Google Sitting on Pile of Cash

Google Sitting on Pile of Cash

While many of its competitors are burning through cash surpluses and trying to weather the rough economic situation, Google Chief Executive Eric Schmidt says the company intends to let its cash “pile up” as his company weathers the recession. While some stockholders may have hoped for a dividend, Schmidt further revealed that Google hasn’t discussed issuing a dividend payment.

Google’s stockpiling of cash has caused some to wonder if the company is saving up to make a big acquisition. According to Schmidt, Google will only use its $8.6 billion cash cushion for "very very conservative investments.” He later said that Google continues to look at acquisition opportunities but doesn’t think prices have reached their low points yet.

Google's Eric SchmidtTwitter has been one company that has been mentioned as a possible candidate for Google to acquire. Part of the speculation is due to a comment from Schmidt where he called the privately held online messaging service a “poor man’s email system.” After hearing the remark, some have speculated this comment was part of a negotiating tactic by Google in hopes of acquiring Twitter. When asked if an acquisition of Twitter was a possibility, Schmidt simply said, “We admire Twitter.”

According to Schmidt, the economic storm will affect all forms of advertising. Even so, he didn’t seem too concerned about Google’s fate during a CNBC interview. During the interview, Schmidt said it’s hard to imagine why Google would see a decline in advertising revenue, especially given the new emerging markets like the mobile sector that could at least help the company break even. Whether or not Google’s broad product base will help it survive the economic storm better than its competitors is hard to say, but given its pile of cash reserves, it’s certainly in a better position than some companies who have little to no safety cushion.

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It's too bad General Motors isn't sitting on a pile of cash like Google is!

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I don't think this recession is going to hit tech companies as hard as brick and mortar stores. If anything it's going to speed up the transition to high tech(Newspapers going out of business - Kindle 2) We are living in a very exciting time and many business models are going to fall and more online solutions are going to rise. If anything the hard times are going to speed up this move. We are living in a time that will be studied in history books. The Information age!

/end deep rant

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The «cushion» referred to in the article should certainly help Google weather even a very severe storm, as the present one does indeed seem to be. But if the economy doesn't collapse totally and we are not forced back to a pre-industrial society, the most important thing for the long-term survival of the company is that it continues to produce new and better products. So far, I haven't seen any indication of a lessening pace of innovation on the part of Google....

Henri

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"if the economy doesn't collapse totally and we are not forced back to a pre-industrial societ"

Wow. You gotta relax bud...really it's not that bad for a lot of people. Yeah quite a few folks have been harmed by the downturn but many more have not. People are hoarding cash because they've been pummeled by the media for months now about how terrible things are and the sky is falling. When people decide they need to go buy something instead of hoard cash and pay off bills then things will return to "normal" and the system will recover. In the mean time think of how much better off the US will be after all of the people with jobs spent the last 2 years paying off bills and save money...for myself Im 2 payments away from having no credit card debt at all...

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