Not necessarily..Ford is a great example. They hired a new CEO in 2006, who immediately began hoarding cash right up until the market crash in 2008. Consequently, Ford was the only American car company that did not take any government bail-out money.
I used to think the same way you did until very recently. But you're (we're) forgetting happens to that cash that *doesn't* get paid out to shareholders. It gets retained on the balance sheet as cash or other investments, and makes the company worth more. Therefore it's valuation is higher, which warrants a higher stock price.
Take two companies: A and B. Both companies are in the same industry, have identical growth, sales, operating margins, etc...the only difference is that A has $10B cash on its balance sheet and B has none. If you were to outright purchase the company (i.e. buy all of its assets), which would you pay a higher price for? Also: Which company is more likely to fare better during an economic downturn?
I think the reason is Outlook Web Access (OWA), which has a built-in paste feature. To see it in action: If you have access to an OWA account (I think hotmail works too but I haven't tried it), log in with Internet Explorer and start a new message. Right click on the message body and click Paste. You get the same warning message about the web site requesting access to the clipboard.
In an attempt to make OWA look, feel and behave like Outlook, I think Microsoft crammed as much functionality into IE-Javascript as they could..and clearly they got carried away. I'm not defending Microsoft's decision (it was clearly stupid), I'm just trying to rationalize it.
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Not necessarily..Ford is a great example. They hired a new CEO in 2006, who immediately began hoarding cash right up until the market crash in 2008. Consequently, Ford was the only American car company that did not take any government bail-out money.
I used to think the same way you did until very recently. But you're (we're) forgetting happens to that cash that *doesn't* get paid out to shareholders. It gets retained on the balance sheet as cash or other investments, and makes the company worth more. Therefore it's valuation is higher, which warrants a higher stock price.
Take two companies: A and B. Both companies are in the same industry, have identical growth, sales, operating margins, etc...the only difference is that A has $10B cash on its balance sheet and B has none. If you were to outright purchase the company (i.e. buy all of its assets), which would you pay a higher price for? Also: Which company is more likely to fare better during an economic downturn?
I think the reason is Outlook Web Access (OWA), which has a built-in paste feature. To see it in action: If you have access to an OWA account (I think hotmail works too but I haven't tried it), log in with Internet Explorer and start a new message. Right click on the message body and click Paste. You get the same warning message about the web site requesting access to the clipboard. In an attempt to make OWA look, feel and behave like Outlook, I think Microsoft crammed as much functionality into IE-Javascript as they could..and clearly they got carried away. I'm not defending Microsoft's decision (it was clearly stupid), I'm just trying to rationalize it.