Corporate Profitability Thread

[Stunt]

One thing I have noticed more recently is a number of people on this forum accusing companies of being greedy through their motivation for profits.

Some feel Oil producers are evil crooks who have excessive profits, on the backs of the hard working lower class; some think pharma companies are becoming preoccupied with lobbying politicians and excessive marketing of their products to the unknowledgable masses.

I want to let this thread to cover these areas:
1) How much profit is too much?
2) Is the drive for profits sometimes too extreme?
3) Should we put policies in place to limit the extreme behaviour?
4) Are there any products you buy, that you feel are too expensive, and you blame the companies for this? Name them and why.

Here is a list of the NYSE 30 ("Blue Chips"), and a couple other notables.

Company/Profit
SBC Communications 11.3
GM 0
Altria 14.55
Merck 20.4
Verizon 11.89
JP Morgan 13.11
Citigroup 26.16
DuPont 9.23
Pfizer 18.64
GE 11.29
Coca-Cola 21.57
Honeywell 4.87
Exxon 10.01
Boeing 3.2
Alcoa 5.09
Procter and Gamble 12.87
Johnson & Johnson 18.36
3M 15.01
McD's 12.27
CAT 7.05
HP 4.31
Intel 22.45
United Tech 7.65
Microsoft 30.8
Wal-Mart 3.63
Disney 4.76
American Express 12.61
Home Depot 6.91
IBM 8.9
AIG 10.7

Nissan 6
Toyota 6.05
Imperial 8.62
BP 6.34
Chevron 8.1
Royal Dutch 7.14

These companies averaged profit margins of 11.2%
The oil companies averaged 8.04%

Discuss.

 

[alent1234]

you can't compare profit margins across industries since they are very different. Food is in the single digits and Intel's gross margins are around 59%, although the last conference call said 56% - 59%. you have to compare margins in a sector. You also have to compare cost of capital. Many of these companies take on a lot of debt to pay for projects or they are in a risky business where big profit margins pay for the loser projects and for the company to survive in tough times. Merck is at 20% because a lot of their projects go no where and you have to pay for it with profits from the blockbusters.

 

[Engineer]

This mostly stems from the big oil complaints in the gas thread, doesn't it? There is no competition in big oil. They stick together on price hikes. All of the other corporations will suffer at the continued energy prices, brought on "partially" by big oil as consumers spend more and more of their paychecks on energy (medical care might be another).

 

[zendari]

1) How much profit is too much?
No such thing.

2) Is the drive for profits sometimes too extreme?
No

3) Should we put policies in place to limit the extreme behaviour?
No. What people should do is focus on limiting THEIR extreme spending behavior, focus on collective bargaining of essentials to keep them at reasonable prices, and remove many worthless govt. regulations that add to overhead.

4) Are there any products you buy, that you feel are too expensive, and you blame the companies for this? Name them and why.

Plenty. Soda at restaurants comes to mind. $3 for soda, compared to an $8 entree, when the soda is maybe $.25 at home is a bit excessive. Though I've given it up recently and just get water instead.

Consumer products are for the most part extremely cheap in this country.

 

[NTB]

The fact that a company *profits* from what they do does not bother me; it is a buisness - that is what it is there to do. What I don't like, or maybe just don't understand, is the percieved need for constant expansion: A "company" - be it an oil company, a retailer, or something like a private school or university (since public schools are supposed to be NFP) - is not terribly happy if it achieves something on par with the results of previous years, even if they make a profit. The only time they're happy is if *this* year's profit is higher than last year's.

Nate

 

[alent1234]

growth means you make more money and it's good for the economy since you hire more people

growth also means that you are a successful business venture and you will atract capital to grow further. Without growth there will be no investment in new ventures and no new inventions or developments. You also have to account for the growing population, so growth may also mean you are growing with population expansion. If the population expands 10% in 10 years and you revenues grow at a smaller rate over the same time, than your business is in trouble.

growth also breeds competition. if Microsoft was happy with no growth than there would be no x-box to compete with sony's monopoly and sony would never have made the playstation to compete with nintendo's monopoly

 

[Engineer]

Originally posted by: alent1234
growth means you make more money and it's good for the economy since you hire more people

Hiring more people outside this country and shedding those in this country = more money for most corporations. Good for the corporate pocketbook, not necessarily the economy.

 

[alent1234]

outsourcing and offshoring has been going on for decades

in the end you get stuff cheaper and your money goes for more discretionary spending which builds the economy in the US. there are a lot of companies in the US that hire thousands of people in the US that wouldn't exist if it wasn't for outsourcing and people having more discretionary income

 

[ntdz]

If companies can make big profits, more power to them. That is, after all, the entire goal of running a business, to make profit, isn't it?

 

[MAW1082]

The sole goals of the corporation is to create profit for its owners or shareholders and maintain economic growth.

I would recommend a new documentary entitled "The Corporation." Excellent source of historical information.

 

[alent1234]

the shareholders are the owners

 

[Craig234]

I think you're misframing the issue - but I'll point out one statistic that summarizes a problem to address.

Since the economic crash, the economy has made a lot more money than it had, e.g., the stock market nearly doubling IIRC.

93% of the gains in the recovery have gone to the top 1%.

Warning for Necro-ing a 6.5 year old thread with a comment that has nothing to do with OP.

