Skinner and Google are giving us a theoretical example of the “A1 Camera Company.” Skinner bids us assume its P&L shows $1 million in revenue and $600K in costs for a $400K operating profit — an operating margin of 40 percent.
But “R&D costs are now tracked in a separate cost center,” Skinner explains.
You could track $200K worth of R&D costs on the original P&L, or you could split out a new P&L for an “R&D cost center.” If you did, it would look like the camera company only had $400K in costs and, thus, had a 600K operating profit for a 60 percent operating margin, while another part of the company had costs of $200K and made no profit at all.
(But is this what Google actually did? We haven’t gotten there yet — Google’s just educating the jury. In fact, Google is literally asking Skinner to tell the jury what this means.)
Peering through Lenovo’s transparent laptop into a sci-fi future
Now there’s a 28,000mAh battery with a phone in it
Samsung has big ambitions for the Galaxy Ring
The Microlino Lite is here to make urban SUVs look even dumber
A former Gizmodo writer changed his name to ‘Slackbot’ and stayed undetected for months