WSJ Says Corp Cash at 3-Year Low
The Wall Street Journal's CFO Journal writes "U.S. Corporate Cash Piles Drop to Three-Year Low." They tell us, "U.S. corporate balance sheets continue to feel the impact of the 2017 U.S. tax overhaul, as companies pivot their capital allocation strategies in response to the new law. Companies funneled record amounts of cash to stock buybacks, dividends, capital spending and acquisitions last year. As a result, U.S. corporate cash holdings fell to a three-year low of $1.685 trillion in 2018, according to a report from Moody's Investors Service Inc. The drop in corporate cash hoards, the first since 2015, came as companies rushed to take advantage of lower taxes on foreign income." The piece explains, "Apple Inc., again the top cash holder, saw its cash pile drop 14% to $245 billion. Rounding up the top five were: Microsoft, Alphabet and newcomers Amazon.com and Facebook, which replaced Cisco Systems and Oracle in the top five. Combined, the five companies held $564 billion, or 33% of the total nonfinancial corporate cash balance, down from $675 billion, or 34% in 2017, according to the report, which looked at 928 U.S.-based, nonfinancial companies." The CFO Journal adds, "Many U.S. companies, particularly in the fast-growing technology sector, built up massive hoards of cash offshore as they opted to keep profits earned in foreign countries outside of the U.S. That strategy was largely motivated by U.S. tax law, which levied a 35% corporate tax, net of taxes paid in foreign jurisdictions, on money that companies chose to repatriate. But since the 2017 tax-law overhaul, which imposed a one-time tax on accumulated foreign profits, some companies have shifted tactics, bringing some or all of that money home. Companies sent $664.91 billion of their foreign earnings back to the U.S. in the form of dividend payments in 2018, up from $155.08 billion the year before, according to data from the U.S. Commerce Department."
