Eight Huge Special Dividends to Watch Out for in Tech Before Year-End

These are eight technology players which could substantially reward their common shareholders with large one-time payments before 2012 comes to an end:

Apple Inc. (NASDAQ: AAPL) is the monster when it comes to which company sits on the world’s largest cash pile. It is also the monster when it comes to its market cap of $551 billion even after shares are down so much from the highs of over $700 recently. Most of its “cash” is in long-term securities but if you tally up Apple’s liquidity it has about $120 billion in its arsenal. Apple could easily pay out 8% to 10% of its market cap in a special dividend and it would not be noticed in the grand scheme of things. If the company wanted to get very aggressive, it could even borrow $25 billion to turn around and distribute it to shareholders. Apple generates so much cash that it could pay that back in a year and still show positive cash growth.

Corning Inc. (NYSE: GLW) may have gotten some good news on glass demand this week, but it is still suffering relentlessly from competitive markets in glass screens. With a market cap of about $18 billion, this leader trades at a discount to its book value. Corning also has close to $11.4 billion in cash, short-term assets and long-term assets. Corning already raised its dividend in November and offers close to a 3% yield but it could easily pay out 10% to its holders without increasing leverage too much.

Dell Inc. (NASDAQ: DELL) may need to hoard its cash to remain defensive and it may need to look for more acquisitions in the IT-services sector. With its shares down and out, you have to wonder about its cash balance and long-term investments coming to roughly $15 billion today. We would never expect this to occur, but this PC player could literally scrape up enough cash to pay out a special dividend that comes to 25% to 50% of its $17 billion market cap. With the tax deadline looming, envisioning a 10% or 15% special dividend would be no sacrifice to the company. It already pays a 3.4% yield as is.

eBay Inc. (NASDAQ: EBAY) has lost its growth and since it trades close to a 52-week high it is even hard to call a value stock any longer. The company has made many deals in the past but has yet to pay a dividend. With a $66 billion market value, eBay has close to $12 billion on its books in cash and short-term and long-term securities. As it already has close to a monopoly in online consumer auctions in America, does it really need to hold all of this cash? Paying a 5% special cash dividend and finally instituting a dividend with a 2% yield would not hurt the company at all.

Juniper Networks, Inc. (NYSE: JNPR) has been overlooked in the technology value plays. It currently does not pay a regular dividend. Some have considered it a takeover candidate as well. If you tally up the networking equipment maker’s cash and short-term and long-term investments it comes to over $4 billion against a market cap of $8.7 billion. Even if Juniper has significant assets locked up it could easily scrape up almost $1 billion to come up with a 10% special cash dividend for its shareholders. With shares at $16.80, its 52-week range is $14.01 to $25.04.

Microsoft Corporation (NASDAQ: MSFT) has such a large cash balance that you wonder just what it will or can do with all of that cash. Unfortunately a large portion of its capital is overseas due to its sales being global. If you tally up the long-term investments and its cash and short-term assets, Microsoft is sitting on somewhere around $75 billion. With a market cap of $230 billion, Microsoft could pay a 10% special dividend and it would not even have to blink its eyes.

Oracle Corporation (NASDAQ: ORCL) is a great laggard when it comes to dividends. Its yield is less than 1% and its market cap is over $150 billion. Larry Ellison and friends have a cash arsenal of more than $31 billion. Ellison recently said that he would rather return cash gradually with hikes, but even if it wants to save its cash for another large deal out in a year or two as it telegraphed before it does not need $31 billion. By sending back half of that cash, Oracle could have a 10% special cash dividend and still have more than $15 billion on its books.

Yahoo! Inc. (NASDAQ: YHOO) just became a cash monster now that it monetized part of its Alibaba stake and repatriated that cash. If you tally up its cash and short-term and long-term investments it now sits on close to $13 billion in liquidity with close to no long-term debt. With a market cap of $22 billion this perpetual turnaround trades at about 2-times its tangible book value. The company previously pledged to return 85% of that $4+ billion in net after-tax proceeds to holders but it did not specify how. Marissa Mayer hs the stock at $19 and at a 52-week high so she can do whatever she wants and likely be able to sell it. Our take is that a large one-time dividend would be best, but the company can likely do what it wants without being punished right now.

With this being the last week of November, if a company is going to conduct a special dividend its time is running out. Taxes are likely headed higher for dividends so these companies need to decide how to best maximize the after-tax returns for shareholders.

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