Comment by mlyle

17 days ago

Big revenue + small margins in a stable business, IMO, is a massive liability for the bottom line; any downturn in business and that becomes big revenue + big losses. Even if cloud is making money, it can wipe a lot of that out.

From the point of view of running an enterprise that lasts, though, diversification is important. Financially diversification is probably, in general, bad for EPS. But if you want to run a lasting empire, it's best to not tie it to just a narrow thing.

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mlyle

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bluGill  17 days ago

That depends on the business. People are not going to stop eating so small margins in the grocery business isn't a negative - the revenue is mostly recurring and recession proof (some people might switch from buying meat to rice+beans, but other people are going to stop eating out and so it balances).

  • mlyle  17 days ago

    Just because people need a grocery store doesn't mean that you're guaranteed to make money running one.

    multiplying huge revenue by a small percentage to get a big positive number

    to multiplying huge revenue by a small negative percentage to get a big negative number

    So that's how Kroger managed to lose billions over the last couple of quarters, or how small changes in shoplifting/shrinkage based on store makeup can cause losses to some chains, etc.