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had1rian

had1rian
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  • TriNet: An Unsustainable Growth Strategy That Will Soon Fail And Expose The Underlying Unprofitable Business [View article]
    Mr. Salazar's article is informative and some additional color on reading their financials might be helpful. Firstly, though GAAP requires them to report over a billion in revenue, to Mr. Salazar's point, a good portion of that is pass thru billings. The company is not being disingenuous in pointing reader towards their net revenue numbers (corresponds to gross profit at NSP) as they are indeed, really a $600 million or so revenue company. Any financial metrics one runs will make much more sense if run against the net revenue number. As an example, if health premiums go up 10% that will show as a GAAP increase in revenue, though it will virtually all be pure pass thru. Similarly if premiums went down 10% (could happen!) the GAAP revenue would decrease. In neither case would their net revenue be impacted and this is the revenue achieved for their operations. The other key metric is worksite employee headcount (wse). Any operational or efficiency metrics should be run against this number. A comment on attrition might be helpful. Not sure whether 20% is high or low in doing business in the small business space but it does imply that a customer is kept for five years. Within the tech space the company targets it might be appropriate to factor in an offsetting non zero wse growth rate for the companies over the five year period.
    May 19 12:43 PM | Likes Like |Link to Comment
  • Bears like to point to the unsustainable level of corporate profits in a slow-GDP economy, but the S&P 500 - trading at just 14.7X earnings vs. a long-run average of 16.6 - may have priced this in, writes Scott Grannis. If the economy stays slow - but avoids recession - stocks should do just okay, but if we get a pickup in growth, look out for far higher prices. [View news story]
    My own experience in business has been that an expectation of demand drives investment decisions. Personal or business tax rates, in my experience, affect the absolute level of expected net profitability but the existence of demand is always the key driver in moving forward on hiring or investing. Put another way, decreasing my taxes does not in anyway motivate me to invest in my business. The argument is made that lowered taxes indirectly improves demand, which is true to a degree. This effect is actually the smallest in the higher income groups who will just add most of it to savings. Stimulating demand through direct infrastructure investment by government is the most effective way to drive demand and will directly motivate businesses to hire and invest. The business investment by the wealthy will occur even if their taxes are increased to pay for the infrastructure costs. This is due to the observation stated above that tax rates really are only a secondary consideration for a business in deciding to expand; increasing demand is real driver for business investment, not taxes.
    Sep 30 05:34 PM | Likes Like |Link to Comment
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