Cash Titans: The Richest IT Vendors
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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.
8. EMC
Cash Reserves: $5.866 billion
2007 Revenue: $13.230 billion
Number of 2008 M&As: 5
Value of M&As: $226 million
7. Dell
Cash Reserves: $8.572 billion
2007 Revenue: $61.133 billion
Number of 2008 M&As: 1
Value of M&As: $155 million
6. IBM
Cash Reverses: $9.756 billion
2007 Revenue: $98.786 billion
Number of 2008 M&As: 12
Value of M&As: $291 million
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