Apple Inc. (NASDAQ:AAPL) generated a staggering $8.5 billion in fourth-quarter profits. It’s one of the world’s most profitable companies. But the huge profit Cupertino reports every quarter is just a by-product of the company’s passion to make the “best products,” says UBS Securities analyst Steven Milunovich. Of course, Milunovich didn’t delve into the bendgate and the iOS 8 update glitches.

For Apple Inc. (AAPL), Profit Is Just A By-product
Source: Pixabay

Why Apple (AAPL) doesn’t care about ROI

When Apple Inc. (NASDAQ:AAPL) made its devices accessible to the blind and began focusing more on environmental initiatives, Tim Cook said he doesn’t care about “the bloody ROI.” Apple Inc. (NASDAQ:AAPL) continues to lose market share to Samsung and other Asian Android vendors. But Cook says the company will keep making high-quality devices, even if that means selling only at premium prices.

The iPhone maker does sweat about financial results. But its 90,000-odd employees go to work “to change the world.” Investors have seen the rise and fall of BlackBerry and Nokia. A large number of them are concerned that Apple’s success is too good to last. However, says Milunovich, Apple Inc. (NASDAQ:AAPL) is pretty different in terms of external ecosystem and internal culture. Understanding these differences will help investors decide whether it has a longer competitive advantage period.

What Apple (AAPL) can learn from history

There is a long history of businesses making money as an “offshoot of product or customer focus.” But they went into a downward spiral when profit became the most important thing for them. For instance, Boeing emerged as the most successful aircraft company through its “love of aviation” rather profit. But the acquisition of McDonnell Douglas prompted a shift in the company’s focus, which didn’t work out. Other companies such as Merck, Citigroup and ICI have also suffered from the myopia of shareholder returns.

Lesson for Apple? Stay focused on creating great products rather than shareholder returns. Pursuing goals (like profits) indirectly is more likely to be fruitful. UBS Securities has a Buy rating on Apple with $115 price objective.

Apple Inc. (NASDAQ:AAPL) shares fell 0.10% to $108.73 in pre-market trading Tuesday.