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PMC-Sierra Inc (NAS:PMCS)
Gross Profit
$370.2 Mil (TTM As of Dec. 2014)

PMC-Sierra Inc's gross profit for the three months ended in Dec. 2014 was $96.1 Mil. PMC-Sierra Inc's gross profit for the trailing twelve months (TTM) ended in Dec. 2014 was $370.2 Mil.

Gross Margin is calculated as gross profit divided by its revenue. PMC-Sierra Inc's gross profit for the three months ended in Dec. 2014 was $96.1 Mil. PMC-Sierra Inc's revenue for the three months ended in Dec. 2014 was $136.9 Mil. Therefore, PMC-Sierra Inc's Gross Margin for the quarter that ended in Dec. 2014 was 70.26%.

PMC-Sierra Inc had a gross margin of 70.26% for the quarter that ended in Dec. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of PMC-Sierra Inc was 76.08%. The lowest was 48.54%. 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. 2014 is calculated as

Gross Profit (A: Dec. 2014 )=Revenue - Cost of Goods Sold
=525.603 - 155.396
=370.2

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

Gross Profit (Q: Dec. 2014 )=Revenue - Cost of Goods Sold
=136.851 - 40.702
=96.1

PMC-Sierra Inc Gross Profit for the trailing twelve months (TTM) ended in Dec. 2014 was 88.904 (Mar. 2014 ) + 89.998 (Jun. 2014 ) + 95.156 (Sep. 2014 ) + 96.149 (Dec. 2014 ) = $370.2 Mil.

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

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

Gross Margin (Q: Dec. 2014 )=Gross Profit (Q: Dec. 2014 ) / Revenue (Q: Dec. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=96.1 / 136.851
=70.26 %

* 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 70.26% for the quarter that ended in Dec. 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
Gross_Profit 210.4278.5291.1343.4330.9430.6442.7372.1358.8370.2

PMC-Sierra Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
Gross_Profit 92.791.887.889.991.689.588.990.095.296.1
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