Apple is a pretty special company. It may not be behind the world's most popular mobile operating system -- that would be Android -- but it's the one making the lion's share of the smartphone's industry profits.
This doesn't mean that Android's success hasn't taken a toll.According toS&P Capital IQ, Apple's net margins peaked at 26.7% in fiscal year 2012, slipping to 21.7% in 2013 and 21.6% in 2014.
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Apple can still command juicy markups, giving it net margins that make rivals envious and investors wealthy. However, if we step outside of the cutthroat realms of tablets, smartphones, and PCs we find that there are plenty of companies delivering higher net margins than the world's most valuable consumer tech company. Let's take a look at a few companies that can milk more out of every dollar of revenue than Apple.
Facebook : 24.7% in trailing net marginsIt wouldn't be right to load this list with financials or drug companies where margins naturally skew higher. We don't have to. There are plenty of tech names with net margins north of Apple's current 21.6%.
Let's start with Facebook, a company that has benefited greatly from the smartphone revolution that Apple's iPhone helped catapult into the consumer market. The leading social networking giant wasn't doing so great on the bottom line when it went public two years ago, but it's been able to dramatically improve its monetization. We saw that on display in its latest quarter where Facebook was able to grow its monthly active users by 14% over the past year to 1.35 billion, but revenue soared 59% in that time. Given the scalable nature of the Facebook model, generating more revenue from every user or page view results in an even greater improvement on the bottom line.
Qualcomm : 30.1% in trailing net marginsAnother big beneficiary of the mobile revolution is Qualcomm. The company's name comes from the Brangelina-zation of "quality" and "communication," and the developer of advanced wireless technologies has cashed in on its rich 3G/4G LTE patents.
Growth is slowing at Qualcomm. Revenue climbed just 7% in fiscal year 2014, slowing to just a 3% year-over-year advance in its most recent quarter. Wall Street's holding out for just 5% top-line growth in fiscal year 2015. Net margins may have peaked at 31.9% in fiscal year 2012, but it's still doing admirably by staying north of 30% two years later.
Alibaba : 46.7% in trailing net marginsThere are a couple of reasons why Chinese tech companies sport higher margins than their global counterparts. The world's most populous nation has a corporate-friendly tax rate. Labor and other expense line items are cheaper.
Alibaba's 46.7% in net margins over the past four quarters is impressive, but the e-commerce giant is one of several Chinese tech darlings that have been able to milk nearly half of its revenue to the bottom line. Alibaba went public at $68 just four months ago, and it's already commanding one of the highest market caps in China.
Microsoft : 23.4% in trailing net marginsMicrosoft was Apple's largest rival a decade ago, battling it out in the PC operating system and software markets. That has naturally changed over the years. PC sales have been sluggish, and Microsoft hasn't been as successful as Apple in cashing in on the mobile revolution.
Software has always been where fat margins come to party, and in fiscal year 2011 we saw Microsoft clock in at an impressive 33.1%. Microsoft then realized that it had to shift gears if it wanted to remain relevant in a world where tablets and smartphones were eating into some PC functionality. Making a push into hardware and diversifying into lower margin niches has taken a toll on net margins, slipping to 28.1 in fiscal year 2013 and then 25.4 in fiscal year 2014. The contraction continues. It wouldn't be a surprise to see Apple overtake Microsoft in the coming years, but for now Microsoft is still the one in front on that front.
The article 4 Companies More Profitable Than Apple Inc. originally appeared on Fool.com.
Rick Munarriz owns shares of Qualcomm. The Motley Fool recommends Apple and Facebook. The Motley Fool owns shares of Apple, Facebook, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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