Tech Titans Holding $260 Billion In Cash

Original source: http://247wallst.com/2009/09/25/tech-titans-holding-260-billion-cash-dell-per-orcl-java-msft-aapl-ibm-goog-csco-intc-hpq-qcom-emc-yhoo

[...] We wanted to look through the technology sector and after we looked through the top 100 markets caps [...]. Out if the $335 billion from those in the top twenty, we broke out Microsoft Corporation (NASDAQ: MSFT), International Business Machines (NYSE: IBM), Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Cisco Systems Inc. (NASDAQ: CSCO), Intel Corp. (NASDAQ: INTC), Oracle Corp. (NASDAQ: ORCL). [...] Now, going further down the list of the top 100 companies with $5 billion or more in cash from tech companies alone adds in Hewlett-Packard Company (NYSE: HPQ), QUALCOMM Inc. (NASDAQ: QCOM), EMC Corporation (NYSE: EMC), and Yahoo! Inc. (NASDAQ: YHOO). [...]

Hewlett-Packard Company (NYSE: HPQ) had almost $25 billion in cash and long-term investments. Now that it has migrated away from just selling PCs and printers, we think that there will be a rather long lull before H-P tries to match its big buyout of EDS even if Dell is tip-toeing into IT-services and consulting with Perot. But in the end, what we think may not matter. Nearly $25 billion in cash when you know you will be profitable ahead leaves a lot of room to go out make purchases.

QUALCOMM Inc. (NASDAQ: QCOM) was the 29th largest company as of Wednesday with a $74.12 billion market cap. If you tally up its cash, short-term and long-term investments, it is sitting on almost $15 billion in cash and equivalents as of last quarter. After all the lawsuits that the Jacobs team are settled, it might consider a way to deploy capital to get around future patent cases. If only it was possible, although anything is possible.

EMC Corporation (NYSE: EMC) is the 64th largest in the country with a $34.7 billion market cap, and it is sitting on very close to $10 billion in cash and short-term and long-term investments. The issue is that it just made the $2.1 billion deal for Data Domain, Inc. (NASDAQ: DDUP), but it also has over 50% of the float of VMware (NYSE: VMW) and that company is worth $17 billion. EMC is likely in such a storage leadership position that it has to make strategic deals. In that notion, EMC could be making $1 to $3 billion buyouts every six to twelve months.

Yahoo! Inc. (NASDAQ: YHOO) was the 100th largest company mid-week with a $23.6 billion market cap. The distant #2 search player is hard to call a definite buyer now because of new management and because of a new direction and restructuring. But the company is still generating cash every quarter even if Google has dwarfed it, and the deal with Microsoft is going to add cash. Throw in its other strategic spin-outs and asset sales, and suddenly Yahoo! may have a real desire to go for broke. At the end of Q2 it held about $7.5 billion in cash and short-term and long-term investments. As Yahoo! wants to get further into profitable content and user-centric interfaces, you could probably pick a hundred names for it to buy. Carol Bartz is no meager CEO and she could probably even get into the auto business if she could make the case that it would take back ten points in the company’s share of search.

Microsoft Corporation (NASDAQ: MSFT) is still #2 with a $230 billion market cap mid-week has more than $36 billion in cash and equivalents. There is always the concern that antitrust issues will arise in any Microsoft deal, but that has not been the case in the search pact with Yahoo! so far. There are very few add-on plays here for its O/S and Office software. Other software, media, search, advertising-related, audio and communications plays would be the most logical targets assuming all the cash doesn’t go for buybacks or another big dividend.

International Business Machines (NYSE: IBM) was #9 on the top companies list and had a market cap of $159 billion and $12.5 billion in cash after spending $2.4 billion in the last quarter alone for dividends and buybacks. IBM would likely look at another people-intensive or service-intensive deal, although there are random hardware and storage and systems possibilities still out there.

Apple Inc. (NASDAQ: AAPL) is now #8 on the America’s largest and it has long been a puzzle about what it would do with all that cash. Its market cap was $165 billion mid-week, and its hoard of cash and equivalents is more than $31 billion. Buying back its own stock would be expensive and maybe just silly and integrating an outside company into Apple might be far from easy. With Apple’s 909.16 million shares, it could pay out close to a $34.00 per share dividend if it wanted to take the cash balance down to Zero and start all over again.

Google Inc. (NASDAQ: GOOG) now has a market cap of close to $158 billion now that its stock went back over $500… and a cash balance of roughly $19.3 billion. Google may have the “Do no evil” mantra, but Google will now get into trouble for any deal it makes that is beyond an expansion. If Google chose the cash dividend route, it could pay close to $60.00 per share and just start over on its cash growth game. Also keep in mind one thing: in acquisitions, Google has tried to stay as content-neutral as it can so that it can still claim fair and open search and preference of content on the web.

Cisco Systems Inc. (NASDAQ: CSCO) was worth close to $135 billion in market cap mid-week and despite making deals all along the way and buying back billions worth of shares, its last quarter ended with close to $35 billion in cash and equivalents. Its expansion has been on many fronts, so where it could do a deal would depend on the climate and upon what would give it a leg up for the next generation. It also has preferred to make small strategic deals since its old Scientific-Atlanta deal.

