Actually, paying dividends are a very costly thing to do. Profits are used to grow the economic value of the company. The stockholders in general want growth of the value of their stock, not dividens, which are doubly taxed. The bottom line is the "value" of the corporation. The stock price essentially reflects this over time.
Customers tend not to be loyal for the most part. If Speakeasy's service deteriorates and there is a better and cheaper alternative, you would be quick to switch. But, more in a commodity situation. If you are in the market to buy a laptop, would you buy one out of brand loyalty or would you buy the one that best meets your criteria (cost, performance, and possibly support). I've dealt with Dell, Compaq and HP PC customer support and I can say reliably that they come from the same gene pool. However, I found that email Compaq's support actually got me a better answer from India than I got from some clueless American from Phoenix. In other words, brand loyalty is generally short lived. Once a business starts relying on that, they are dead. They need to actively retain their existing customers while attracting new customers. On 13 Aug 2002 at 14:48, Paul Iadonisi wrote: > Forgive me, but I'm really not following your line of reasoning at > all. > Perhaps this is the biggest *problem* with US businesses' mindset. > Growth. It's all about growth. That's what killed the dotcoms (in > addition to really stupid ideas). It's a lot harder to find dividend > paying stocks than it use to be. In that model, you're not as concerned > about growth (increase in stock price) as you are about profitability. > A portion of the profits get distributed to the stockholders. > > > > Take a producer of commodity goods, like PCs. Your margin is shriking. You > > must (1)increase volume, (2) cut costs. At the same time, customers are not > > very loyal. Why would a customer buy otherwise identical systems from > > Compaq, Dell or Gateway, Much of that is consumer marketing. Right now, > > Dell has a successful marketing edge. In any case, the CEO must cut both > > Not really sure what you mean by consumer marketing in this context. > > > costs and increase revenue in the short run. If support can be moved > > offshore at a significant cost savings without any reduction of service, it > > will happen. The same for software development. > > Ask yourself *why* customers are not very loyal. I'm a very loyal > Speakeasy DSL subscriber. Why? Customer support that has a clue and > speaks my mother tongue clearly and understands it as well. Please note > I'm not deriding those who don't speak English or don't speak it > fluently. I'm deriding companies that make zero effort to be sure that > their support people can communicate clearly in the language of their > customers -- whatever language that may be. > Part of the reason I ditched my AT&T cable modem service was that > every time I called customer support (which was frequent due to shoddy > connectivity) I got someone who was difficult understand and worse, > could not understand what I was saying no matter how clearly I spoke or > how many times I repeated myself. > I'd be willing to wager that the Speakeasy crew is paid at least a > little more than the average support crew. And they will continue to > run a successful business as long as they keep it that way and don't > ship support offshore. > The problem is that 'significant cost savings WITHOUT ANY REDUCTION IN > SERVICE' (emphasis mine) rarely, if ever happens, regardless of what > some management types preach to their investors. > > > Another cost that gets reduced is R&D. Cutting R&D normally helps short- > > term profits and hurts the long term viability of a high tech company. > > Erh...isn't this kinda what I was saying with my 'short sighted' > remark? Typically, businesses cut things that help financially in the > short term but hurt in the long term. > > -- > -Paul Iadonisi > Senior System Administrator > Red Hat Certified Engineer / Local Linux Lobbyist > Ever see a penguin fly? -- Try Linux. > GPL all the way: Sell services, don't lease secrets > > _______________________________________________ > gnhlug-discuss mailing list > [EMAIL PROTECTED] > http://mail.gnhlug.org/mailman/listinfo/gnhlug-discuss -- Jerry Feldman <[EMAIL PROTECTED]> Associate Director Boston Linux and Unix user group http://www.blu.org PGP key id:C5061EA9 PGP Key fingerprint:053C 73EC 3AC1 5C44 3E14 9245 FB00 3ED5 C506 1EA9 _______________________________________________ gnhlug-discuss mailing list [EMAIL PROTECTED] http://mail.gnhlug.org/mailman/listinfo/gnhlug-discuss
