

Why is it bad to have 70B in cash - kgutteridge
http://pocketcyclone.com/2011/01/18/why-is-it-bad-to-have-70b-in-cash/

======
cd34
$60B, but, who's counting.

The fact that they have that much cash means that they cannot find anything
that would materially affect their stock value (ROI for the investor) greater
than the expenditure.

If they acquire a business, it needs to provide a greater return than the cash
it took to buy that business. This is a problem Google and Cisco and a number
of other companies face as well. Cisco's answer was a dividend - which was a
sad statement for the tech market.

Google can buy all of the companies for tens of millions it wants for the
foreseeable future, but, none of those companies materially affect the ~94% of
their revenue brought in through search. That's why Google can be all over the
board with Solar projects and alternative energy and self driving cars, etc,
but, at the end of the day, will any of those ideas provide the same ROI as
search?

Sure, something will come along that will do it, but, holding the cache horde
right now until something encouraging comes along is slightly better than
paying a dividend and having to borrow when they do find that investment
they've been on the lookout for.

And Apple's stock price reflects their cash position. Don't think Wall Street
doesn't analyze that and use that as a basis for assigning value. If they
announced a dividend, the share price would jump to the current price + the
expected dividend, then would settle back down to the appropriate valuation.

