At the end of the most recent quarter, net cash and investments (cash and investments minus debt) on the balance sheet of Microsoft (MSFT, Cisco (CSCO), Google (GOOG), and Apple (AAPL) combined was over $ 160 billion.
AAPL | $ 65 billion
MSFT | $ 38 billion
GOOG | $ 31 billion
CSCO | $ 28 billion
Together, these four businesses add to that pile of cash at a near $ 60 billion annualized rate. So they will soon have over $ 200 billion combined unless one or more of them has an extremely large acquisition or buyback in the works.
So cash rich, yes, but will the money be put to good use? Tougher call.
I'm guessing most chief financial officers in corporate america would trade places in a heartbeat to have that much financial flexibility.
It's not just these 4 companies that are sitting on lots of cash....
From this Jason Zweig article:
All told, the companies in the Standard & Poor's 500-stock index are sitting on more than $960 billion in cash, a record.
What's unusual is that not only are companies sitting on more cash than ever before, they are paying out much less of it as a proportion of earnings than they have historically.
Meanwhile, the payout ratio—the proportion of earnings paid out as dividend income to shareholders—fell to 28.9% for the past four quarters. That, says S&P senior index analyst Howard Silverblatt, is the lowest level since 1936. Dividends are going up—Intel, UnitedHealth Group and WellPoint have recently raised them—but cash is still piling up far faster than most industrial giants can possibly find a prudent use for it.
Consider that the combined market cap of the four above tech companies is approximately $ 750 billion. Subtract the $ 160 billion in net cash and you are paying ~ $ 590 billion for around $ 60 billion in free cash flow.
Long MSFT, CSCO, GOOG, and AAPL
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