By Sunny Oh
Seven tech companies held 41% of the total cash among U.S. corporations in 2019
Even as cash stockpiles among U.S. corporations have dwindled steadily since 2017, more of these reserves are being concentrated in the hands of a select few tech firms, according to a new report.
Moody's on Wednesday issued a forecast that total cash holdings among U.S. non-financial companies would drop another 7.5% by the end of this year, falling to $1.55 trillion, as business executives look to pay down maturing debt and hand cash to shareholders through buybacks and dividends.
See: After Trump tax cuts, corporate cash hoards finally shrink ()
Yet only seven technology firms were expected to carry 41% of the total cash in all nonfinancial U.S. companies this year, versus 17% at the end of 2009, according to Moody's. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Facebook (FB) Cisco and Oracle (ORCL) would hold $638 billion on their balance sheets.
Those companies were expected to see only a 1% decline in their cash holdings in 2019, while all seven firms also were pegged to reduce their debt levels.
Investors sometimes looked to large cash stockpiles among U.S. corporations as a buffer against the record level of debt racked up by nonfinancial corporations as C-suite executives seized on depressed interest rates to lock in lower borrowing costs.
But with much of that cash now holed up at a limited number of businesses, the credit profile of broader corporate America may be less robust than at first glance.
-Sunny Oh; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
November 13, 2019 14:16 ET (19:16 GMT)
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