Cash is king - or it is at least for these tech giants. Every
few months we take a look at how cash contributes to tech firms'
stock values in order to assess how capable these firms are of
making sizable commitments to acquisitions, R&D or paying
dividends. We note that Texas Instruments' (
) $6.5 billion for National Semiconductor (
) at a whopping 78% premium to its stock price prior to the
announcement could help spark some consolidation in the tech sector
amid an already healthy M&A environment. This time around
Motorola Mobility (
) tops our list while many of the usual suspects like Nokia (
) and Qualcomm (
) also make the list for their cash holdings.
Below are the 10 tech firms with the largest net cash positions
compared to our price estimates:
As shown in the chart below, Motorola Mobility, the mobile
phones industry giant, has the largest cash proportion with net
cash making up ~45% of its stock price. Just behind MMI are
VeriSign (VRSN) with 38% and AOL (AOL) with 30%.
Other firms on the list include mobile industry giants like
) and Qualcomm (
); PC manufacturer Dell (DELL); radio and security device
manufacturer Motorola Solutions (MSI); GPU maker nVIDIA (NVDA);
media content delivery firm Akamai (AKAM) and storage giant NetApp
We also include the largest net cash positions by sector as this
provides some clues on who can make acquisitions. In this list we
have included more companies than the top 10 mentioned above.
Below are the five sub-sectors in the tech industry and the
firms with the largest cash contributions to stock value:
1. IT Services & Computers
Dell has the largest net cash position to its stock with 21%
while its prime competitors like HP (HPQ) and IBM (IBM) have
worth around 8.6% and 7.5% of their values respectively. Apple
(AAPL), which now derives a greater portion of its value from its
iPhone brand vs. its Mac branded notebooks and desktops, has a cash
contribution of around 15% of its stock value.
Other firms with high cash contributions are Lexmark (LXK) with
15% and Accenture (ACN) with almost 13%.
Internet firms in general have some of the highest net cash
contributions to stock value within the tech sector. Three of the
Internet firms VeriSign, AOL and Akamai make it to our top 10 list.
Other Internet giants like eBay (EBAY), Google (GOOG), Yahoo
(YHOO) and Amazon (AMZN) are not very far behind with 17%, 16%,
15.5% and 10.5% respectively.
3. Mobile phones
Like Internet based firms, mobile phone manufacturers tend to
have high cash contributions to their stock value as well. Motorola
Mobility, Nokia and Qualcomm make to our top 10 list while Research
in Motion (RIMM) is the only exception with only 7.4% cash
nVIDIA leads the sector way ahead of Intel (INTC) at 4.5% and
AMD (AMD) has
of around 6% of its stock value.
Microsoft (MSFT) is the perennial leader in the sector with
15.6% net cash contribution to stock, well ahead of other software
firms like Adobe (ADBE) and Oracle (ORCL) at 6% and 5% cash
NetApp leads the sector against competitors like EMC (EMC) and
SanDisk (SNDK) that have 11.6% and almost 10% of their stock value
in net cash positions.
** Editor note: Cisco (CSCO) has a net cash position of around
18% of our price estimate and should be included in this top 10