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From: taab5@isuvax.iastate.edu (Marc Barrett)
Subject: Re: Commodore Business Machines
Message-ID: <1991Jun24.122603.3272@news.iastate.edu>
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Organization: Iowa State University, Ames, IA.
References: <7471@vela.acs.oakland.edu>,<1991Jun24.003834.4258@cunixf.cc.columbia.edu>
Date: Mon, 24 Jun 1991 12:26:03 GMT
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In article <1991Jun24.003834.4258@cunixf.cc.columbia.edu>, es1@cunixa.cc.columbia.edu (Ethan Solomita) writes:
>	But, to the subject of Commodore spending on marketing in
>the U.S.: Please tell me, whence the money? They don't have any.
>Commodore's profits for July 1, 1989 through June 30, 1990 were
>five million dollars. This year it looks like they will make
>about $40-50 million or so, back to their standard before last
>year. That's on sales of appr. one billion dollars. They simply
>don't have the money. There are STOCKHOLDERS who do kinda demand
>that profit.
>	I'm not defending every action at CBM, but realism needs
>to creep into these discussions. It isn't that Commodore doesn't
>have any ideas of how to spend money, they simply don't have
>money.

   OK, we'll assume (wrongly) for a minute that Commodore is perpetually
close to bankruptcy and that they have no money to spend on advertizing.  
I don't have the exact figures handy, but during the 1990 fiscal year 
Commodore posted a modest profit.  During the same year, Commodore had
somewhere around $100 million in capital expenditures (marketing, R&D, and
upkeep of the corporate infrastructure).

   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)".

   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.

   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.  

>	-- Ethan
>
>"...Know-Nothing-Bozo the Non-Wonder Dog, an animal so stupid that it
>had been sacked from one of Will's own commercials for being incapable
>of knowing which dog food it was supposed to prefer, despite the fact
>that the meat in all the other bowls had engine oil poured all over it."

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