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Google is facing a hurdle other companies would love to confront: how to get better returns from investing its cash hoard without being regulated as a mutual fund.
Companies whose securities comprise more than 40 percent of their assets can fall under restrictions that govern the mutual fund industry.
It also states that if they didn't receive exemption, then the executives are authorized to create a mix of investments which would not expose them to this 1940 law. So they'll get around it anyway, but they want it in hard currency rather than in investments.
Those billions of dollars belong to the shareholders. Google should distribute a chunk of that money as a cash dividend.
That would be deeply foolish, as it would dilute the overall value of the company.
Any investor who wants to "cash out" the value of their Google holdings, merely has to sell off some of their shares.
By keeping a war chest, Google is being smart. It buffers them against a downturn in the market. It allows them to diversify their revenue stream, in that if they put a large chunk into stable, slow growth investments, they gain a revenue stream independant of their ad business. It also gives them the flexibility to move big whacks of cash around to buy out potential rivals and emerging companies that can add value to the company.
And no, I don't have any shares in Google. I think of it as a soda-pop stock. A little too bubbly for my tastes.
take your highly inflated PE Ratio and .com currency and sell some more stock, as much as you can, build up the cash, then start to buy some brick and mortar businesses.
Goog's PE ratio is about 54, about double what any mature business should be, and what Goog WILL BE VERY SOON. They should sell off the company while people are willing to pay it 54 times what it's bringing in, and buy the company back when it trades at "only" 30 times. THAT is enhancing shareholder value.
Amazon could have owned all of every brick and mortar bookseller, and a bunch of other brick and mortar retailers with the valuation they had -- once. Goog has twice as much market cap as AMZN ever had, a lot of cash, too.
Just my opinion. ;)