Apple famously sits on a huge stockpile of cash – $215B at the latest count – but a new report from corporate credit rating agency Moody’s puts the number into perspective. It shows that if you exclude banking & finance, a sector that sits on a lot of cash by definition, just three companies hold 23% of all the corporate cash in the USA: Apple, Microsoft and Google.
GeekWire notes that this is the first time that all five of the top spots have been held by tech companies, with Apple holding twice as much as Microsoft and three times as much as Google …
The bulk of Apple’s cash reserves are held overseas, as corporate taxes would make it too expensive to repatriate the cash, hence Apple borrowing money to fund its stock buybacks.
Apple leads the pack with $215.7 billion in cash, followed by Microsoft at $102.6 billion, and Google at $73.1 billion […] 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.
The full text of Moody’s announcement can be read below.
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Announcement: Moody’s: US non-financial corporates’ cash pile increases to $1.68 trillion, tech holding the lead
Global Credit Research – 20 May 2016
New York, May 20, 2016 — US non-financial companies rated by Moody’s held $1.68 trillion in cash at the end of 2015, up 1.8% from $1.65 trillion the year prior, Moody’s Investors Services says in a new report. The top 50 holders of cash account for $1.14 trillion of the total cash pile, and entry to the top 50 list now requires $6.12 billion in cash.
“The top four cash-heavy US industries remain technology, healthcare/pharmaceuticals, consumer products, and energy,” says Richard Lane, a Moody’s Senior Vice President. These four industries currently hold a record $1.3 trillion, or 77% of total corporate cash and have accounted for more than 72% of the total every year since 2007.
The top five cash holders are Apple, Microsoft, Google, Cisco Systems and Oracle, Moody’s says in “US Non-Financial Companies: Cash Pile Grows 1.8% to $1.68 Trillion; Tech Extends Lead Over Other Sectors.”
Apple held $215.7 billion in total cash for the period. The company has held the top spot as cash king since 2009.
“While the concentration of cash among the top-rated cash holders continues to grow, so too has the portion held by the technology sector, which accounted for a record 46% of total cash in 2015, up from 41% in 2014,” Lane says.
Moody’s expects the technology sector cash concentration will grind higher over the next year because of the sector’s strong cash flow generation and despite stronger returns of capital to shareholders. The technology sector generated 63% of the total rated non-financial free cash flow in 2015, up from 37% in 2007.
For the top 50, capital spending fell by 3% to $885 billion, and net share buybacks fell 7% to $269 billion. Dividends increased by 4% to a record high of $404 billion, while acquisition spending increased 43%, to a record $401 billion.
For the first time since 2012, cash coverage of aggregate debt maturities over the next five years fell below 100% to 93% at the end of 2015.
In 2016, Moody’s expects aggregate spending on capital investments, dividends, acquisitions and share buybacks to again approximate $1.9 trillion.
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