It seems that the worst international financial crisis in decades has not affected everyone. While many US companies struggle to survive, some technology companies have plenty of cash piles. Still, how are they planning to use them? Let us see some of these rich tech companies:
Cisco Systems Inc is the most cash-rich tech company with $29.5 billion in hand, putting it just behind Exxon Mobil Corp’s $31.4 billion, despite having a market value less than one-quarter of the oil giant’s. Bankers and analysts think it may make a move on virtualization software maker VMware Inc.
Another tech company with some of the largest cash piles includes Apple Inc with $25.6 billion. In spite of spending about $2bn a year on R&D and capital investment, Apple’s $26bn in cash has left it with the biggest cash pile in the technology world. The company’s stock price too has rebounded from its low of $78.20 in the week when Steve Jobs announced his leave. The fact that Apple’s cash can be a big strength during recession has quieted critics, who in the past have called on the company to buy back shares or offer a dividend.
Microsoft Corp too sits on a huge cash pile of $20.7 billion. The rich software giant, however, announced rather disappointing quarterly results recently, unlike IBM. Microsoft recently announced that its 2009 first quarter profit sank from $4.71bn a year ago to $4.17bn, a loss of 12 percent. Total revenue was $16.63bn, a 2 per cent rise from year before. This was only possible thanks to higher server, tools and entertainment sales.
The search giant Google Inc too sits very well with a cash reserve of $15.9 billion. The Mountain View, California-based company had almost $16 billion in cash at the end of the recent-announced fourth quarter. According to Google CFO, Patrick Pichette, the cash reserves provided Google with sufficient flexibility “for the right deal at the right price.”
International Business Machines Corp too has a huge cash pile. In January, the company disclosed its full-year financial results for 2008: record revenue of $103.6 billion; record pre-tax profit of $16.7 billion; record earnings per share of $8.93; and record free cash flow of $14.3 billion, up $1.9 billion, excluding global financing receivables. IBM also announced an earnings’ forecast for this year at $9.20 a share, well above Wall Street’s $8.75 call.
The enterprise software giant Oracle too sits on a $7.4 billion pile of cash. Little doubt that the Redwood Shores-based company is quietly going on a shopping spree. Recently, the company bought mValent Inc, a small software company that helps configure other software. The deals put Oracle in amongst the cash-rich companies. Oracle made sales of $22.4 billion in fiscal 2008.
Sun Microsystems might be a little bit affected by the recession. However, the high-end computer and software maker remains among the companies with a relatively large amount of cash, even if its stock has been faced considerable hammering in the past few months further accentuated by fears of weakening global tech spending. The company carries a cash balance of $2.6 billion and a market cap of $3.8 billion.
June 7, 2009
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