maz

The 15 Most Cash Rich Companies

mkreisel,

You make the classic mistake of assuming that all debt is equal but it isn't. Debt on GM's balance sheet is completely different from that at a utility company (like Berkshire's Mid-American which holds 90% of Berkshire's debt. All utilities are funded with debt because of the royalty like stream of their revenues. This makes complete sense as debt funding is a heckuva lot cheaper than equity & the revenue streams are preductable way into the future. Contrast that with tech companies that have to re-invent themselves every 5 years or so or lose their revenue streams - they have to be very careful about using debt & need cash to invest in new ideas or acquire new ideas.

Also it is important to know interest coverage & leverage ratios - net debt in isolation is a pretty useless measurement


On Mar 13 02:35 PM mkreisel wrote:

> If we include debt, things look very differently:
>
> Ticker, debt, net cash
> XOM, 9425, 22582
> CSCO, 6848, 22683
> AAPL, 0, 25647
> BRKA, 36882, -11343
> PFE, 17283, 7272
> TM, 118626, -95745
> MSFT, 0, 20298
> GOOG, 0, 15846
> RDSA, 23269, -8081
> WYE, 11739, 2806
> IBM, 99925, -21018
> JNJ, 11825, 957
> INTC, 1988, 9855
> HPQ, 20458, -9203
> ORCL, 10238, 408
>
> Now things look quite different!
>
> In addition, many companies are burdened with massive pension obligations,
> the stuff that did GM and Bethlehem Steel in. For example, IBM has
> 19452 million on its balance sheet; XOM 20729 million.
>
> BRKA also has a maximum of 67 billion derivatives exposure, including
> 37 billion in equity index puts, 19 billion in CDS, and 18 billion
> in muni bond insurance.
>
> PFE has just squandered its cash horde on that panic deal with WYE.
> When the deal closes for good, PFE will have a monstrous debt load
> and very little cash left.
>
> So if you really like company with lots of cash, AAPL, CSCO, MSFT,
> GOOG, INTC, and XOM are your best choices.

Microsoft's Ballmer Starting Own Yahoo-Buying Rumor?

I honestly think that using the market value reduction as an argument is specious

1. The time period of 3 months is too short to have any meaning other than market sentiment & has nothing to do with franchise value (as opposed to current price)
2. The last 5 weeks includes a huge general market sell-of and without comparing your company losses to the market loss they are in a vacuum
3. Using absolute values (ie $9b loss for MSFT vs. $10b for Google) - using % losses makes far more sense (-3.15% for MSFT and -5.9% for Google)

Also apart from Susan Deckers recent purchase most of Yahoo insiders seem to be selling (apart from acquisitions at $0 cost which I assume are restricted stock grants) both shares and recently exercised options finance.yahoo.com/q/it...

With All the Focus on Apple's Options Issues, When Will We Hear About Microsoft's?

One BIG difference - even if MSFT's option practices were similar to AAPL Gates & Ballmer didn't grant themselves gobs of options

Also Dell is currently under investigation for revenue recognition practices not options