Filed under: Deals, Google (GOOG), Boston Scientific (BSX)
Current data advocates that America’s largest industrial companies are piling up cash. The New York Times reports: “According to S.& P., the total cash held by companies in its industrial index exceeded $600 billion in February, up from about $203 billion in 1998.”
That’s good news if the money does something other than sit in the bank. A number of very big companies like Google (NASDAQ: GOOG) don’t need anywhere near the tons of greenbacks in their accounts and they add more each quarter.
The money probably has two potential uses. One is to purchase other companies — as the market falls, there are going to be more deals at lower prices. Of course, many deals don’t work. Some of these will fail to find economies of scale and lead to write-offs like the Boston Scientific (NYSE: BSX) buyout of Guidant. Everyone lost as the BSX shares fell apart.
The second option is that companies could just do the easy thing and turn the cash back to shareholders. Everyone wins and it is hard to screw up a big one-time dividend.
Douglas A. McIntyre is an editor at 247wallst.com
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