Companies' Cash Holdings: The Winners and Losers

by: Felix Salmon

Having too much cash is something of a luxury problem these days: the worst that can happen is that you find yourself subject to the occasional snarky column telling you to up your dividend. Meanwhile, the opportunities presented by having a large cash pile have never been greater. So I asked the friendly people at Gridstone Research to help me put together a list of the companies with the most cash. The very smart Sandeep Shroff came up with two spectacular spreadsheets: this one, which looks at net cash and cash flow from operations, and this one, giving the sector averages.

In case you're not an Excel jockey, however, I've broken out the highlights. Here's the top of the table, showing the companies with the most cash; it features most of the world's triple-A companies. Apple, the one company everybody associates with the phrase "cash-rich", is indeed high up the list; what's even more impressive is the amount by which its cash holdings increased over the past year -- almost $7 billion.

Ticker Company Net Cash ($millions) Year-on-year increase
F FordMotorCo. 41,801 1270
XOM ExxonMobilCorp. 35,553 3436
CSCO Cisco Systems Inc. 25,735 3469
MSFT Microsoft Corp. 23,662 251
AAPL Apple Computer Inc. 22,111 6725
GOOG Google Inc. 15,846 1627
PFE Pfizer, Inc. 14,411 (5239)
WYE Wyeth 13,632 496
PC Panasonic Corp. 11,773 443
INTC Intel Corp. 11,741 (3480)
SNE SonyCorp. 11,603 1415
TOT TotalS.A. 11,057 9049
CVX ChevronCorp. 10,151 3219
ORCL Oracle Corp. 10,042 4380
JNJ Johnson & Johnson 9,077 2225
ERIC Ericsson 8,815 791
AMGN Amgen Inc. 8,552 3401
BMY Bristol-Myers Squibb 8,111 7777

Meanwhile, here's the bottom of the table:

CAT Caterpillar, Inc. (11,259) (1781)
T AT&T (12,327) (7437)
HMC HondaMotorCo.Ltd. (15,479) (5876)
DAI DaimlerChryslerAG (24,296) (13390)
NSANY NissanMotorCo.Ltd. (33,607) 3427
TM ToyotaMotorCorp. (39,268) (9474)
GE General Electric (104,062) 30031

This possibly helps explain why General Electric stock has done so badly of late, and also why GE is not like all those other triple-A companies. But it doesn't shed much light on things like car companies: I don't think the fact that Ford has lots of cash and rising necessarily makes it a more solid automaker than Toyota, which has a negative cash position and falling.

But those cash-rich companies certainly have a very broad and attractive opportunity set facing them right now. They can return their cash to shareholders, in the form of buybacks or dividends; they can buy back their own debt at a discount; they can try to acquire a competitor, make fill-in acquisitions, or expand into a new area of business; they can up spending on R&D; they can expand headcount; or they can just continue to do what they've done until now, which is happily sit back on their cash pile and simply wait for the perfect opportunity to arise.

The one thing I'm sure of is that none of these companies are in any hurry to spend their cash. I'm sure they all have a steady stream of underemployed M&A bankers showing them ideas every week; they've got to be used to saying no by now.

On the other hand, there are risks to holding cash -- credit risks, counterparty risks, currency risks, and many other risks which a good CFO can try to minimize, but which never really go away. Maybe it really is better just to buy back your own debt, if you can do so at less than the price at which you issued it.