Alphabet Surpasses Apple In Terms of Cash In The Bank

Google’s parent company Alphabet has surpassed Apple as the company with the biggest cash reserves in the world, according to a report by the Financial Times.

The move comes as Apple has made a conscious decision to let go of some of its cash reserves, and about six years after activist investor Carl Icahn pressured the company to do so.

The technology company’s holdings of cash and marketable securities, net of debt, has dropped to $102 billion from $163 billion at 2017 year-end.

Alphabet, however, has been moving in the opposite direction. Its cash reserves have risen by around $20 billion to $117 billion.

The company’s cash-heavy position comes at a precipitous time for Big Tech operations. In Washington, tech companies have been the subjects of investigations by both the Federal Communications Commission (FCC) and the Department of Justice (DOJ). Also, Alphabet faced a fine of €8.2bn in the EU over antitrust issues.

Some investors in the company are also bothered by the fact that Alphabet chooses to use its money to move into new markets rather than reward them with dividends or buybacks.

“In general, their attempts to reinvent themselves with their new initiatives aren’t working out,” said Walter Price, a portfolio manager at Allianz Global Investors. “I wish they’d return more cash to shareholders and waste less.”

Even with the addition of the reserves, the company has been spending a lot. Capital spending climbed to $25 billion last year, an increase of almost double from $13 billion in 2017. A lot of the money has gone into real estate, for Google offices in New York and into data centers for the company’s cloud service.

Chief Financial Officer Ruth Porat said the real estate purchases aren’t that indicative of the company’s regular investments, and that in a normal quarter, 70 percent of capital expenditures go toward servers and other new equipment.