to tell you how many products are affected by fuel costs and how all oil related cost are passed on down the line. Increased consumer product cost leads to reduced consumption...blah, blah, blah, it's the 70's all over again. Big business didn't see it coming then(till it was to late) and I'm not sure they see it now. So maybe a reduction in margin is not such a bad thing. Good for the economy over all and even with Wall streets twitchiness with margins cash in the bank will make them smile.
I'm more concerned with the individuals financial well being than the corporation because I think the former takes care of the latter better than the other way around.

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