Meet Linear Technology Corp., the Company More Profitable than Apple

*Written by Alexander Crawford.

What do you think is the most profitable company in the US?

Many would probably say Apple Inc. (AAPL), whose widespread product popularity boosted the company to temporarily become the world’s largest in August. But Bloomberg has a different opinion. They point to Linear Technology Corp. (LLTC), a semiconductor company less than 2% the size of Apple by market cap.

In ranking large U.S. companies by their earnings, Bloomberg “gave equal weight to five variables, including profit margin and return on invested capital.” This is because of the many different ways one can measure a company’s profitability.

Linear Technology came out on top, beating contenders Microsoft Corp. (MSFT) and Apple for being the most profitable large company in the U.S.

The chipmaker designs products for industrial equipment and luxury cars. According to analyst at UBS AG Uche Orji, Linear Technology became profitable by avoiding commodity consumer products and focusing instead on industrial electronics. Chips sold to industrial clients produce profit margins that often exceed 75%.

“Because it takes five to 10 years to design products for industrial users, not many companies are willing to take the risk and stay so focused,” Orji said.

Their success also appears highly protected. “90-eight per cent of Linear Technology’s products are proprietary ones, which means clients can’t get it from someone else,” Tore Svanberg, an analyst with Stifel Nicolaus & Co, told Bloomberg. “Over the years the company has built up the best engineer team in the industry, which develops better products than others.”

For a greater look at this company, use Kapitall’s Turbo Chart to compare LLTC against performance of the S&P 500:

For another look at this stock, use Kapitall’s Compar-O-Matic to compare average analyst expectations against industry peers:

 

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