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Profits: Profit measures that exceed the expected

...Westpac reported an operating profit after tax of $818 million for the six months to March 31 and an economic profit of $493 million...

Strategy: Westpac's Web revolution
...Jeremy Gross, Westpac's group executive for information technology and operations, says applications that have been developed so far, such as internet banking and broking, are "business as usual" - existing services provided through a new distribution channel....

Customers redesign www.westpac.com.au
..."With customer satisfaction of 94% already, we are aiming to set a new benchmark for what customers can expect from a financial institution online.....
www.westpac.com.au/internet/publish.nsf/Content/WI NU+Archive+media+release+08+Sept+0 0

Profits: Profit measures that exceed the expected

...Westpac reported an operating profit after tax of $818 million for the six months to March 31 and an economic profit of $493 million...

Strategy: Westpac's Web revolution
...Jeremy Gross, Westpac's group executive for information technology and operations, says applications that have been developed so far, such as internet banking and broking, are "business as usual" - existing services provided through a new distribution channel....

Customers redesign www.westpac.com.au
..."With customer satisfaction of 94% already, we are aiming to set a new benchmark for what customers can expect from a financial institution online.....
www.westpac.com.au/internet/publish.nsf/Content/WI NU+Archive+media+release+08+Sept+0 0

What people tend to forget is that one man's capital is another man's cost. If you overspend on rolling out a network, you have to pass the costs onto the next guy or consumer somehow or else your shareholders get rather upperty. All those megaprofit projections by the dotcons have to come out of someone's pocket.

LL

... take a look at this article. This highlights the contrast between the traditional bread earners and the so called new IT revolution. One needs to question what is wealth creation or even the definition of profit. The capitalisation of a company is nothing more than the expected discounted income stream plus expected growth. Hence if a company is valued at say $1 billion, shareholders expect a company to earn at least that much in profits (or revenues in the case of .com fluff) over a period when it is deemed to have a competitive edge. For some strange reason the assumption is that share price is roughly analogous to dominance in market share (ie the number of customers you "own") which seems a little presumptious considering that with the reduction in transaction costs, there may be multiple paths/sources to obtaining the same good or service. Thus as soon as a new competitor arrives, the share price drops to indicate a dilution of the market. Why would an IT cartel have such a high "value" compared to a farm which produces so called essentials. Basically it relates to the laws of supply and demand and people mistaking a trajectory which they assume continues forever. Domain name registrations will slow down once every business and person has an account (or we run out of recognisable letters). Once the marginal costs reduce down to the actual operating costs of renewing a site, then you will see some serious cash-flow hiccups along with brutal competition to keep others from poaching your customers. and then maybe it might be smart switching your vaporcash into a real farm. IT companies only have growth potential so long as their products result in improved productivity and capabilities. Once the stress and pain becomes too much (as in the case of a not-so-popular OS) then people start resisting. The real competition to software is not other players but your historical software and customer habits. People tend to underestimate the risk premiums in share prices and until a crash or two happens to kill off the ignorant, rationality won't return to the share-market. Also, it would help if politicans kept their meddling hands out of the pot.

LL

While world domination might be the trademark of Wall Street (as enshrined in US corporate law), I'd like to respectfully point out that other countries might not share the same extreme values. A study of the best US corporation compared with the second best revealed a long-term vision and strong NON-financial values where critical to their success. Sure you can be as successful as Bill Gates at the cost of half the planet hating your guts/products but then a few hundred billion will smooth that burden, right? Frankly, from the point of view of Wall Street, they wouldn't care less if Red Hat staff stripped naked and ran a circus because next year there will be another fad, another media frenzy, another roll of the dice. As the day traders are finding out with the brokerage fees and vigorish (mandatory payments to the dealer) the only people guarenteed to make money are the financial wheeler-dealers (guess who's pocket their mulimillion dollar bonuses are coming out of?). Now capital markets have a role but they are not the end-all and be-all that some people think. Basically companies are trading labor, goods or services to satisfy the wishes of consumers and if what you have to offer is superior and at the low-cost end of the efficiency spectrum, then natural dominance results. Growth for the sake of growth is rather pointless. Afterall, in biology we call unlimited growth a cancer.

So I wish Red Hat luck along with the rest of the Linux distributors.

LL