alt Hacker NewsXbox has been profitable almost continuously since a few years into the Xbox 360. It's fascinating how "profitable but low margins" equates to "struggling" to so many.
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It’s potentially a gross misallocation of capital.
Right now, the 5 and 10 year US treasury rates are 4.2% and 4.47%. The 30 year is 4.99%.
A business with a return on invested capital less than that is in fact operating at a loss. Unless there is reason to believe the situation will change in the near-to-mid future, such a business would literally be better off liquidating everything and just investing in treasuries.
You would need access to internal data to figure out their ROIC, but a 3% margin is not promising.
> It's fascinating how "profitable but low margins" equates to "struggling" to so many.
A high revenue but low margin business is a lost opportunity to invest that same revenue in a different area with better margins.
>It's fascinating how "profitable but low margins" equates to "struggling" to so many.
If one bank pays 4.25% on your savings and the other pays 3.25%, which one are you going to chose to put your money in all else being equal? Why is the 3.25% one not a good choice despite you still making money?
People inherently understand business, they use the same principles in their daily life, but they just get confused on making the connections.
Right? It seems intuitive that markets can eventually saturate, and that there's a floor for how low you can get costs, so growth can't be infinite. Maybe you could make an argument that you want to grow in scale with inflation so that your profit doesn't eventually become meaningless, but you don't need to "reset" your multi-billion dollar revenue business to achieve that; you can get that by just bumping prices in line with inflation every few years.
64c lost for every dollar invested. What a massive waste. What a loss for both shareholders and the gaming community. Take it out back and shoot it.