U.S. COMPANIES HOARDING $1Trillion IN CASH

[Anonymous]

http://news.yahoo.com/s/nm/20101027/bs_nm/us_corporates_cash_moodys
 U.S. COMPANIES HOARDING $1Trillion IN CASH
NEW
YORK  – U.S. companies are hoarding almost $1 trillion in cash but are
unlikely to spend on expanding their business and hiring new employees
due to continuing uncertainty about the strength of the economy, Moody’s
Investors Service said on Tuesday.As the economy stabilizes companies
are also more likely to spend on share repurchases and mergers and
acquisitions, Moody’s added.Companies cut costs, reduced investment in
plants and equipment and downsized operations in order to boost cash
holdings during the recession. As the corporate bond market reopened
many companies also boosted cash levels by selling debt and refinancing
near-term debt maturities.Nonfinancial U.S. companies are sitting on
$943 billion of cash and short-term investments, as of mid-year 2010,
compared with $775 billion at the end of 2008, Moody’s said. This would
be enough to cover a year’s worth of capital spending and dividends and
still have $121 billion left over, it said.

However, “we believe
companies are looking for greater certainty about the economy and signs
of a permanent increase in sales before they let go of their cash
hoards, which they suffered so much to build,” Moody’s said in a report.”Given
low demand and capacity utilization within certain industries,
companies are wary of investing their cash in new capacity and adding
workers, thereby doing little to abbreviate the jobless recovery,” it
added.

Around one quarter of the cash is held overseas and is
unlikely to be repatriated to the United States, Moody’s said.Meanwhile
only 20 companies hold a large portion of corporate cash balances, with
$346 billion on their balance sheets, or 37 percent of the total,
Moody’s said.

Cisco Systems  has the largest cash balance, at
$39.86 billion, while Microsoft is second with $36.79 billion, Moody’s
said. Google  has the third-largest balance with $30.06 billion,
followed by Oracle with $23.64 billion and Ford Motor Co (F.N) at $21.89
billion.Technology companies held the most cash as a sector, at $207
billion, followed by pharmaceuticals with $124 billion, energy at $105
billion, and consumer products with $101 billion, Moody’s said.

[Author]

October 27, 2010 at 8:09 AM