Awash in Cash

With Microsoft and Amazon earnings out last night, we now have a picture of cash entering 2010 for the “Four Horsemen” – AMZN, AAPL, GOOG, and AMZN.  Ending the 3rd Quarter, we had $96.7 billion of cash on the books.  Ending the 4th Quarter, this number has increased to $106.8 billion.  Microsoft was down slightly on a sequential quarter basis, but everyone else was up (AAPL up $5.8 billion – yes, that’s one quarter of growth).  That’s more cash than the entire asset base of AT&T.  That’s enough to pay all of the debt obligations of AT&T ($72.1 billion), Sprint (3Q = $21.7 billion) and Level3 (3Q = $6.3 billion).  As we have seen in the past year, the success of the “four” is largely dependent on the success of the wireless and wireline networks that carry that content.  Whether it’s a debt issue, or it’s a commitment across carriers, the “four” know that they cannot get close enough to that customer, and that this matters in every market: it’s a local issue.  Solving the bottleneck has now become a “four” issue because they have the cash to do this.  For example, the cash on hand could fund a femtocell (private cell site for all folks who have a broadband connection) for every household in America (120 million) and remove 3G network constraints in cities like New York City and San Francisco.  Oh yeah, that only eats up $20 billion of the $106.8.  We need to start to think about the broad workings between the networks and the “four.”


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