Technology is the most profitable industry in the economy. But sometimes we lose sight of just HOW profitable.Upon learning that social games maker Zynga had a 47% profit margin last year, we wondered if it’s the most profitable company in the world. Turns out, we weren’t even CLOSE.
The world’s 10 most profitable publicly traded tech companies all have profit margins higher than Zynga. And one of them has profit margins close to a whopping 70%.
Let’s rephrase that so it sinks in: some large tech companies make almost 70 cents of pure profit for every dollar of revenue they generate.
And US bears should be scared, very scared: plenty of them are Chinese.
(Data via YCharts, thanks to commenter Myzplk for the link.)
Baidu doesn't just clean Google's clock in China, it also cleans its clock in profitability. The biggest search engine in China is vastly more profitable than the biggest search engine everywhere else.
This company makes equipment and provides services for pay TV companies in China. And apparently it does so very, very well.
Atmel makes semiconductors that go into everything from radios to computers to planes.
Ebix makes software for the insurance industry. Talk about a nice niche. Half of the revenue Ebix generates is pure profit.
Changyou makes online games like Dragon Oath, Zentia and Blade Wars. They're massively multiplayer online games, which means you pay a subscription fee to play the game online, and these games can be quite addictive. Fixed costs + recurring revenue = profit.
Fixed costs + recurring revenue + addicted customers = GREAT PROFIT.
Cadence makes computers, software and services that help semiconductor companies design chips. This is hardcore technology for an industry which tends to be very profitable, so it makes sense that they're here. Still -- 53%. Wow.
Nanometrics makes equipment for the semiconductor industry. What applies to Cadence applies here: making hard technology for a profitable industry means you get VERY profitable. Kudos to Nanometrics' managers and shareholders.
Corning is the world leader in specialty glass and ceramics, meaning things like LCD screens and fibre optic. And they seem to be good at it. They made a cool video of a sci fi future where everything is a glass touch screen. Where's the video about what they're doing with the money they're swimming in?
Gilat is an Israeli company that makes satellite communications products, software and services. Its big clients include governments and militaries, which is also a good trick to be (extremely) profitable.
Let's just take a second to appreciate the awesomeness of a company whose profit margin is almost 70 per cent. Seven-zero.
Entropic is a fabless semiconductor company; fabless means they don't build chips, they design them, and then other people pay them a licence to build the chips. Licensing can be an extremely profitable business because your costs are fixed and once they're covered every incremental sale is pure, recurring profit. Still -- 68.32%. Kudos. We bow to you.