qubex said:
An exclusive contract to sell well under market rates is a forfeit of profit and thus shareholder value. Since it significantly reduces taxable income, it is also tax fraud and a securities offence.
I'm sorry, but you really aren't getting it. First off, market price is whatever the market will pay for a given quantity of the product. If they can sell 1,000,000 units at $X, great, but if they want to sell 10,000,000 units they may not be ble to find a buy willing to pay more than 1/2 $X. If they can increase the amount sold while decreasing cost per unit (which is almost a certainty, as a huge part of the cost per unit on something like this would be R/D, plant set up, etc, and a relatively small portion of the cost is going to be raw materials) then they will make more money selling 10x the units at half the price.
Did you ever take Calc in high school? I think every Calculus textbook includes an example of minimums and maximums based on factory production... if each unit produced costs less than the last, or more accurately, the first unit costs a tremendous amount of money and each sunsiquent unit costs very little, there is a balance where lowering your price per unit is going to result in more profit.
I suspect that Samsung isn't selling parts to Apple at a discount just 'cause they are really nice fellows, but rather because in order to make the most money on their investment of R/D and manufacturing facilities they needed to sell more units, even if they had to lower the price to get the contracts.
But, go ahead and sell your shares, hopefully one of my 401k funds will buy them up for you.
