Five Stocks With the Most Cash

Companies are facing increasing pressure to put their cash to good use. Here are five sitting on vast hoards of unspent dollars

by Marc Hogan

The pressure is on for companies hoarding enormous amounts of cash. Investor activists like Carl Icahn have been hounding cash-rich companies to put their unspent dollars to use for their shareholders. The question is, which cash-laden company could be next in the crosshairs?

Icahn's latest target was Motorola (MOT). On Jan. 30, the cell-phone maker disclosed that the billionaire financier was seeking a seat on its 13-member board of directors (see BusinessWeek.com, 1/31/07, "Icahn Sets His Sights on Motorola"). In recent years, Icahn has also pushed for change at ImClone Systems (IMCL), Time Warner (TWX), and Lear (LEA).

Motorola was sitting on $14.8 billion in cash as of Sept. 30, 2006, according to Standard & Poor's(MHP). That would be good enough to place the handset maker among the five U.S. stocks with the biggest cash stockpiles as tracked by S&P. However, a Motorola spokesman says the company's "gross" cash position—adjusted for acquisitions—was a significantly smaller $11.3 billion at the end of 2006. (Motorola plans to make a regulatory filing next week to resolve this confusion.)

It can be tricky to determine which companies are truly the most cash-rich. Not all report their cash levels, observes Howard Silverblatt, S&P's senior index analyst. Based on available data, this week's Five for the Money looks at the five companies with the biggest cash hoards—not including Icahn's latest target.

1. Exxon Mobil (XOM)

The sheer size of Exxon Mobil helps ensure its place atop this list, but a recent string of record profits certainly didn't hurt. The oil giant has $37.4 billion in cash, equivalent to 8.5% of its market value and 577.6% of the company's long-term debt, according to S&P. Exxon's massive market value—roughly fives times the number for Time Warner, and nearly 10 times that of Motorola—also tends to insulate it from shareholder activists like Icahn.

Exxon hasn't just been letting its cash collect dust, though. The Irving (Tex.)-based company has consistently been at the forefront of Corporate America's recent trend of buying back its stock (see BusinessWeek.com, 8/28/06, "Buyback Binge: Bane or Boon?"). Exxon distributed $32.6 billion to shareholders last year through dividends and share repurchases, a 41% jump from 2005.

The company's 2005 earnings topped Wal-Mart's (WMT), Microsoft's, and Johnson & Johnson's (JNJ) combined, notes Morningstar (MORN) analyst Justin Perucki. "Any way you slice them, the figures are impressive," Perucki notes in a Feb. 1 research report. "With more cash than debt and an 87-year-old AAA credit rating, the company's financial strength is almost unrivaled."

2. Microsoft (MSFT)

Calls to spend its cash pile must be nearly as familiar to Microsoft as the old Windows startup sound. Last year, the software giant answered some of that criticism by unveiling a plan to repurchase as much as $40 billion in stock over the next five years (see BusinessWeek.com, 7/21/06, "Microsoft Buyback: Should You Bite?").

So far, the buyback splurge has only begun to dent the Redmond (Wash.)-based company's formidable cash stockpile. According to S&P, Microsoft has $28.9 billion—10.2% of its market value—in cash and no long-term debt.