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U.S. companies hoarding almost $1 trillion cash: Moody's
NEW YORK (Reuters) - U.S. companies are hoarding almost $1 trillion in cash but are unlikely to spend on expanding their business and hiring new employees due to continuing uncertainty about the strength of the economy, Moody's Investors Service said on Tuesday.
As the economy stabilizes companies are also more likely to spend on share repurchases and mergers and acquisitions, Moody's added.
Companies cut costs, reduced investment in plants and equipment and downsized operations in order to boost cash holdings during the recession. As the corporate bond market reopened many companies also boosted cash levels by selling debt and refinancing near-term debt maturities.
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.
However, "we believe companies are looking for greater certainty about the economy and signs of a permanent increase in sales before they let go of their cash hoards, which they suffered so much to build," Moody's said in a report.
"Given low demand and capacity utilization within certain industries, companies are wary of investing their cash in new capacity and adding workers, thereby doing little to abbreviate the jobless recovery," it added.
Around one quarter of the cash is held overseas and is unlikely to be repatriated to the United States, Moody's 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 (NasdaqGS:CSCO - News) has the largest cash balance, at $39.86 billion, while Microsoft (NasdaqGS:MSFT - News) is second with $36.79 billion, Moody's said. Google (NasdaqGS:GOOG - News) has the third-largest balance with $30.06 billion, followed by Oracle (NasdaqGS:ORCL - News) with $23.64 billion and Ford Motor Co (NYSE:F - News) 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. (10.26.2010) http://finance.yahoo.com/news/US-companies-hoarding-almost-rb-2687745036.html?x=0&.v=1
"To Achieve World
Government it is necessary to remove from the minds of men their individualism,
their loyalty to family traditions and national identification" Brock Chisholm - Director of the World Health Organization
"A society whose citizens refuse to see and investigate the facts, who refuse to
believe that their government and their media will routinely lie to them and fabricate a
reality contrary to verifiable facts, is a society that chooses and deserves the Police
State Dictatorship it's going to
get." Ian Williams Goddard
The fact is that "political correctness" is all about creating uniformity. Individualism is one of the biggest obstacles in the way of the New World Order. They want a public that is predictable and conditioned to do as it's told without asking questions.
"The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first." Thomas Jefferson