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Apple, Microsoft and Google Hold 23% Of All US Corporate Cash Outside the Finance Sector (geekwire.com) 166

An anonymous reader writes: Apple, Microsoft, and Google are the top three cash-rich U.S. companies across all sectors of business, not including banks and other financial institutions -- holding a combined $391 billion in cash as of the end of 2015, or more than 23 percent of the entire $1.68 trillion held by the nation's non-financial corporations. Apple leads the pack with $215.7 billion in cash, followed by Microsoft at $102.6 billion, and Google at $73.1 billion. The numbers are documented in a new report from Moody's Investors Service that shows an unprecedented concentration of cash in the tech sector. For the first time, the top five companies on the Moody's cash ranking are tech companies, with Cisco and Oracle following Apple, Microsoft, and Google. Technology companies overall held $777 billion in cash, or 46 percent of the total cash across all non-financial industries.
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Apple, Microsoft and Google Hold 23% Of All US Corporate Cash Outside the Finance Sector

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  • Dupe. (Score:2, Informative)

    by Anonymous Coward

    Meet the new Slashdot, same as the old Slashdot.

    • Editor A publishes story S, and then editor B publishes also story S. Editor B simply forgot to check the post-it note stuck on the fridge "Fresh beer! btw, took care of that 23% cash story, good'day".
  • Maybe (Score:4, Funny)

    by liqu1d ( 4349325 ) on Tuesday May 24, 2016 @10:57AM (#52171223)
    They should buy a country and funnel all profits to that. All these pesky tax havens being made illegal.
  • Hold on. This is the tech sector. Perhaps they ment "cache". The tech sector is holding a lot of cache.

  • by swb ( 14022 ) on Tuesday May 24, 2016 @11:13AM (#52171341)

    Are there any longer term data on the nature of their cash holdings -- ie, has this amount increased over time or is it fairly static?

    I'm also curious about the economic impact of cash hoarding like this. Presumably having this much capital tied up in short-term non-working assets is suboptimal in a macroeconomic sense.

    My understanding is that it mostly gets parked in high liquidity accounts and instruments, and that even banks have begun charging negative interest rates on large deposits because the short term nature and liquidity demands prevent them from being able to use it as capital.

    I'm also curious how shareholders feel about this. It would seem kind of obnoxious for a corporation to hoard cash that could be paid out as dividends. Obviously some amount of cash (even relatively large) is a good idea for future investments and acquisitions, but maybe not at the levels shown here.

    • I'm also curious about the economic impact of cash hoarding like this. Presumably having this much capital tied up in short-term non-working assets is suboptimal in a macroeconomic sense.

      I strongly doubt that they're in non-working assets. I don't know about the others, but I know that Google aggressively invests its cash holdings, and gets a nice rate of return.

      My understanding is that it mostly gets parked in high liquidity accounts and instruments

      Not so liquid, I think. Oh, I'm sure there's some amount that's highly liquid, but it would be foolish to keep all of it in such instruments, because the people managing this money know that there's no way it will be needed on short order. In fact, most of it can't easily be used to purchase companies or expand operations because th

      • by swb ( 14022 )

        I strongly doubt that they're in non-working assets. I don't know about the others, but I know that Google aggressively invests its cash holdings, and gets a nice rate of return.

        My assumption is that the term "cash" is used to denote a specific asset class, i.e., highly liquid holdings of actual cash balance accounts or extremely liquid instruments like short-term T-bills.

        Assets held as working, long-term investments aren't really all that liquid and I wouldn't necessarily call them "cash", especially if converting them into cash requires an investment bank or market-maker to buy the securities or some kind of longer time horizon to convert them to cash.

        • My assumption is that the term "cash" is used to denote a specific asset class, i.e., highly liquid holdings of actual cash balance accounts or extremely liquid instruments like short-term T-bills.

          My understanding is that corporate balance sheets include anything that isn't a business-related asset in "cash".

          • by fizzup ( 788545 )

            My understanding is that corporate balance sheets include anything that isn't a business-related asset in "cash".

            That is not quite correct. Here [google.ca] is a quick way to get at Google's balance sheet. As of April 31, Google has about $75 million in cash, cash equivalents, and short term investments (US GAAP - will expire, mature, or be sold within one year). Bean counters commonly refer to those three together as "cash". This article has used that shorthand, but reported the cash from December 31 of last year.

            One counter-example to a non-business asset outside the "cash" umbrella is long term investments.

    • Presumably having this much capital tied up in short-term non-working assets is suboptimal in a macroeconomic sense.

      No need to qualify that statement. It definitely is sub-optimal in a macro and micro economic sense. Basically it means those companies have no idea how to make productive use of that capital.

      I'm also curious how shareholders feel about this.

      I'm not a shareholder in these companies but I would have mixed feelings about it. On one hand having a fortress of a balance sheet makes investing in the company extremely safe. Even if Apple were to stop selling iPhones tomorrow, they literally could buy another Fortune 100 company in cash if they needed to. Wit

      • by swb ( 14022 )

        I think the articles I've read tried to chalk this up to the slow growth of the economy generally. There just aren't enough productive investments to put the money into.

