just doing the sums, page-6

Just a few things about what Tap has posted.

"The fixed costs, being fixed, will have no effect on the profit as revenues increase above break even."

This is not entirely correct. Fixed costs typically increase with company size. More employees, more offices (e.g. the new one in Japan that just opened), increase as the company gets larger. This will still eat into the profit margin a little.

"The variable costs, being variable, will have a braking effect on profit as revenues increase. But due to economies of scale, the more revenue generated above break even, the less braking on profit there will be."

The "braking" on profit has nothing to do with break even, but all to do with volume / revenue. Or to put it another way the discount / cost advantage due to economies of scale is not linked to break even.

"The profit for companies therefore becomes a product not of total revenue, but of revenue ABOVE the break even. If they can increase revenue as a percentage of break even, and have low variable costs relative to revenue (which is typical of technology companies with market-leading products), profits will skyrocket. Netcomm has both those characteristics. "

Netcomm does not have low variable costs relative to revenue.... its 76% of revenue is Variable costs. So it does not have both. These sweeping statements are misleading.

In addition I believe one of the reasons that the margin is only 24% is because Netcomm is pricing its products low to capture market share. Maintenance / upgrade and ongoing costs for fixed infrastructure such as KONE Elevators and smart meters is significant.

-SS