A Stitch in Haste

Anyone remember the Saturday Night Live commerical spoof, I think a parody of Citiblob, in which an employee describes the bank's highly competitive changemaking services? It went something like this:

We're so flexible that if the customer gives me a dollar, then not only can I give him four quarters, but also ten dimes or even one hundred pennies.

How do we make money doing this? Simple: Volume!

Now why do people understand the humor of that sketch but not this simple arithmetic:

[ExxonMobil] announced profits of $9.9 billion on sales of $101 billion. For those who cannot divide, that is a profit margin of 9.9% of sales. Since when is a profit margin at a cyclical peak of 9.9% considered "staggering"?

Microsoft makes 30%, in good times and bad, with a fraction of the investment or risk [ExxonMobil] takes. ... Procter [&] Gamble makes a margin of nearly 13% of sales selling toothpaste and detergent but we are going to begrudge oil companies 7.6% on average and 10% in their best quarters?

Exactly. "Big" is not the same as "excessive." Stated differently, "big divided by big" can equal "small."

Go read Coyote Blog's whole post. It's good.

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Meanwhile, En Passant asks a question about profits that are not too positive, but far too negative:

Song is almost as good as JetBlue, so Delta is phasing it out? The only legacy carrier to get it right is abandoning its venture.

It seems to me that perpetually losing money and "getting it right" are mutually exclusive. Go figure.