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.
Twitter 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.