Originally Posted by
fosters
That's how buffett determines if he should buy a company or not. People put too much emphasis on profit. Like you said, if you put $500 million into Company "A" that made $50 million, or put $5 million into Company "B" that made $10 million, the winner is Company "B" even though they had significantly less profit.
Airlines, however, have always had low ROI due to the high cost of entry (ie equipment), so I welcome ANY profit at this point
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Yeah. It really POed me when people talked about the record profits of the oil companies (well yeah, they'd never been bigger), or the profits KBR made in Iraq. If you looked at the ROI, it was actually in the 10% range for most of the companies (some higher, some smaller). I know KBRs was about 10% in Iraq, which, when you consider the risks involved, was really quite low. I know XOMs was about 12% when they recorded their record profit which is again very low considering the risks involved in oil exploration. Now I believe it is in the 25% range which is more in line with the risks.
Yeah, I think Buffett's comment about airlines was something to the effect that from an investor's perspective they have been a dismal failure. Or Bransons- if you want to make a little money in the airlines you need to start with alot of money.