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Apple, Microsoft and Google Hold 23% Of All US Corporate Cash Outside the Finance Sector (geekwire.com)
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.
Meet the new Slashdot, same as the old Slashdot.
They should buy a country and funnel all profits to that. All these pesky tax havens being made illegal.
Why not include the financial sector in this analysis?
Because Apple, Microsoft, and Google would only hold 2% of all US corporate cash, and we would feel bad for them.
Slashdot, fix the reply notifications... You won't get away with it...
That's not how it works. The economy ground to a halt because money was too easy to get and people borrowed way more than they could afford (mostly on houses), which drove up a bubble, cramped credit, and combined with other factors (like huge international competition for things that the US never used to have to compete for) to impact the entire economy. The companies you're complaining about are doing exactly what most households are now doing: saving money so they don't get burned again by relying on debt. Want those companies to park money in US banks instead of overseas? Reduce the egregious tax rate.
Don't disappoint your bird dog. Go to the range.
The "cash" they hold isn't held as actual cash, it's just very liquid investments. Even if they did hold it in "cash" it wouldn't be cash, it would be a current account balance with a bank. That bank is VERY busy investing that money elsewhere - so the fact that they hold "cash" (liquid investments) is utterly irrelevant to whether or not that money is ACTUALLY being invested somewhere.
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.
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.
In the USA, there was never a 90% tax rate on corporate profits, even if you consider the double taxation on dividends. Besides, these are cash holdings, meaning that the companies already paid their f***ing taxes in the process of acquiring the cash.
These companies aren't obstructing economic growth. The Federal Reserve has effectively destroyed the interest rates on cash and cash equivalents for the express purpose of forcing people into more risky investments. If there were positive returns to be had by increasing capacity or making new investments, these companies would most certainly be taking advantage of them. It's not like there's a surplus of new and promising business ventures out there which are starved for cash.
Government policy has ground this economy to a halt by rewarding "financialization" and trying to cure a debt-based recession by doing everything possible to increase outstanding debt.
Because so much of the cash that the financial sector holds on their balance sheets isn't their cash at all, but their customers money which they are being lent (by that customer opening an account with them), where as the cash on Google, Apples and Microsofts balance sheets represents their cash and their cash alone.
Sorry, but I'm now too old and too experienced with actual business to let this "assumed conceptual buy-in" to pass without noting it.
Using terms like "burned" (or for that matter arguments based on "risk") simply are not the same meaning as applied to the financial sector or successful high-tech companies, as to 99% of the readership you are addressing.
When a Google gets "burned", that means potentially the stockholders end up moving from rich to slightly less rich. For the middle class, "burned" means, as you've noted, losing their homes and their families potentially being on the street.
While the argument can be made this is an acceptable state of affairs, using terminology that gives a false sense of equivalence to all parties (like the egregious "job creators") ends up simply misrepresenting reality for the benefit of a highly selective group of people, who are not the ones you are addressing. Though I realize it isn't your intent, the terminology is basically an attempt to hijack the reader's mind to evaluate the situation against reality and against their own interests. And that by now has become the standard form of media interaction, with predictable effects.
~ Whence do you come, slayer of men, or where are you going, conqueror of space?
> When a Google gets "burned", that means potentially the stockholders end up moving from rich to slightly less rich. For the middle class, "burned" means
Those damn stockholders, rich people saving up tthousands of dollars in their 401k. Fuck them. They don't need to retire, to have hundreds of thousands of dollars when they're 72. Tax the hell out them, they can eat dog food when they're old.
You're attempting to draw a distinction between "stockholders" and "middle class". You're missing the fact that "stockholder" means "everyone over 30 who has half a clue". Stockholders ARE the middle class, all middle-class people who aren't ignorant or irresponsible invest for retirement. One day, not too long from now, you'll be old, 60,70,80 years old. You won't be able to work like you do in your twenties. That means you'll need enough savings to last you for 20 years or so - a million dollars or more. How the hell do you save up a million dollars so you can eat and pay bills for 20 years when your retired? You put the first 10%-15% of your income into mutual funds while you're working; you become a stockholder.
The companies don't have a big room with stacks of $20 bills. "Cash" in this sense means investments they can sell quickly.
If Musk OWNS battery research lab and factory, selling that portion of the business might take a year or two. That's considered a long-term, illiquid investment. On the other hand, if Google finances the same type of battery R&D by buying 10% of the stock in a separate battery technology company, they can easily sell that stock within a day or two. That's called a liquid investment, or cash-equalivent.
Either way the money is invested in the same type of R&D and builds the same type of factory. It's accounted as cash when it's arranged so that the company can get out quickly, converting their investment into actual cash.
The most "cash like" is when Google hands the money to a bank, and then the bank loans the money to someone starting a new business or buying a house or whatever. All money ends up being invested. Again the distinction is whether it's a pure financial investment only, so the company can get out of that investment quickly , or if the investment is directly into the operations of the business, such as Cox investing in building a fiber-optic network. Cox can't quickly sell their fiber network, so that's a non-cash investment. It's all investment.
The *only* effective way to have companies pay corporate income tax is to fix the tax laws. That way, everyone's playing by the same rules and it doesn't hurt a company competitively to repatriate cash. This is a Congress problem, not a corporate problem. ... That being said, the current rate of US corporate income tax is kinda ludicrous; it's the highest in the world.
Exactly, and the right way to fix the tax laws would be to eliminate corporate income taxes altogether. Treat dividends and income from sale of shares as ordinary income (after deducting the cost basis, of course), and leave the rest alone. Taxes should not levied against intermediaries—no taxation without representation, etc. The voting citizen should be able to see exactly how much they earn from their investments before taxes, and how much is being taken for public use.
While we're at it, individuals should be able to deduct their own labor costs (e.g. minimum wage) from their income. The time and effort individual employees expend to provide their labor are not substantially different from the expenses businesses are able to deduct. By failing to include a deduction for labor, the current system discriminates against anyone with a day job.
"The state is that great fiction by which everyone tries to live at the expense of everyone else." - Bastiat
> A Bill Gates or Eric Schmidt in no case are "burned" in the same sense
You're confusing high-level employees vs stockholders (retirement / home-purchase savings). 2% of Google is owned by Eric Schmidt. 4% of Microsoft is owned by Bill Gates. The vast majority of stock is owned by middle-class people saving up to buy a home, send a kid to college, or retire.
You actually have a very, very important choice to make. You can do what is easy for now and very painful later, or you can do what takes a bit of effort now and will pay off greatly in not-too-distant future. You can whine about rich people, which will have no practical effect other than wasting your time, or you can go spend a few minutes learning about index mutual funds, then about your company's 401k. If you take the second option, you'll likely learn that the company you work for is willing to give you free money. You save the first ten percent of your pay check and they'll throw in an additional 5%, free money for you. Then in just a few years you can own a house instead of throwing money away on rent every damn month. Do a bit of that and you end up financially comfortable.
No. 30% of your money has gone for taxes, 30% of the plumber's money has gone for taxes, and 30% of the electrician's money has gone for taxes.
Once your money has gone to the plumber, it's the plumber's money, not yours. You' don't get to double-count the taxes paid so that everyone magically has a 66+% tax rate instead of a 30% tax rate.
In effect, your scenario has a GDP of 100 + 70 + 49 = $219 dollars of income and tax revenue of 30 + 21 + 15 = 66 dollars of taxes, which is still 66/219= 30%. *SHOCK*