According to a new report by Bloomberg, U.S. companies outside of the finance industry are holding a record cash of $1.64 trillion, with Apple sitting at the top of the list whose cash pile surged to $158.8 billion at the end of 2013. The Cupertino giant now holds 9.7% of total corporate cash outside the financial industry, followed by Microsoft, Google and Verizon.
Topping the list of cash-rich companies, technology firms held $309 billion more in cash at the end of last year than they did in 2009, accounting for 53% of the increase for all non-finance companies. These technology companies kept $450 billion overseas, meaning 47% of the total corporate cash pile was held outside the U.S. According to securities filings from 307 corporations reviewed by Bloomberg, U.S. based multinational companies have accumulated $1.95 trillion outside the country, taking advantage of the loopholes in the country’s tax code.
“Stockpiling cash can help companies maintain stronger credit ratings and ensure near-term debt can be paid off if there are swings or disruptions in capital markets, Moody’s credit analyst Richard Lane wrote in the report. High levels of cash can also attract activist shareholders, who can weaken a company’s credit rating, or encourage companies to make risky decisions, such as expensive acquisitions.
Three U.S.-based companies — Microsoft Corp., Apple and International Business Machines Corp. — added $37.5 billion, or 18.2 percent of the total increase. Capital spending of $869 billion and dividend payouts of $365 billion reached seven-year highs last year, while share repurchases and acquisition spending declined, according to Moody’s.”
Billionaire investor Carl Icahn has been targeting Apple for not returning enough cash to shareholders. However, he dropped his campaign a couple of months back after the company stepped up repurchases.