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EarthLink Holdings Corp (NAS:ELNK)
Gross Profit
$583 Mil (TTM As of Mar. 2016)

EarthLink Holdings Corp's gross profit for the three months ended in Mar. 2016 was $139 Mil. EarthLink Holdings Corp's gross profit for the trailing twelve months (TTM) ended in Mar. 2016 was $583 Mil.

Gross Margin is calculated as gross profit divided by its revenue. EarthLink Holdings Corp's gross profit for the three months ended in Mar. 2016 was $139 Mil. EarthLink Holdings Corp's revenue for the three months ended in Mar. 2016 was $254 Mil. Therefore, EarthLink Holdings Corp's Gross Margin for the quarter that ended in Mar. 2016 was 54.69%.

EarthLink Holdings Corp had a gross margin of 54.69% for the quarter that ended in Mar. 2016 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of EarthLink Holdings Corp was 66.54%. The lowest was 51.58%. And the median was 58.62%.

Warning Sign:

EarthLink Holdings Corp gross margin has been in long term decline. The average rate of decline per year is -2.4%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

EarthLink Holdings Corp's Gross Profit for the fiscal year that ended in Dec. 2015 is calculated as

Gross Profit (A: Dec. 2015 )=Revenue - Cost of Goods Sold
=1097.252 - 500.628
=597

EarthLink Holdings Corp's Gross Profit for the quarter that ended in Mar. 2016 is calculated as

Gross Profit (Q: Mar. 2016 )=Revenue - Cost of Goods Sold
=254.262 - 115.206
=139

EarthLink Holdings Corp Gross Profit for the trailing twelve months (TTM) ended in Mar. 2016 was 156.616 (Jun. 2015 ) + 148.513 (Sep. 2015 ) + 138.51 (Dec. 2015 ) + 139.056 (Mar. 2016 ) = $583 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

EarthLink Holdings Corp's Gross Margin for the quarter that ended in Mar. 2016 is calculated as

Gross Margin (Q: Mar. 2016 )=Gross Profit (Q: Mar. 2016 ) / Revenue (Q: Mar. 2016 )
=(Revenue - Cost of Goods Sold) / Revenue
=139 / 254.262
=54.69 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

EarthLink Holdings Corp had a gross margin of 54.69% for the quarter that ended in Mar. 2016 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

EarthLink Holdings Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Gross_Profit 866773595450388724707640619597

EarthLink Holdings Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Gross_Profit 152151153162153153157149139139
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