I hate it when high-flying tech companies hide behind the “we need to continue to reinvest in the business” argument for hoarding cash. Reinvesting includes acquisitions, of course, and that’s a primary reason to stockpile cash. And Google (NASDAQ:GOOG) is relentlessly innovating, so I will give it that. Between capital expenditures and “investments,” it spent over $16 billion in 2011.
But Google is making money hand over fist. It will soon split its stock, it’s sitting on nearly $42 billion in cash and is generating about $8 billion in cash flow after those capital expenditures. The stock trades for a very conservative 19x earnings — vs. Amazon’s (NASDAQ:AMZN) absurd 242x. So, it just seems to me a small token of quarterly appreciation couldn’t hurt at all, especially since Google shares are lagging the S&P 500 over the last year.
Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he is long AAPL.