Innovation
Huge corporate cash holdings of $2.8tn put recovery at risk; Top five own hoard of almost $400bn
By Michael Hennigan, Finfacts founder and editor
Jan 22, 2014 - 7:46 AM

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Source: Daily Finance

A small number of global companies are hoarding a huge amount of cash, which could have implications for the strength of the current recovery. The top five are in the technology sector and had caches worth almost a combined $400bn in cash in 2013.

Deloitte, the Big 4 accounting firm, in a study first reported by The Financial Times, report that in 2008 the gross cash hoards of 963 non-financial companies in the S&P Global 1200 index amounted to $1.95tn, with groups holding $2bn or more in cash accounting for three-quarters. By 2012, total reserves had risen to $3.16tn but the proportion held by companies with more than $2bn in cash had grown to 85%.

Of the non-financial companies in the S&P Global 1200 index, 32% of companies held 82% of the aggregate cash hoard, the highest level since at least 2000.

Apple with almost $150bn available accounted for 5% of the total at the end of its fiscal year last September.

The Wall Street Journal reports that since 2002, the company has spent $17.7bn, or roughly $1.5bn a year on R&D. "Capital expenditures over that same period have also been shockingly small compared to Apple’s overall economic impact: $28.6bn, or $2.4bn a year."

The company is currently generating about $50bn in operating income each year, and $37bn in net income.

The top 20 tech companies held $462.5bn  in 2012 with 80 tech companies holding $584.1bn.

The cash pile for the top 5 was $313.2bn in 2012.

In 2013, the top 5 held $387bn: Apple $146.8bn; Microsoft $80.7bn; Google $56.5bn (to Q3); Verizon $54.1bn; Samsung $49.0bn.

The tech giants in particular have been aggressively avoiding or evading taxes, which has contributed to their cash mountains.

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