NEW YORK (TheStreet) -- In this season of giving, why are the smartest and most successful companies on the planet such penny-pinching Scrooges when it comes to spending down their cash?
Apple (AAPL), the world's most valuable company, sits atop a cash hoard of $147 billion, which, to put the outrage in Dickensian proportions, represents 10% of all corporate cash held by nonfinancial companies, according to Moody's.
And Apple isn't alone atop the Miserly Index. Microsoft (MSFT) holds more than $68 billion in cash and Google (GOOG) nearly $50 billion. In fact the combined cash and liquid assets of the giants of tech -- Apple, Microsoft, Google, Cisco (CSCO), Oracle (ORCL) and Facebook (FB) -- accumulates to more than $340 billion, a fivefold increase in unspent corporate wealth since the turn of the century.
To be sure, capitalism rewards innovation and smart management with big profits. Companies who by dint of hard work and good stuff make tons of money are doing precisely what they are supposed to be doing.But the issue isn't the gathering of wealth; it's the dispensing. "Academic research shows that companies with the highest levels of cash go on to become less profitable in the long term," writes the Wall Street Journal's Jason Zweig. "One recent study found that high-cash firms earn future profit margins 1.5 percentage points lower than those that carry the least cash." Not only is hoarding cash dumb for business, it's hurtful to the economy. "This extraordinary [tech] penchant for savings has been antisocial," says John Plender of the Financial Times, especially in the wake of the 2008-2009 financial crisis "when the world was suffering from deficient demand." Why, he asks, are the juggernauts of technology, flag carriers in the world's digitization revolution, "acting like misers in a Balzac novel."
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