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0 pointsdalke12y ago0 comments

I know only what I read in the linked-to article. I don't how important the $20 earnings per share is to IBM, that they might let off profitable groups solely to make that goal. Hence "alleged."

But "insufficiently profitable" and "dead weight" are not synonymous, just like "maximizing profit" and "greedy bastard" are not synonymous. The first of each pair are economics terms, the second are social terms.

To turn your question around, would you rather put your capital towards products with 85% margin or 75%? Does your choice of one make the other by definition a dead weight?

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Spooky2312y ago

The margin question is a good one, and you have to ask it in context of IBM. Nobody wakes up and says "Hey, let's go buy SVC for storage virtualization!". You go to buy IBM storage (lower margin) and layer on SVC and the other management software.

Think of a fast food scenario. The marginal cost of cheese on a hamburger is like 95% profit for a restaurant. That doesn't mean that you stop selling hamburgers for $1 and only sell slices of cheese for $0.25.

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0 pointsdalke12y ago0 comments

I know only what I read in the linked-to article. I don't how important the $20 earnings per share is to IBM, that they might let off profitable groups solely to make that goal. Hence "alleged."

To turn your question around, would you rather put your capital towards products with 85% margin or 75%? Does your choice of one make the other by definition a dead weight?

0 comments

Spooky2312y ago

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