Sunday August 4, 2:53 pm Eastern Time
Reuters Market News
Tech Firms Swimming in Cash
By Duncan Martell
SAN FRANCISCO (Reuters) - The technology industry may be slogging through its worst slump ever but many of the biggest names aren't hurting for cash.
In fact, they're swimming in the stuff.
So the question facing companies and investors is what to do with all that money. The options, experts say, are actually rather limited -- buy another company, buy back shares, boost research and development spending or increase dividends. But the good thing in the interim is that all that cash is helping to keep their battered shares from falling even more, and could be enticing to investors.
Take Microsoft Corp. (NasdaqNM:MSFT - News), for example. The No. 1 software company is a cash-generating machine, with $38.7 billion in cash and short-term investments, more than Ford, ChevronTexaco and Wal-Mart combined.
Shareholders may soon start asking for some of it back. After all, spending on information technology has been lackluster, the stock market has sagged, and some of the biggest names in technology, such as Intel Corp., are seeing their markets mature.
"We're past the point where we have the unlimited faith of investors," says Henry Asher, president of New York-based money management firm Northstar Group, which owns Cisco, Intel, Microsoft, Oracle and other tech stocks.
In addition to Microsoft, Cisco Systems Inc. (NasdaqNM:CSCO - News), the biggest computer networking gear maker, boasts $21 billion in cash and investments, Intel (NasdaqNM:INTC - News) has $8.96 billion and database powerhouse Oracle Corp. (NasdaqNM:ORCL - News) has $5.84 billion.
"Particularly Intel, Microsoft and perhaps Oracle will be at the head of the list to increase payouts to shareholders," Asher says.
Even though their stocks are down and earnings have been under pressure, the biggest tech firms are no slouches when it comes to generating cash from their core businesses, ranking with huge oil companies, pharmaceutical and consumer goods firms. .... |