        Although that seems kind of a thin excuse; these firms aren't investment banks and presumably seek profitable growth through their principal business function, not investment in capital markets.

        I think I mostly agree with you that it represents a kind of deficit in terms business growth. Rather than investing in business growth through new

        • I think the articles I've read tried to chalk this up to the slow growth of the economy generally. There just aren't enough productive investments to put the money into.

          I don't personally subscribe to that theory. I think there are plenty of productive investments available today. Arguments about the economy being slow are fig leaf excuses. Frankly what better time to buy at a good price than when prices are depressed by economic conditions? No, the problem is something else.

          The problem is that there are not a lot of huge investments available that will return 25% net margins like Apple, Google and Microsoft are accustomed to. Any of them could buy any but a h

          • by swb ( 14022 )

            Does Apple pay enough dividend to make the difference between 5% and 25% meaningful to shareholders, or are we just playing the stock price appreciation game where shareholders don't give a shit about fundamentals as long as the stock price increases?

            Pardon my cynicism, but I think corporations should have to provide compelling reasons to hoard cash on this scale or pay dividends. This just seems like lazy management, coasting on high profit products while failing to do the hard work of business expansion

            • Does Apple pay enough dividend to make the difference between 5% and 25% meaningful to shareholders, or are we just playing the stock price appreciation game where shareholders don't give a shit about fundamentals as long as the stock price increases?

              Apple currently has annual earnings per share of $9.22 and pays $1.98 in dividends per share. That is roughly 20% of their earnings going to dividends. Plus they are doing some stock buyback as well. So if margins were to drop by to 5% and all else held stable, they would basically be paying out all of their earnings in dividends. So yes, the margins matter. A lot. But that's a bit over simplistic. More realistically they could find some businesses with 10-15% net margins and buy those. Then their

          • not a lot of huge investments available that will return 25%

            What if they have a long term outlook and preparing themselves for the next 25% margin industry?

    • ...and perhaps they could start paying all that tax that they've been dodging for so long the world over (once governments have worked out new watertight tax laws). I sounds like it might be enough to affect a few economies.
  • Slashdot holds 100% of the dupes on this site. Good job!
  • by orlanz ( 882574 ) on Tuesday May 24, 2016 @11:29AM (#52171447)

    What does that mean? What is your intent here?

    Based on my accounting background, I would say this is bad. But probably not for the same reasons as others. This means that Apple, Google, and Microsoft are not doing a great job running their business. Its not a "bad job", just not a great job. It could just mean that most of the other companies are reinvesting their cash (and equivalents) in expansions, buildings, upgrades, or giving it out as dividends & salaries (think Walmart, Publix, ConocoPhillips, Boeing, Samsung, Tesla, etc).

    Too much cash normally means the owners are playing it too safe and not investing enough or could invest in higher risk & more profitable ventures. I doubt these guys are hording cash to buy each other.

  • Comment removed based on user account deletion
    • So a company that has, say, $100 million offshore, and who would expect a $35 million tax hit by bringing it back, should be able to do so for free, if it returns 10% of that to shareholders as a dividend, which some while pay 15% on, while many others (pensions, IRA's, 401k's) will pay nothing on at all.

      • by imgod2u ( 812837 )

        Which is probably why we should:

        1. Make dividends tax-deductible
        2. Raise dividend tax to income levels

        That way it's almost identical to payroll taxes, with the exception of SS/Medicare contributions, which we should probably find a way to have dividend earners contribute to as well.

        Taxing an ephemeral entity like a corporation is like trying to catch a ghost; tax the people who own and benefit from said corporation.

    • Eliminate the business tax on repatriating funds if the business distributes 10% of the repatriated funds as a one time dividend to shareholders.

      One time distributions won't solve the problem. It just creates an incentive to wait for the tax amnesty the next time. They've actually done a one time tax amnesty before with predictable results. No, you need to actually change the laws so that it is economically attractive to repatriate the funds. Could be done by eliminating corporate taxes and taxing all income (corporate or personal) at the personal level like they do for S-Corps. (I'm overly simplifying here but you get the idea) That way the c

  • Well, it seems to be down by about 10% from 4 days ago [slashdot.org]!
  • We just had this story, more-or-less:

    https://news.slashdot.org/stor... [slashdot.org]

    The headline's an improvement on last time, though.

  • I am no fan of reagan, but have to give the man credit; he DID re-do the taxes in which he got rid of so many tax breaks. We need to do the same here and solve this issue with these companies.
  • "A large portion of tech company cash is held overseas, highlighting ongoing roadblocks corporate tax reform that would help companies repatriate those funds. Moodyâ(TM)s estimates that Apple, Microsoft, Cisco, Google and Oracle have $441 billion overseas, representing 87 percent of their cash."

    Because the US is one of the few countries in the world that taxes income of corporations earned outside the US. Change the rules to what almost every other country uses (income is taxed in the country where it

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