Cash Titans: The Richest IT VendorsBy Lawrence Walsh | Posted 2009-01-22 Email Print
Tech companies are shedding jobs and issuing profit warnings faster than you can Twitter your latest brainstorm. But which vendors have the best cash reserves? Google is on the list, but it’s not No. 1.
With the exception of a few earnings reports, IT vendors are reporting that sales are down and income projections are trending lower. The poor economy and leading indicators are forcing IT vendors to cut back on spending and cut jobs, but are these vendors really that poor?
According to FactSet Mergerstat, an analyst group that tracks mergers and acquisitions, and a new report by UpData Advisors, an investment services firm that specializes in technology mergers, the largest technology vendors are sitting on a mountain of cash that totals more than $107 billion.
Cash reserves are sometimes used to close revenue gaps, but most often for investments in new business initiatives and acquisitions. Don’t expect vendors’ cash reserves to save many jobs. Updata Advisors believes major vendors will use their wealth to acquire undervalued companies and add new technologies to their portfolios.
"While the economic uncertainty of 2008 is most certainly going to hang over into 2009, we believe that M&A will remain an important corporate strategy for growth and enhanced competitiveness. 2008 has proved that even in the most troubled economic environments, well-considered M&A transactions were still announced and completed," Update Advisors wrote in its recent report.
According FactSet Mergerstat, the following are the top 8 vendors ranked by their estimated cash reserves.
Cash Reserves: $5.866 billion
2007 Revenue: $13.230 billion
Number of 2008 M&As: 5
Value of M&As: $226 million
Cash Reserves: $8.572 billion
2007 Revenue: $61.133 billion
Number of 2008 M&As: 1
Value of M&As: $155 million
Cash Reverses: $9.756 billion
2007 Revenue: $98.786 billion
Number of 2008 M&As: 12
Value of M&As: $291 million