What's Important in the Financial World (3/19/3013)
Mar 19th 2013 6:32AM
Corporate Cash Piles Up
The debate over how America's largest companies use cash will pick up again. Moody's Investor Services released a study that forecasts how big the cash balances will be at some of these public corporations at the end of 2013. The kind of activism Apple Inc. (NASDAQ: AAPL) has faced about distributing its cash to shareholders through a higher dividend or share buybacks almost certainly will spread to the other companies on the Moody's list. The Moody's report put Apple's year-end cash balance at $170 billion. Microsoft Corp. (NASDAQ: MSFT), Google Inc. (NASDAQ: GOOG), Pfizer Inc. (NYSE: PFE) and Cisco Systems Inc. (NASDAQ: CSCO) are also on the Moody's list. Perhaps the most critical difference between these companies and Apple is that they have shown a history of acquisitions. Apple has never used its money that way, at least on any large scale. According to MarketWatch:
Overall, corporate-cash stockpiles at U.S. non-financial companies rated by Moody's grew to $1.45 trillion in 2012, up 10% from 2011, according to the report.
Cypriot Parliament to Weigh In
The parliament in Cyprus may block the government's attempt to seize money from the savings accounts of its citizens as a way to raise money to get access to bailout funds. If so, the anxiety about the action, and its possible effects on the plans of other financially weak EU nations, should drop. Some analysts believe there could be a sort of contagion, if countries like Greece run out of options to close budget gaps. Cyprus does not have anywhere else to turn for the money, which is the primary reason it took such measures. According to Reuters:
Cyprus's parliament is unlikely to pass legislation taxing deposits which has prompted turmoil in its banking system, falling short on a condition for an international bailout, government spokesman Christos Stylianides said on Tuesday.
Apple and Its Shadow
Wherever Apple goes, Samsung is never far behind it. The South Korean company said it will build and market a smartwatch, just as Apple is rumored to be doing. Among a heightened competition, the launches are likely to cause another round of intellectual property and patent challenges in courts around the world. These kinds of fights already are well along as Samsung has challenged both the iPhone and the iPad. According to Bloomberg:
"We've been preparing the watch product for so long," Lee Young Hee, executive vice president of Samsung's mobile business, said during an interview in Seoul. "We are working very hard to get ready for it. We are preparing products for the future, and the watch is definitely one of them."
Filed under: 24/7 Wall St. Wire, Market Open Tagged: AAPL, CSCO, featured, GOOG, MSFT, PFE