Big Oil Versus Microsoft

By Mel Duvall  |  Posted 2006-05-09

Microsoft has long held the crown as the technology world's biggest generator of cash. But as Americans empty their wallets at the pumps on $3-plus per gallon of gas, a new cash king is emerging: ExxonMobil.

According to the latest figures filed with the Securities and Exchange Commission, which were pointed out today by The Wall Street Journal, Exxon's cash hoard climbed to $31.9 billion at the end of March, up from $28.6 billion at the end of 2005. That puts Exxon within striking distance of Microsoft, which had short-term investments of $34.8 billion at the end of March.

The only other company in the same ballpark is Warren Buffet's Berkshire Hathaway, which had cash and equivalents of about $43 billion at the end of March.

The question remains, of course, what will Exxon do with all of that money? The company says it will spend close to $20 billion on capital projects in 2006 alone, and $100 billion by the end of the decade. It also says it will invest heavily in new technologies aimed at finding increasingly harder-to-reach deposits of oil and gas. (See Baseline's report, "Behind Oil Profits: A Look At ExxonMobil's Technology Alignment.")

But despite having loads of financial resources at its disposal, Exxon chief executive Rex Tillerson says it will maintain a strict discipline by investing only in those projects that promise an attractive return on investment. Exxon has, in fact, used the same strategy to closely align its technology spending with its business goals.

If Exxon continues to generate cash at the current pace, it could eclipse Microsoft by the end of the summer driving season.