With a King's Ransom in Cash, Why Is There Still No Buying Spree in the Tech Space Yet?
Even in the midst of the economic meltdown, consider these mega-billion-dollar cash hoards of big tech companies:
Microsoft (MSFT): $20.7 billion
Cisco (CSCO): $29.5 billion
Apple (AAPL): $25.6 billion
Intel (INTC): $11.8 billion
Oracle (ORCL): $10.6 billion
Hewlett-Packard (HPQ): $10.2 billion
Google (GOOG): $15.9 billion
Yahoo (YHOO): $3.5 billion
Of this moneybags list, Apple and Google have zero debt, with the others not having much at all to speak of. Better still, all typically generate a whole lot of cash flow quarterly, even in the downturn.
And since very few tech companies like to hand over dividends or buy back much stock–kind of a minor sacrilege in the space since it means they have no innovative new ideas to fund–BoomTown asked a big exec at one of these companies when the buying spree of both public and private companies might begin.
“Like everyone else, we are waiting for the bottom,” said the exec. “So who knows?”
Said another: “No one wants to buy when prices could just keep going down. The trick is to buy before the really great deals out there collapse.”
And, even as some tasty targets are suffering and might need a lifeline, none of them want to necessarily sell out at all-time lows either.
“We will start eating our toner and paper first,” joked one start-up exec, whose company is increasingly strapped for cash, even after a number of cost-cutting moves.
Interestingly, the only standout in the buying game has been Oracle, which has been in bargain-hunting mode, making 10 acquisitions for about $750 million in the last year, according to an article in The Wall Street Journal today.
While this amount is small potatoes to Oracle, which has typically been known for doing huge merger and acquisition deals, it is still some activity in a decidedly inactive space.
Oracle has especially focused on private firms, as the private-equity investing and venture capital has dried up and IPOs are an impossible dream.
And while another well-known M&A addict, Cisco, has recently issued $4 billion in debt to fund more purchases, and Microsoft execs have noted recently that it is a buyer’s market, it seems Oracle CEO Larry Ellison is the only one currently putting his big money where his big mouth is.
So, when do you think tech companies should commence to gobbling too?