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Apple Inc. (AAPL) Isn’t The Only Cash Hoarder In The Technology Sector

February 11th, 2013

cashChris Preston: David Einhorn is suing Apple Inc. (NASDAQ:AAPL). By now you probably know that. It’s been all over the news.

It makes for great headlines. “Einhorn: What Tim Cook Should Do with Apple’s Cash”, is how Bloomberg wrote it. “Einhorn Sues Apple: Will His Battle Save the Stock?” asked Yahoo! Finance.

Anytime a famed hedge sues the world’s largest company, it turns heads. Einhorn’s lawsuit also exposes a dirty little secret among large cap technology companies.

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The reason Einhorn, who runs the hedge fund Greenlight Capital, is suing Apple has to do with cash hoarding. Einhorn argues that Apple is sitting on an enormous cash pile, and needs to issue more of it to shareholders in the form of a higher-yielding, preferred stock. At present, Apple is considering altering its charter to put a halt on issuing such a stock.

Apple, which is sitting on a cash pile of $137 billion, isn’t the only tech company that’s notoriously stingy with its money. Here are three other major cash hoarders in the tech sector:

  • Google Inc. (NASDAQ:GOOG): Apple’s rival doesn’t quite have the same amount cash on hand with “only” $48 billion. But unlike Apple, Google doesn’t pay a dividend.
  • Cisco Systems Inc. (NASDAQ:CSCO): The world’s No. 1 chipmaker has $45 billion in cash yet didn’t start paying a dividend until 2011. Its 2.7% yield is almost as pedestrian as Apple’s 2.3% yield, though Cisco spends a lot of money on acquisitions. In fact, according to research firm Factset, no company has made more acquisitions over the past 15 years.
  • Microsoft Corporation (NASDAQ:MSFT): Microsoft’s yield (3.3%) is more generous than Apple’s or Cisco’s. But the yield isn’t that generous when you factor in the company’s $68 billion cash balance.

This article is brought to you courtesy of Chris Preston from Wyatt Research.

Technology Select Sector SPDR (NYSEARCA:XLK)

Top 10 Holdings (64.21% of Total Assets)
Company Symbol % Assets
Apple Inc. AAPL 17.54
International Business Machines IBM 7.12
Microsoft Corporation MSFT 7.08
AT&T Inc. T 6.70
Google Inc. GOOG 6.60
Oracle Corporation ORCL 4.40
Verizon Communications Inc. Com VZ 4.34
QUALCOMM Incorporated QCOM 3.72
Cisco Systems, Inc. CSCO 3.65
Intel Corporation INTC 3.06


NYSE:XLK


 

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