Google Needs to Shed Some Cash

Aug.27.06 | About: Alphabet Inc. (GOOG)

Lots of people are making much of Google's (NASDAQ:GOOG) filing earlier this month to try to avoid -- given its nearly $10-billion cash holdings -- being regulated like a mutual fund.

While I see the entertainment value in the news, and I too am in awe of the company's cash-spinning capacity, I read this more as a reminder of how technology companies continue to collect cash, rather than dividend it back, even when they have no idea what to do with all the money.

scroogeI mean, does anyone really think Google is building cash for some billion-dollar-plus acquisition, or that its cap-ex plans are set to accelerate so much that it needs a multi-billion buffer on its balance sheet? I know I don't buy it. Technology companies remain the Scrooge McDucks of business: Building cash piles just because they can, shareholders be damned.

GOOG 1-yr chart with cash flow:

GOOG 1-yr chart