This isn't as crazy as it sounds. Look at a typical main street business: retailer, car dealership, restaurant, etc. There is no "R&D". Profits scale linearly

This isn't as crazy as it sounds. Look at a typical main street business: retailer, car dealership, restaurant, etc. There is no "R&D". Profits scale linearly with revenue; it's not so crazy to jump from "profit is down" to "business is failing". In fact, the very definition of a "high-technology company" is one that reinvests a large amount of revenue into development. The exact threshold varies, but 20-30% and most people agree you're into "high tech" land. For comparison, consumer product goods companies like P&G spend some 10% of their revenue on marketing/advertising. http://adage.com/article/special-report-pg-at-175/procter-gamble-s-advertising-spending-1987-2012/237974/ http://adage.com/article/special-report-pg-at-175/procter-ga... The real issue is that "Business" doesn't yet understand the economics of software companies. They have no tangible assets, their cash cycles are vastly different from most other companies, and they grow in discontinuous, sharp, nonlinear ways. You'll see this bias all over the economy if you look. "Silicon Valley companies are overhyped, THEY HAVE NO PROFITS" "That company is failing, it's going under" Amazon is the grand counterexample, look at how much of a head-scratcher that company is to Wall Street to get an idea of how puzzling this is to Joe Business Guy.