No, it seems like the people manufacturing one thing are being rewarded more than the people manufacturing other things . . . until you realize it's not manufacturing at all. It's resource extraction, which is necessary but still a different thing. Also, why overlook the banks? They might not be totally without value, but they're not manufacturing either. I'd much rather see such a list dominated by people who actually build stuff higher up the value chain, not their suppliers and facilitators.
Ehhh. Those companies and others like them (Aramco, etc) represent the heart of the modern industrial economy, for better or for worse. Are consumer companies like Apple even imaginable in their absence?
Notice the impact different presentation makes here. If I'd come to a summary like this, I'd notice some standings, compare few companies and continue with what I was doing. While the info-graph provided a completely different experience. I was staring at the data, comparing with my own income, comparing to cars and houses, thinking about the profit difference between FB and Google and what it will take FB to get somewhere close.
The data is the same, but data with design applied gets me interested and I spend time investigating it.
It's a bit too bad they compare revenue of resellers like Amazon with editors like Microsoft, the gross margin is really different. Resellers have to punch over their weight to get some money home where Microsoft brings almost everything to the bank.
Yes, I agree but it's really very difficult to compare companies these days. On the surface, Microsoft, Apple and Google all seem like competitors to each other but they have different businesses underneath and as you said, different gross margins. However, I don't think you can truly find businesses that are almost identical when it comes to giant conglomerates.
The interesting thing about this chart is how unprofitable manufacturing is. Foxconn's profits are less than $3 billion on $115 billion in revenues (and $50-$60 billion in assets). Google has 3x the profit but less than half the revenue. When people ask why manufacturing has left the U.S., this is the reason why: it doesn't offer very good return on capital.
On the other hand, Foxconn provides jobs for over 1.2 million people, while Google employs less than 50,000. Also relevant to the debate about manufacturing.
Profits relative to revenues isn't a useful figure. An investor who sees a business as a black box where you put initial capital in and get money out, doesn't care what the revenue of the company is at all.
Jobs are a more complex issue - offshoring manufacturing may be efficient, but it does have an impact on the distribution of wealth, and unemployment. It's not clear what the right policy trade off is. I think cutting back on illegal immigration would be a better way to boost job growth in the low end of the job market.
> Profits relative to revenues isn't a useful figure. An investor who sees a business as a black box where you put initial capital in and get money out, doesn't care what the revenue of the company is at all.
I can't see how an investor would not care. It seems that given a more profitable business, for a desired ROI amount, the capital input is smaller.
Many manufacturing companies can run on much higher debt levels, because much of the debt is collateralized by resellable equipment (good for the bankers) and because their revenues tend to have lower variance (good for the shareholders).
This magnifies returns on equity, which makes them more competitive with non-manufacturing companies, which typically cannot run on as high of debt levels because they don't have the same kind of collateral.
So typically you probably do have lower returns on invested capital (the entire capital base, debt plus equity) but returns on equity might be comparable. And if the manufacturing business is more stable -- which it often is, compared to most more ephemeral businesses with few assets -- lower returns are acceptable because there is lower risk.
Of course not all manufacturing companies are lower risk than all non-manufacturing companies.
That's why you don't use revenue relative to profit as a metric, but various returns on invested capital as a metric, e.g. profit to debt, profit to assets, profit to capital expenditures, etc. Revenue is often a difficult figure to compare, as different companies in the same industry can record revenue in different ways depending on a multitude of factors (e.g. location in the value chain).
Put it more simply, if I have a business selling widgets and I need to invest $100 to start the business, it matters more what kind of profit I can get on that $100. If the widget I'm selling sells for $50 and I make $10 profit vs. sells for $500 and I make $10 profit, I'm still making $10 profit on $100 invested capital.
Now more often than not, I'd prefer to sell the higher margin product as it requires less working capital (such as inventory costs) which in itself has the 'cost of capital', but that's just the reality of some (fairly lucrative) industries you get into.
> That's why you don't use revenue relative to profit as a metric, but various returns on invested capital as a metric, e.g. profit to debt, profit to assets, profit to capital expenditures, etc.
Sure, that's optimal, but they don't have that information easily accessible on Wikipedia for web debates...
I would be surprised if profits/revenues wasn't at least indicative of better measures like return on invested capital, at least for the companies in the above list.
>The interesting thing about this chart is how unprofitable manufacturing is
And it isn't just manufacturing; resource extraction is similar. Look at Glencore[1], the Swiss mining conglomerate: $1.5BB in profit on $214BB in revenue (190,000 employees).
There are more "efficient" uses of capital. Unfortunately, someone needs to do the building and mining.
I just viewed the OP 15 minutes ago and I have no idea how much revenue any of the companies made. I know Samsung and Apple were near the top and Blackberry was near the bottom, but I already knew that! If it had been a simple table with numbers I'd still remember them.
I liked the presentation, but I think I would have preferred a dynamic bar graph, where each bar grows at the rate relevant for that company, starting from zero. It would keep all the data on the screen and still show visually the differences.
Displaying profit instead of revenue would have been more interesting, "Waooo!!! This company makes more money per second than what I make working a whole month!"
Revenue is interesting because it shows how much is going to each company. Like how many people are buying Dell computers or Google ads, not just the amount of profit each company makes off them which can vary vastly for all sorts of reasons.
IBM and HP are absolutely huge B2B service providers. HP has over 300,000 employees; IBM has over 400,000. By comparison, Google is an order of magnitude less, at about 35,000 excluding Motorola.
to add a precision to your post: and most IBM and HP's employees are billed by the time. Headcount is proportional to market size.
Google employee's time brings no revenue per se. Headcount is independent of market size (the only limiting thing is customer support whose max is O(log(customer)), and we are talking about google ...)
Revenue is not really interesting. Take Amazon as an example, they make a lot of revenue... but that's because they pretty much give away as much money as they can sustain.
Would be cool if this had an at-a-glance view with incrementing counters for each company on a single screen, updating proportionally to their revenue.
I would add compare it with energy-related industries private or public. Each of Shell, Exxon, Sinopec and China national petroleum earn 3 times as much as Apple. 6/10 biggest companies by income are in oil/gas, and privately owned companies are a fraction of the industry size...
I wouldn't say private since these are corporations usually based on shares systems. This is different from a company such as Valve, for example, which is purely private and where the revenue information is not publicly available.
Apart from this detail, your point is very interesting. I wonder, all industries considered, how much % of worldwide's revenue is earned by nationally owned companies versus the corporations counterparts.
To what end? Looking at revenue in isolation is mostly pointless. The presented companies have vastly different businesses with different revenue flows.
Shell, by the way, is $14,800/second. These numbers are public and trivially discoverable.
IMO the visual on the page was annoying, and not very informative.
The bar chart somebody linked to showed the same data in a much nicer way. Easier to grasp at a glance, and easier to make comparisons.
To make the page's visual work it would have been better to show later numbers in terms of the previous companies. Show, for example, that Facebook is 1.3 Blackberries, Nokia is 4 Facebooks, etc.
The title is missing an important keyword. There are, of course, a lot of companies making much (much) more than this per seconds.
Also, how is Foxconn a technology company in the sense the others are? Don't they only (as oppsoed to Samsung for example which does that also) manufacture for others, what is designed by others? I really don't think they fit the description.
