Kirjner believes Google will hold onto its cash over the next few years for strategic reasons such as acquisitions or large capital investments, however, its money generating web search business could eventually bloat the company's bank account and spur a dividend. Google, after all, has been far more acquisitive than Apple in recent years, buying Motorola Mobility, YouTube and Android, all in significant strategic deals that's bolstered the company's overall spending. Meanwhile, the company continues to R&D spending on various projects, including Google Glass, a self-driving car and Google X. "We ask ourselves the question... are there real options for us actually to use the cash from a strategic perspective? And we've come to the conclusion that it is a real strategic asset for us right now with the ability to pounce," Patrick Pichette, Google's CFO said in a late 2012 investor conference call. Pichette's comments and a natural earnings trajectory that could have Google generating $20 billion in free cash flow by 2016 setting up a dividend over the next 2-3 years, according to Kirjner.
For Google to stray from a dividend by 2016, the company's spending and acquisitions will have to "fall somewhere between the absurd and the insane," Kirjner wrote. Kirjner, for instance puts prospective acquisitions of Visa ( V), Facebook ( FB), Microsoft ( MSFT), IBM ( IBM), Oracle ( ORCL) and Sprint ( S) in the 'beyond insane and absurd' bucket. The analyst, however, sees deals for Discovery ( DISCA), CBS ( CBS) and Viacom ( VIAB) as among some that deserve consideration.