Switch to:
PMC-Sierra Inc (NAS:PMCS)
Gross Profit
$359.7 Mil (TTM As of Mar. 2014)

PMC-Sierra Inc's gross profit for the three months ended in Mar. 2014 was $88.9 Mil. PMC-Sierra Inc's gross profit for the trailing twelve months (TTM) ended in Mar. 2014 was $359.7 Mil.

Gross Margin is calculated as gross profit divided by its revenue. PMC-Sierra Inc's gross profit for the three months ended in Mar. 2014 was $88.9 Mil. PMC-Sierra Inc's revenue for the three months ended in Mar. 2014 was $126.5 Mil. Therefore, PMC-Sierra Inc's Gross Margin for the quarter that ended in Mar. 2014 was 70.30%.

PMC-Sierra Inc had a gross margin of 70.30% for the quarter that ended in Mar. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of PMC-Sierra Inc was 78.91%. The lowest was 49.60%. And the median was 67.73%.


Definition

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

PMC-Sierra Inc's Gross Profit for the fiscal year that ended in Dec. 2013 is calculated as

Gross Profit (A: Dec. 2013 )=Revenue - Cost of Goods Sold
=508.028 - 149.213
=358.8

PMC-Sierra Inc's Gross Profit for the quarter that ended in Mar. 2014 is calculated as

Gross Profit (Q: Mar. 2014 )=Revenue - Cost of Goods Sold
=126.468 - 37.564
=88.9

PMC-Sierra Inc Gross Profit for the trailing twelve months (TTM) ended in Mar. 2014 was 89.947 (Jun. 2013 ) + 91.661 (Sep. 2013 ) + 89.173 (Dec. 2013 ) + 88.904 (Mar. 2014 ) = $359.7 Mil.

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

PMC-Sierra Inc's Gross Margin for the quarter that ended in Mar. 2014 is calculated as

Gross Margin (Q: Mar. 2014 )=Gross Profit (Q: Mar. 2014 ) / Revenue (Q: Mar. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=88.9 / 126.468
=70.30 %

* 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

PMC-Sierra Inc had a gross margin of 70.30% for the quarter that ended in Mar. 2014 => 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.

PMC-Sierra Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
Gross_Profit 209.8210.4278.5291.1343.4330.9430.6442.7373.1358.8

PMC-Sierra Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 91.196.592.792.887.889.991.789.288.990.0
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide