Bloomberg News

U.S. Firms Hold Record $1.64 Trillion in Cash With Apple in Lead

March 31, 2014

Apple Leads U.S. Companies Holding Record $1.64 Trillion in Cash

Attendees with Apple Inc. laptop computers and iPads during the South By Southwest Interactive Festival in Austin, Texas, on March 10, 2014. Photographer: David Paul Morris/Bloomberg

U.S. companies outside of the finance industry are holding more cash on their balance sheets than ever, with $1.64 trillion at the end of 2013.

That’s up 12 percent from the prior record in 2012, Moody’s Investors Service said in a report today. Technology led the charge, with Apple Inc. (AAPL:US), Microsoft Corp (MSFT:US)., Google Inc. (GOOG:US), and Verizon Communications Inc. (VZ:US) topping the list of cash-rich companies.

Stockpiling cash can help companies maintain stronger credit ratings and ensure near-term debt can be paid off if there are swings or disruptions in capital markets, Moody’s credit analyst Richard Lane wrote in the report. High levels of cash can also attract activist shareholders, who can weaken a company’s credit rating, or encourage companies to make risky decisions, such as expensive acquisitions.

Apple, whose cash pile surged to $158.8 billion from $5.46 billion in 2004, now holds 9.7 percent of total corporate cash outside the financial industry. The Cupertino, California-based company, which reinstated dividends in 2012, was targeted by Carl Icahn for not returning enough cash to shareholders. Icahn dropped his campaign in February after the company stepped up repurchases.

Technology companies held $309 billion more in cash at the end of last year than they did in 2009, accounting for 53 percent of the increase for all non-finance companies.

Firms in the technology industry kept $450 billion overseas -- 47 percent of the total corporate cash pile held outside the U.S.

Tax Loopholes

Companies have been putting money in low-tax countries, taking advantage of loopholes in the U.S. tax code. U.S.-based multinational companies have accumulated $1.95 trillion outside the country, up 11.8 percent from a year earlier, according to securities filings from 307 corporations reviewed by Bloomberg News. Three U.S.-based companies -- Microsoft Corp., Apple and International Business Machines Corp. -- added $37.5 billion, or 18.2 percent of the total increase.

Capital spending of $869 billion and dividend payouts of $365 billion reached seven-year highs last year, while share repurchases and acquisition spending declined, according to Moody’s.

To contact the reporter on this story: Sarah Frier in San Francisco at sfrier1@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net; Pui-Wing Tam at ptam13@bloomberg.net Crayton Harrison


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Companies Mentioned

  • AAPL
    (Apple Inc)
    • $101.06 USD
    • 0.10
    • 0.1%
  • MSFT
    (Microsoft Corp)
    • $47.06 USD
    • -0.46
    • -0.98%
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