This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Foreign Earnings Boost Corporate Bank Accounts, Led By Apple

Updated to include Morgan Stanley comments on Hewlett Packard cash

NEW YORK ( TheStreet) -- Corporate cash stockpiles grew to $1.45 trillion in 2012, a new record for non-financial corporations as foreign earnings helped add to cash-rich balance sheets at the likes of Apple (AAPL - Get Report), Pfizer (PFE - Get Report) and Cisco (CSCO).

A new survey from Moody's indicates cash at America's largest corporations grew by 10% in 2012, as undistributed foreign earnings helped swell bank accounts at tech sector giants and the nation's largest pharmaceutical, energy and consumer products companies.

As for U.S. earnings, corporations spent the second half of the year returning money to investors by way of a boom in special dividends.

Apple, which currently holds a record $137 billion in cash, led all U.S. non-financial firms in its holdings.

Moody's analysts project that the iPhone and iPad maker could end the year with nearly $170 billion in cash. Such a scenario is possible, even after the Cupertino, Calif-based tech giant announced a dividend payout of nearly 30% of profits and continues to battle hedge fund manager David Einhorn on its payout.

Microsoft (MSFT - Get Report), Google (GOOG - Get Report), Pfizer (PFE - Get Report) and Cisco (CSCO) rounded out the top five "cash kings," which with $347 billion in combined cash represented roughly a quarter of overall cash at U.S. corporations rated by Moody's.

After a year of dividend increases and a revival in capital spending, foreign earnings appear to be the only driver of growing cash at corporations. While overall cash grew about $130 billion, according to Moody's calculations, money held at foreign subsidiaries increased about $140 billion to $840 billion.

Foreign cash now represents about 58% of total cash and reflects the "relative strength of most emerging market economies over the last few years, the negative tax consequences of permanently repatriating money to the US, and the domestic use of cash for dividends, share buybacks, and the majority of acquisitions," according to Moody's analyst Richard Lane, who spearheaded the survey.

The growing of foreign cash stockpiles came as corporations pushed capital spending and dividends to six-year highs. Share buybacks and acquisitions declined in 2012, the data show.

Moody's expects trends seen in 2012 to persist this year.

"We expect overall business conditions will remain subdued over the next year. As a result, we anticipate aggregate spending in 2013 of about $1.7 trillion on capital investments, dividends, acquisitions, and share buybacks, slightly higher than 2012 levels," the Moody's report states.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 -1.15%
GOOG $693.01 0.29%
HPQ $12.27 -2.39%
MSFT $49.87 -0.06%
PFE $32.71 -0.61%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs