M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, October 27, 2010

Firms still hoarding cash

According to Reuters, firms are still hoarding nearly $1 trillion in cash with no plans to spend it: 

Nonfinancial U.S. companies are sitting on $943 billion of cash and short-term investments, as of mid-year 2010, compared with $775 billion at the end of 2008, Moody's said. This would be enough to cover a year's worth of capital spending and dividends and still have $121 billion left over, it said. ...

Meanwhile only 20 companies hold a large portion of corporate cash balances, with $346 billion on their balance sheets, or 37 percent of the total, Moody's said.

Cisco Systems (CSCO.O) has the largest cash balance, at $39.86 billion, while Microsoft (MSFT.O) is second with $36.79 billion, Moody's said. Google (GOOG.O) has the third-largest balance with $30.06 billion, followed by Oracle (ORCL.O) with $23.64 billion and Ford Motor Co (F.N) at $21.89 billion.

Technology companies held the most cash as a sector, at $207 billion, followed by pharmaceuticals with $124 billion, energy at $105 billion, and consumer products with $101 billion, Moody's said.

What's preventing the spigot from turning on this potential private sector stimulus?  Lack of confidence.

-bjmq

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