Google parent company Alphabet has overtaken Apple to become the world's most cash-rich company, reports The Financial Times this morning.
According to the FT, Apple’s cash hoard has fallen to $102 billion, down from a peak of $163 billion at the end of 2017. Meanwhile, Alphabet's $117 billion cash reserve has risen by almost $20 billion over the same period.
However, as FT notes, Alphabet's new title as "king of cash" may be somewhat of a poisoned chalice, as it could antagonize investors who would rather see the cash being used to reward shareholders with buybacks or dividends.
The leadership switch is said to be a result of Apple's own efforts to reduce its liquidity, by taking advantage of US tax reforms to repatriate overseas reserves and pay out to investors. The company has spent $122 billion on buying back stock and paying dividends in the past 18 months.
Alphabet's stock buybacks, by contrast, have been paltry. In the nearly four years since it began repurchasing its own stock, it has spent an average of only $1.7bn a quarter.
In that time, it has handed out more new shares in the form of employee stock benefits than it has bought back through its repurchase programme. As a result, the payments have done nothing to lift its earnings per share — the reason investors generally welcome buybacks.
Alphabet's new cash-rich status also comes at a time when it is under more intensive scrutiny than ever before. Google and its parent company have received over $9 billion in antitrust fines by the EU in the past two years. It is now facing a new antitrust investigation by the Justice Department.
Alphabet's cash reserves have actually increased despite the parent company's heavy investment in real estate for new office builds and data centers, which will form part of the infrastructure supporting Google's increasing AI endeavors.
In terms of most valuable company on the planet, Apple has been overtaken by both Amazon and Microsoft, with the latter now taking that particular crown. Microsoft is now worth nearly $1.1 trillion, after soaring on the back of optimism about its cloud business.
Top Rated Comments
There is a difference between security issues and a business model based on gathering as much personal data as possible for running a targeted ad business.
[doublepost=1564664302][/doublepost]Yes, there are lots of people in the world who can drop ~$800 for a quality device that they use all day long as their most important computer for 2-5 years, since it’s supported with software updates all that time.
(And which still holds some resale value after years of use. iPhone is great value for money.)
[doublepost=1564664592][/doublepost]No. Let’s go further!
Apple should give all their products for free!
Apple’s net margin has not changed for like ten years.
Cook has done a good job - despite not being a product visionary like Jobs was.
People seem to expect Apple to do 2007 all over again every year, i.e. release a product that turns an existing industry upside down every single year.
Apparently it’s other companies who are doing this now. I just can’t think of any examples of anyone releasing anything like Apple Watch or AirPods over the last few years.
Oh well, perhaps voice assistants (also known as cooking timers)? But the thing is that neither Google or Amazon is making any money with them.
Remember, Apple lost the cash lead by choice. They spent money paying dividends and buying back stock.