Fern
Super Moderator

 

[woolfe9999]

I'm not interested in arbitrary caps on business profits. Profits per se are not the issue at all.

If a company treats its workers poorly, I have a problem with that.

If a company pollutes the environment, I have a problem with that.

If a company engages in fraud and other shady dealings that creates a systemic cascading problem with the economy which in turn devastates the middle class, I have a problem with that.

If a company is getting special tax breaks when it would be profitable with or without said breaks, I have a problem with that.

If a company takes tax payer money to be bailed out of a situation created in part by its own incompetence and/or fraud, then uses said money to pay its top execs even more money, I have a problem with that.

If a company pours money into lobbying elected officials so that it is better able to pull off any of the above, including the promotion of anti-science lies, I have a problem with that.

If the company isn't doing any of these bad things then I don't care if its profit margin is 1% or 1000%.

- wolf

 

[EagleKeeper]

I think you're misframing the issue - but I'll point out one statistic that summarizes a problem to address.

Since the economic crash, the economy has made a lot more money than it had, e.g., the stock market nearly doubling IIRC.

93% of the gains in the recovery have gone to the top 1%.

Possibly because the top 1% have the most invested into the system.

 

[BoberFett]

Way to resurrect an ancient thread.

So Craig, how much profit is evil when it's made by movie, music, or video game companies?

 

[CPA]

1) No such thing
2) As long as it's legal, nope
3) No
4) No, not one company forces me to buy their product. Not one.

 

[Craig234]

Whoops. I didn't realize this wasn't a current thread, as my post indicates. I don't even remember how I ran across it - just seeing it and responding thinking it was current.

But it's always good to see I can count on the same lack of appreciation of the issue in a statistic like the one I posted.

How the heck did I run across this thread...

 

[Anarchist420]

1) How much profit is too much? 2) Is the drive for profits sometimes too extreme? 3) Should we put policies in place to limit the extreme behaviour? 4) Are there any products you buy, that you feel are too expensive, and you blame the companies for this? Name them and why.

1. Profits become too much the more they have the government help them. I don't blame the corporations for this, however.
2. It is when they lobby for government regulations and subsidies (which includes contracts as they're nothing more then subsidies).
3. I think fractional reserve banking should be nullified at the State level. I also think State governments should only accept silver or gold (but not both) to crash the fed and to put the banks out of business. I think Federal lands/shores should be auctioned off so that gas prices can possibly come down.
4. I get pissed off at how expensive medical care is, but that's solely the fault of government.

 

[ichy]

Profit is awesome. Breaking laws or fucking over people to earn it isn't cool, but the notion that big corporations can make "too much profit" is repulsive and immoral. How a company makes its money matters, how much it makes does not.

Re: 1%, I don't care. Has it ever occurred to you that vast swaths of the population don't save, don't want to work more than the minimum and seem to have no concept of delayed gratification?

 

[IBMer]

Re: 1%, I don't care. Has it ever occurred to you that vast swaths of the population don't save, don't want to work more than the minimum and seem to have no concept of delayed gratification?

Has it ever occurrred to you that our culture has driven most to this and infact the economy counts on it for the profits it gets?

 

[ichy]

Nobody is "driven" to buying a larger house than they need or buying too expensive a car or getting their kids iPhones.

 

[Jaskalas]

I think you're misframing the issue - but I'll point out one statistic that summarizes a problem to address.

Since the economic crash, the economy has made a lot more money than it had, e.g., the stock market nearly doubling IIRC.

93% of the gains in the recovery have gone to the top 1%.

And yet your lovely government, via BOTH political parties, is the one responsible for propping up the infrastructure. A set of financial institutions that should have collapsed, gutting the top 1% and restoring sanity back into the economy.

Washington DC is the boss keeping the looters in place, sooner you come to realize it the sooner power can be returned to the people.

 

[1prophet]

I'm not interested in arbitrary caps on business profits. Profits per se are not the issue at all.

If a company treats its workers poorly, I have a problem with that.

If a company pollutes the environment, I have a problem with that.

If a company engages in fraud and other shady dealings that creates a systemic cascading problem with the economy which in turn devastates the middle class, I have a problem with that.

If a company is getting special tax breaks when it would be profitable with or without said breaks, I have a problem with that.

If a company takes tax payer money to be bailed out of a situation created in part by its own incompetence and/or fraud, then uses said money to pay its top execs even more money, I have a problem with that.

If a company pours money into lobbying elected officials so that it is better able to pull off any of the above, including the promotion of anti-science lies, I have a problem with that.

If the company isn't doing any of these bad things then I don't care if its profit margin is 1% or 1000%.

- wolf

Companies are abstractions, go after the people in companies that make the actual decisions and hold them responsible for all of the above and they would sing a different tune.

 

[Sunburn74]

Companies are abstractions, go after the people in companies that make the actual decisions and hold them responsible for all of the above and they would sing a different tune.

Really really tough to do. Corporations when caught red handed, like to pick a scapegoat, send him over as a sacrifice, distance themselves from the individual and once its all blown over resume business as usual.

Instead, what really needs to be done is crippling fines and jail time for the CEO and board members for serious violations regardless of their direct involvement or not. Most fines corporations face these days are absolutely trivial. I think intel was once fined like 5 hours of a years worth of profits for many many years of anti trust violations that allowed them to get such a dominant position and reap those profits. The fine should have been more like 5 years worth of profits.