Intel Corp. (NASDAQ: INTC) had a market cap of roughly $109 billion mid-week and has close to $19 billion cash equivalents before closing a recent deal. It also had close to $6 billion in receivables and inventories. Intel has been somewhat active via its ventures and in acquiring units or bolt-on companies like Wind River recently. Intel has to be careful where it treads on anything processor-related, but there are dozens of core related technologies in computing and in communications that it would not fall under harsh antitrust reviews.

Oracle Corp. (NASDAQ: ORCL) had over $12.5 billion in cash at the end of last quarter that could be used for a deal if its Sun ambitions are thwarted by the dopes at the E.U. who think that Sun should keep losing money. If that deal is somehow blocked, you know at least how much Larry Ellison is willing to dole out for a money-losing operation.

Pound Unter Alles...

Euro sempre più forte ed oggi il rapporto Euro/Pound è ritornato a 0.90. E' l'occasione giusta per convincere il popolo di Albione a lasciare da parte orgoglio e pregiudizio, abbandonare una valuta decrepita e poco attraente (la sterlina non si è mai dimostrata cool come il marco tedesco) e saltare sul carro del vincitore?

The Nightmare Portfolio of 2009

by Tom Petruno (http://latimesblogs.latimes.com/money_co)

(From the original source: http://latimesblogs.latimes.com/money_co/2009/09/is-it-possible-for-an-investor-to-be-losing-money-in-financial-markets-this-year--with-an-incredible-amount-of-bad-luck-y.html)

September 17, 2009 | 5:30 am

Is it possible for an investor to be losing money in financial markets this year?

With an incredible amount of bad timing and wrong-headed conviction, you actually could have constructed a portfolio on Jan. 1 that would be deep in the red by now -- even as most stocks, bonds and commodities have rallied sharply.

Basically, if you bet heavily at the start of the year on some version of economic and market Armageddon unfolding in 2009 -- and you’ve refused to budge from that bet -- you probably are in a world of hurt.

Though I concede the year isn’t over, and it’s possible that financial Armageddon has only been deferred, here's my idea of the Nightmare Portfolio of 2009:

--- A long-term Treasury bond fund. As 2008 ended Treasury yields had plunged to near-record lows as some investors flocked to the relative safety of government bonds, fearing that the worst was yet to come for the economy and the financial system.

Bad move: Treasury yields began to rebound with the turn of the calendar to January, as the market focused less on the economic meltdown that was in progress and more on Uncle Sam’s massive borrowing needs. When yields go up, bond prices drop.

The 30-year T-bond yield, which fell as low as 2.52% in December, now is at 4.26%. The average total return for long-term T-bond mutual funds this year, according to Morningstar Inc.: a negative 11.6%, as the plunge in bond prices has more than wiped out interest earnings.

--- A bear-market stock fund. With the Standard & Poor’s 500 index down 38% in 2008, and the worst of the recession clearly ahead as 2009 dawned, bear-market funds had huge appeal as portfolio hedges. By using derivative securities or "short selling" strategies the funds are designed to gain if share prices slump.

That continued to be the right market bet -- until stocks hit bottom in early March, turned up, and, so far, haven’t looked back. The average total return of bear market funds year-to-date: a negative 32.3%, compared with the positive 20.5% return of the S&P 500.

--- A strong-dollar fund. If you expected the global financial system to fly apart in 2009 it would have made sense to bet on the dollar rallying, figuring that investors would turn back to the world’s premier currency as a haven. In fact, the greenback rose sharply in January and February as fears of calamity mushroomed.

But once stock markets began to snap back in March the dollar’s allure faded as global investors began to reach for risk again. This month the buck is sliding anew, deepening the losses of funds that bet on dollar strength. Case in point: The Pro-Funds Rising U.S. Dollar fund now is down 9.1% for the year.

--- A natural gas fund. Specifically, the U.S. Natural Gas exchange-traded fund (ticker: UNG). Who knew that, despite the resurgence of crude oil prices this year, natural gas prices would continue to plummet -- to 7 1/2 year lows by early this month?

But there may be hope: Even amid a continuing glut of gas and weak industrial demand, gas futures prices have rebounded 48% since Sept. 3, and the UNG fund is up 30% since then. That may not be much comfort to investors who bought in late last year or early this year, however: The fund still is off 49% year to date.

Tom Petruno (http://latimesblogs.latimes.com/money_co)

Natural gas... è rebound?

I contratti futures del natural gas sono aumentati vertiginosamento ieri (14 settembre), spinti dalle voci che il mercato ha raggiunto il fondo a ridosso della stagione invernale (il gas naturale è usato massimamente per il riscaldamento delle abitazioni). Al Nymex il contratto future del natural gas con scadenza ottobre è terminato a 3.29$ (+11%). Nonostante il progresso del prezzo del gas dell'ultima settimana (dopo aver raggiunto i minimi da sette anni di 2.50$) molti analisti dubitano che ci possa essere un vero rebound a causa del persistente stato asfittico dell'economia americana (il natural gas è fondamentale per la produzione dell'energia elettrica necessaria all'industria) e le previsioni di un inverno inaspettatamente mite rispetto agli anni passati.