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

PMC-Sierra Inc's gross profit for the three months ended in Jun. 2014 was $90.0 Mil. PMC-Sierra Inc's gross profit for the trailing twelve months (TTM) ended in Jun. 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 Jun. 2014 was $90.0 Mil. PMC-Sierra Inc's revenue for the three months ended in Jun. 2014 was $126.8 Mil. Therefore, PMC-Sierra Inc's Gross Margin for the quarter that ended in Jun. 2014 was 70.96%.

PMC-Sierra Inc had a gross margin of 70.96% for the quarter that ended in Jun. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of PMC-Sierra Inc was 76.08%. The lowest was 44.82%. And the median was 67.18%.


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 Jun. 2014 is calculated as

Gross Profit (Q: Jun. 2014 )=Revenue - Cost of Goods Sold
=126.822 - 36.824
=90.0

PMC-Sierra Inc Gross Profit for the trailing twelve months (TTM) ended in Jun. 2014 was 91.661 (Sep. 2013 ) + 89.173 (Dec. 2013 ) + 88.904 (Mar. 2014 ) + 89.998 (Jun. 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 Jun. 2014 is calculated as

Gross Margin (Q: Jun. 2014 )=Gross Profit (Q: Jun. 2014 ) / Revenue (Q: Jun. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=90.0 / 126.822
=70.96 %

* 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 70.96% for the quarter that ended in Jun. 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 209.8210.4278.5291.1343.4330.9430.6442.7372.1358.8

PMC-Sierra Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
Gross_Profit 91.196.592.791.887.889.991.789.288.990.0
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