International Business Machines Corp. (IBM), Intel Corporation (INTC), Microsoft Corporation (MSFT) & Buffett’s Top Tech Giant

In terms of balance sheet, Intel Corporation (NASDAQ:INTC) has a much stronger balance sheet than IBM. As of March 2013, it had $51.2 billion in total stockholders’ equity, $10 billion in cash and short-term investments, and only $13.1 billion in long-term debt. In addition, it has nearly $4.7 billion in marketable equity securities and $1.3 billion in other long-term investments.

At around $22.40 per share, Intel Corporation (NASDAQ:INTC) is worth around $111 billion on the market. The market values Intel quite cheaply at only 5.1 times EV/EBITDA. Income investors might like Intel a lot due to its high dividend yield of 4% while IBM offers investors dividend a yield of only 1.8%.

Microsoft Corporation (NASDAQ:MSFT) – cheap and nice dividend yield

If investors are looking for other tech giants which are paying decent dividends and are valued cheaply, they should consider . Many investors might think that Microsoft Corporation (NASDAQ:MSFT) gets hit hard by the declining global PC sales.

However, most of Microsoft Corporation (NASDAQ:MSFT)’s revenue and income, $24 billion and $15.7 billion, respectively, comes from the Microsoft Business Division, including Microsoft Dynamics business solutions and the Microsoft Office system. What is more encouraging for Microsoft is Microsoft Business Division’s income has risen steadily to $15.7 billion in 2012.

Microsoft Corporation (NASDAQ:MSFT) also has a very strong balance sheet. As of March 2013, it had nearly $76.7 billion in equity, $85.7 billion in cash and investments, and only $14.2 billion in debt. Microsoft Corporation (NASDAQ:MSFT) is trading around $32 per share, with a total market cap of $271 billion. The market values Microsoft quite cheaply at only 6.7 times EV/EBITDA. Income investors might also like Microsoft with its decent dividend yield at 2.9%.

My Foolish take

All three companies — International Business Machines Corp. (NYSE:IBM), Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT), could fit well in investors’ long-term income portfolios. Even with the highest valuation among the three, IBM seems to be the most decent pick for the long run because most of its business comes from software and technology services.

The weakness in the PC industry does not affect IBM much. Furthermore, Warren Buffett also likes IBM a lot. IBM has become the third biggest position, accounting for as much as 17.3% of his total portfolio at the end of 2012.

The article A Sluggish Quarter for Warren Buffett’s Most Favorite Tech Giant originally appeared on Fool.com and is written by Anh Hoang.

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