The Bank of Technology: Top 10 Leaders have $300 Billion in Cash, Investments

 @DavidZie
on November 04 2011 4:54 PM
An Apple store employee checks cash for counterfeit bills after a customer purchased a pair of Apple iPad 2 tablets in New York
An Apple store employee checks cash for counterfeit bills after a customer purchased a pair of Apple iPad 2 tablets in New York March 11, 2011. REUTERS/Lucas Jackson

Now that the corporate earnings reports have largely ended, there's no doubt that top technology companies are enormously profitable.

Forget about the quarterly earnings. Just look at what's in their treasuries. An IBTimes review of 10 of the top technology leaders determined they are sitting on a record $301.3 billion in cash and investments.

The biggest pile is with Apple, with $85.1 billion, followed by Microsoft, with $57.1 billion and Google, with $42.6 billion.

The runners up are Oracle, $41.6 billion; Intel, $25.71 billion and Qualcomm, $20.9 billion. The others are Hewlett-Packard, IBM, Texas Instruments and Yahoo.

Besides cash and investments, the IBTimes review for some of the richer companies includes long-term holdings and other kinds of liquid assets.

By contrast, JPMorgan Chase, the No. 1 U.S, bank, reported total assets of $2.29 trillion, followed by Bank of America's $2.22 trillion.

But technology companies aren't banks. At any time, they must spend small fortunes to remain competitive. Semiconductor makers including IBM, Intel and Texas Instruments on this list, can invest as much as $4 billion in a new chip plant.

Meanwhile, technology laggards, like Eastman Kodak, the 131-year-old imaging pioneer, appear to be in a continuing cash crisis. In order to complete a seven-year turnaround, CEO Antonio Perez this week essentially bet the company's cash position on the auction of 1,100 patents, said by intellectual property bankers to be valued as high as $3 billion. Meanwhile, Kodak may need to raise as much as $700 million in the near term to fuel operations.

Here's what these top 10 companies could do with their cash, aside from creating significant new products:

Buy other companies. That's one reason Google has agreed to acquire Motorola Mobility for $12.5 billion, to push more solidly into the smartphone sector and get more search portals with advertising potential. Or why HP just completed the $10.5 billion takeover of Autonomy to get more content-oriented services.

Reward the shareholders. Pay a dividend, which many on this list don't do, including cash-rich Apple. Others, like Oracle, have small ones. Others, like IBM and HP, have paid dividends for years, although IBM temporarily stopped during its hard times in the early 1990s.

Another solution is to declare a special dividend and buy back shares, much like Microsoft did in 2004, when it returned $75 billion to shareholders via a one-time $3 a share payout and a doubling of the quarterly dividend to 8 cents a share.

Of course, instead of doing that, Redmond, Wash.-based Microsoft might have created Groupon or Twitter, but those companies have their own history.

Bring the cash home to create U.S. jobs. Most of this cash hoard is held outside the U.S. because the tech leaders are multinationals. That's why it's easier for HP to buy Autonomy, based in Britain, or IBM to acquire Cognos, a Canadian software giant.

Current U.S. tax law imposes a penalty as high as 35 percent on repatriated capital, which effectively bars the U.S. leaders from bringing cash home. That also allows Intel, for example, to build new chip plants in Vietnam, Israel and Costa Rica.

Perhaps in an era when U.S. unemployment remains at nine percent, the technology bank might bring home some of the money, expand U.S. operations and expand domestic employment in the high-paying tech sector.

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