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| ▲ | rsynnott 13 hours ago | parent | next [-] | | This is why GDPR fines, say, are a percentage of _revenue_. Harder to mess with without getting into outright fraud. | | | |
| ▲ | esseph a day ago | parent | prev [-] | | They're a publicly traded company. If they drop profits substantially, I imagine shareholders etc would leave. | | |
| ▲ | estearum a day ago | parent [-] | | I'm pretty sure GP was suggesting a general enforcement framework, not talking about any particular company. Anyway no, shareholders care about much more than simple profits. | | |
| ▲ | esseph a day ago | parent [-] | | Explain, please. I ask because I've never invested in a company that wasn't very profitable. I'm trying to find out besides intense insider information why someone would. (I'm not VC clearly, just a retail investor.) | | |
| ▲ | estearum a day ago | parent [-] | | Explain how people care about more than just profitability? If they didn't, everyone would be invested in the single most profitable company on the market, which they're not. There are unprofitable companies people are perfectly willing to buy. Growth, absolute revenue, rates of rates of change are all relevant depending on what you care about. | | |
| ▲ | bruce511 21 hours ago | parent [-] | | All the above. Plus it is absurdly simple to manipulate profit up or down. For example, as an owner, I can be paid a bonus, or not. Crumbs, I can be paid a salary or not. If I want profits high, I simply take a low salary and no bonus. Or vice versa if I want profits low. But that's the tip of the iceberg. Buying an asset this year, depreciated over the next 5, means higher profit this year, and 4 years of lower profit. Marketing expenses this year, benefits next year, and so on. Drop the head count to juice profits for a couple years, raise head count to drop it, and do on. Profits are the easiest thing to manipulate and hence the worst metric for fines. Which is why you see Europe use Revenue (not profit) as the measure for some fines. | | |
| ▲ | estearum 12 hours ago | parent [-] | | Yep, not to mention what you can do with complex conglomerates. For example, one should take a look at the intra-company eliminations that the giant pay-viders do (e.g. UnitedHealthGroup, owner of insurer/payer UnitedHealth and healthcare provider Optum) Insurers are margin-capped, but wouldn't you know it once you own a PBM and the providers, you can make revenue, holdings, pricing power, and market share rise arbitrarily while never producing a profit beyond the cap. |
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