Google parent Alphabet has dethroned Apple as the world's cash king after a decade of dominance

[steven36]

• Google's parent company, Alphabet, has overtaken Apple as the company with the most cash on hand.
• Alphabet had $117 billion in financial reserves at the end of the most recent quarter, while Apple had $102 billion.
• Both companies have recently come under pressure to deploy their massive cash holdings.

 

 

After holding the title for more than a decade, Apple has been dethroned as the king of cash by Alphabet.

 

The Google parent's holdings of cash and marketable securities, net of debt, topped $117 billion in the most recent quarter, exceeding Apple's recently reported cash pile of $102 billion, according to the Financial Times, which first reported the shift.

 

Apple, which had $163 billion in cash on hand in 2017, has been actively trying to reduce its stockpile since it was criticized by the activist investor Carl Icahn six years ago, the report said.

 

Many investors don't want companies to hold on to large amounts of liquid assets. They instead prefer that companies use that money to buy back stock or pay shareholder dividends.

 

Alphabet has also faced scrutiny for holding on to so much cash, especially following the 2017 GOP tax plan, which imposed a tax on overseas cash holdings for US companies. In addition, Alphabet has been hit with antitrust fines of €8.2 billion in the EU over the past two years, the Financial Times said.

 

Apple has increased buybacks by $122 billion and paid dividends over the past 18 months, the Financial Times noted. It also bumped up its research-and-development spending by 15% in the last quarter, to its highest level in 18 years.

 

But Alphabet has been holding more in its financial reserves and using it to try to break into new markets, the Financial Times said. It spent $25 billion on real estate last year, buying Google office spaces in New York and building data centers for its cloud-computing business.

 

And while Alphabet has spent little on stock buybacks, its board just approved adding $25 billion to its stock-repurchase program, the report said. Since the beginning of the year, the company has been authorized to repurchase $37.5 billion of its stock.

 

Source

[Karlston]

Apple isn’t the most cash-rich company in the world anymore, but it doesn’t matter

Alphabet has $117 billion in cash on hand.

Google co-founder Larry Page is now CEO of Alphabet.

Justin Sullivan / Getty Images

You've probably heard it before: Apple has more money in the bank than any other corporation on Earth, thanks to huge profit margins on its products and a run over nearly two decades leading in the consumer technology industry. It has been called the richest, most successful company in the history of the world. But one part of that narrative isn't true anymore: Apple no longer has the biggest financial reserves of any company on Earth.

 

According to a report in Financial Times, that label may now be applied to a different tech giant: Alphabet, Google's parent company. As of this year's second financial quarter, Alphabet now has $117 billion in reserve, compared to $102 billion for Apple. However, Apple had $163 billion in 2017, so this is just as much a story of Apple reducing its reserves as it is one of Google growing its own.

 

Since then, Apple has worked to reduce its liquidity in response to criticisms from investors that the company was hoarding cash. While there is some room for nuance, investors generally want to discourage companies from hoarding cash. Instead, they prefer that the money either be returned to investors in some way or invested in something that may produce a return later.

 

Apple spent $122 billion on stock buybacks since the beginning of 2018. It also took advantage of a one-time tax incentive to bring overseas cash back into the United States at a reduced tax rate a little over a year ago.

 

All of this is to say that, while platform-loyal tech enthusiasts might see this as evidence that Google is winning and Apple is losing, the reality is more nuanced. Finance professionals, in many cases, actually see holding excessively large cash reserves as a negative.

 

Apple continues to face the challenge of reinventing itself in a world that has been more or less fully saturated with smartphones. The company's most recent earnings report showed another quarter of decline in year-over-year iPhone sales. But the losses in that quarter were made up by growth in services, wearables, and other areas.

 

Meanwhile, Google had a record-breaking quarter, with a reported quarterly profit for $9.9 billion and 19% greater revenue than the same quarter the previous year. While Apple's risk for investors comes from a stagnating smartphone market, Google's comes from threat of increased regulation and other government action. And, of course, Alphabet's umbrella covers more than just Google.

 

Both companies' financials are relatively healthy for now, though. And news about which tech company has the most cash in the bank doesn't carry much relevance for most consumers; it's primarily an investor concern. But how tech giants will navigate shifting market demand for certain products, consumer outrage over privacy matters, the impact of US/China trade disputes on supply lines, and threats of regulation or even monopoly-busting breakups by politicians and political candidates might. So those are the stories to watch most closely.

 

 

 

Source: Apple isn’t the most cash-rich company in the world anymore, but it doesn’t matter (Ars Technica)