David Rosenthal: belief

Transcript context

…Agree. It's also worth pointing out a little bit at this point. For fiscal 89, just to put some numbers around this, they did $1.84 billion in revenue and $217 million in earnings. They're doing 12%-ish net income margin, which is good, but not as good as big tech companies today. We're talking about how amazing the business model is, but it is worth pointing out just how much R&D they had, just how hard it was to manufacture a lot of this physical stuff. At this point in 89, they were heads down on two future generations of consoles, actually three, including the Virtual Boy. There's a lot of real expense in the business, even though they're blowing the doors off sales. I think that's true. I think that net income was probably suppressed and artificially low, perhaps, in part because of all the cash sloshing around that they're using, but also all the international entities. I don't have the stat at my fingertips, but I believe operating margins were more in the 30%-ish range. It's still not like tech companies today, but good. Spinning off hundreds of millions of dollars in cash is nice.…

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