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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bluGill a day ago | parent [-]

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).

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mlyle 20 hours ago | parent [-]

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.

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frumper 20 hours ago | parent [-]

https://massmarketretailers.com/kroger-delivers-solid-quarte...

They didn't lose money because of their grocery operations. Those margins have increased slightly.

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mlyle 18 hours ago | parent [-]

They lost money because of their grocery delivery operations.

Their margins have increased slightly if you ignore the part where their efforts at grocery fulfillment blew up.

Just because an industry is essential doesn't mean that every firm in it makes money.

	▲	frumper 16 hours ago \| parent [-]
		I agree, all kinds of grocery stores have failed over the years. Kroger's just isn't a good example of a failing store for a lot of reasons. They aren't a stellar investment, but they are also up from 1 year ago and 5 years, so investor's don't look like they agree with your summary of the business.