Monday, September 20, 2010

Large Cap Tech

Here's a Barron's article on how one analyst, Tavis McCourt of Morgan Keegan, thinks tech companies should allocate the enormous cash they have on their balance sheets. In addition to excellent FCF, many tech companies have cash on the balance sheet equal to 1/5 or more of total market capitalization.

McCourt recommends boosting the dividend payout ratio to as much as 70% of earnings.

Not sure if that makes sense but valuations are attractive. Some of these are selling at 10x earnings or less. If technology CEO's do end up effectively allocating their excess capital, near recent prices, there seems to be very good risk/reward with some of the companies listed in the article.

Adam

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