Busy Morning

I had to take our dog Kramer to the vet for, ahem, acupuncture and manipulation. We are also adopting a new dog that we are bringing home this afternoon.

On the way back I stopped at Costco and spent $100 on HP ink cartridges. We all have to have ink cartridges. HP can charge whatever they want, and I think they do, so why has the stock been such a dog (forgive the pun) for so long?

Obviously tech has been the wrong sector for a long time. I don’t know how much it costs to make an ink cartridge but if it is more than $5 something’s gotta be wrong. And yet the company seems, to me as a person that follows that market but does not know the company inside and out, to be totally lost.

Maybe this is yet another flaw in the Peter Lynch model.

5 Comments

  1. >>>>On the way back I stopped at Costco and spent $100 on HP ink cartridges. We all have to have ink cartridges. HP can charge whatever they want, and I think they do, so why has the stock been such a dog (forgive the pun) for so long?
    Maybe, because many (including) myself) are buying HP-compatible-knock-off ink cartridges (that work just fine) online and for peanuts comparing to what even Costco charges.

    Reply
  2. Roger, you need to try some “generic” printer cartridges….they work just fine and I don’t notice a difference in the yields….try the Staples brand or ink from this outfit called Carrot Ink…

    http://www.carrotink.com/

    Carrot Ink has good pricing and great service. Do you still buy Tylenol aspirin rather than the generic brand:)

    It is funny, I currently own an HP laser printer and a multi-function unit and I go out of my way to avoid HP products now….I have had trouble with support whenever there is an issue.

    Reply
  3. HP seems lost because it is still suffering from Fiorini syndrome. What a nightmare!

    I speak as an electronic engineer who know some people in the company.

    Reply
  4. From a zero start, Dell is up to something like 15% of the printer market. The printers are Dell branded Lexmark.

    HP is in the Dog House because Dell is eating its lunch.

    Reply
  5. I just recently got into my own business, and everyday I’m startled by the wide differences in price and quality in product offerings.

    My business is Large Format Digital Printing.

    Quite frequently, I’ll find something (like msking tape) that we use in great quantity. We used to buy it at 3$ a roll from Home Depo. Should be a good price, right?

    A box of *24* runs me $10 from the 3M distributer in town. And they’ll only sell it to me because I’m a business. If you’re not in business (no resale license, or business license), he won’t sell to you.

    Basically, you should be paying (retail) about 4x the cost of goods. The basic breakdown is: 25% for sales commissions, 25% for fixed costs (rent, utilities, etc), 25% COGS (cost of goods sold, includes hourly labor, materials and delivery costs), and 25% return on investment (profit, for the owners).

    Obviously the percentages will vary a lot from company to company, but there’s a lot of costs that aren’t part of COGS that a company must recover.

    Also, dealing with the consumer market is hell. A distributer can bring down fixed costs and sales, and sell at a greater percentage of his COGS; however, a retail outlet (like myself) can’t do that.

    Salespeople are required in the consumer market. Fixed costs are high because I’ve got to have a nice storefront, not a warehouse in the armpit of the city.

    Consumers also take a lot of time, want lots of attention, and refuse perfectly good finished goods. About the only thing good about consumers is that I can demand payment on delivery. For businesses, net 30 turns into net 90 pretty quickly. Can you imagine if you boss told you he’d pay you for last week sometime next quarter?

    HP may be charging more than 4x COGS. Bulk ink costs be $.05/mL; HP ink costs me $0.30/mL.

    And the bulk ink has sales, fixed costs, and profit in it. The cost of that ink is probably about $.02 in raw materials.

    Reply

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