10 Tech Stocks with Highest Cash Contributions vs. Stock Value

By
A A A

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' ( TXN ) $6.5 billion for National Semiconductor ( NSM ) 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 ( MMI ) tops our list while many of the usual suspects like Nokia ( NOK ) and Qualcomm ( QCOM ) 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 Nokia ( NOK ) and Qualcomm ( QCOM ); 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 (NTAP).

Sector Leaders

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 net debt 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%.

2. Internet

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 contribution.

4. Semiconductors

nVIDIA leads the sector way ahead of Intel (INTC) at 4.5% and AMD (AMD) has net debt of around 6% of its stock value.

5. Software

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 contribution respectively.

6. Storage

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 list.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: MMI , NOK , NSM , QCOM , TXN

Trefis

Trefis

More from Trefis:

Related Videos

Stocks

Referenced

Most Active by Volume

91,252,153
  • $13.78 ▼ 4.31%
68,133,496
  • $12.93 ▲ 6.77%
57,268,074
  • $46.13 ▲ 2.47%
43,432,023
  • $105.22 ▲ 0.37%
40,880,685
  • $13.46 ▲ 8.90%
40,712,405
  • $98.62 ▲ 0.82%
39,776,976
  • $16.72 ▲ 0.72%
34,688,871
  • $11.16 ▲ 3.05%
As of 10/24/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com