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Alphabet overtakes Apple to become most cash-rich company

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Re: Alphabet overtakes Apple to become most cash-rich company

#51

Post by sureshv »

olde_fortran wrote: post #40
jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

Dividends at taxed at income tax rates

They are taxed as capital gains for recipients.

Edit: *qualified dividends

Re: Alphabet overtakes Apple to become most cash-rich company

#52

Post by nickles »

sureshv wrote: post #51
olde_fortran wrote: post #40

Earlier quoted context omitted.

Dividends at taxed at income tax rates

They are taxed as capital gains for recipients. Edit: *qualified dividends

> They are taxed as capital gains for recipients.

No, ordinary dividends are taxed as income.

Re: Alphabet overtakes Apple to become most cash-rich company

#53

Post by _delirium »

olde_fortran wrote: post #40
jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

Dividends at taxed at income tax rates

True for ordinary dividends, but almost all stock dividends meet the criteria to be treated as qualified dividends, taxed at capital gain rates. For example, in Vanguard's S&P 500 index fund, about 98% of dividends are qualified [1]. Of commonly traded classes of stocks, only real-estate funds mostly pay out ordinary dividends.

[1] https://advisors.vanguard.com/VGApp/iip/advisor/csa/investme...

Re: Alphabet overtakes Apple to become most cash-rich company

#55

Post by cameronbrown »

ergothus wrote: post #12
navigatesol wrote: post #9

Earlier quoted context omitted.

> Their CEO, Sundar Pichai, gets a huge stock-based compensation I'm as cynical as they come, but I'm skeptical that all people at these levels are that driven by their compensation. They are ultra-wealthy, and forever will be; a few extra million here or there isn't anything compared to what they stand to lose in wealth and reputation in the face of negative public sentiment. But I could be wrong.

> I'm skeptical that all people at these levels are that driven by their compensation. All of your arguments make sense...except that we see people at these levels take actions to increase their compensation so frequently, even at the risk of their reputations. I don't know about Pichai personally, nor can I explain WHY the mega-rich are so interested in getting richer when it can't possibly change their day-to-day o…

The rich are interested in getting richer because it's fun. And there are real benefits for thousands of people to growing an organisation. It's easy to justify.

Re: Alphabet overtakes Apple to become most cash-rich company

#56

Post by winter_blue »

olde_fortran wrote: post #40
jjeaff wrote: post #35

Earlier quoted context omitted.

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

Dividends at taxed at income tax rates

In the U.S., if you've held the stock for at least one year, its dividends are taxed at a very favorable long-term capital gains rate. Stock held for less than a year is however taxed like regular income.

Re: Alphabet overtakes Apple to become most cash-rich company

#57

Post by adventured »

pyb wrote: post #45
wpasc wrote: post #4

This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…

It's hard not to acree with Thiel here. We only need to look at Elon Musk to realize that there are still plenty of opportunity for moonshot investments. What does Elon know that Google as a whole doesn't?

> What does Elon know that Google as a whole doesn't?

It's not what he knows per se, it's what he does, it's the source of his motivation for being and doing.

It's that invention and innovation is most often driven by individuals - whether acting together or in solitary - in pursuit of something that matters to them. You saw this throughout the industrial revolution. You saw it at Bell Labs and Xerox PARC. You saw it with regards to the individuals that pushed the Internet and tech universe forward, from Ted Hoff to Dennis Ritchie to Tim Berners Lee.

It wasn't a giant corporation and team of 100 people that created Doom and Quake. It was a tiny team of highly motivated people doing something that mattered to them. That same conceptual story frequently occurs throughout modern history.

Elon Musk desperately wanted (wants) to build Tesla and SpaceX. Steve Jobs cared about Apple as though he were maniacal about it, like it was his true love. Who at the very top of Alphabet/Google cares about anything they do there that much? I haven't seen any evidence that there is anyone at the top of their organization that fits that.

Re: Alphabet overtakes Apple to become most cash-rich company

#58

Post by skybrian »

wpasc wrote: post #4

This reminds me of a talk I watched with Peter Thiel and Eric Schmidt. I know Thiel is controversial, but he was well-meaningly digging at Google for running out of ideas and no longer innovating. The criticism was something like "You have so much cash on hand but no ideas to invest in. However, you can't pay a dividend because the second you do, you're admitting you've run out of ideas and are no longer innovating".…

This argument relies on a fallacy of binary thinking: either you have ideas or you don't.

It's perfectly fine to say that you have lots of investment ideas, but they don't add up to needing $100 billion to implement them. Especially when you are earning more cash every quarter.

Re: Alphabet overtakes Apple to become most cash-rich company

#59

Post by mhb »

jjeaff wrote: post #35
noego wrote: post #11

Finance 101: Being cash-rich is a major advantage in environments where fundraising is a major hurdle, and where the funds can be put to productive use very quickly. For example, for a startup to raise funds for a major marketing campaign, it has to go through a lengthy and attention-demanding process of pitching to VCs and negotiating terms. Hence why having a big war-chest ready to fire, can be a competitive advant…

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

How does hoarding cash increase the share price to generate those capital gains?

Shouldn't they be buying back their own shares?

Re: Alphabet overtakes Apple to become most cash-rich company

#60

Post by Skunkleton »

jjeaff wrote: post #35
noego wrote: post #11

Finance 101: Being cash-rich is a major advantage in environments where fundraising is a major hurdle, and where the funds can be put to productive use very quickly. For example, for a startup to raise funds for a major marketing campaign, it has to go through a lengthy and attention-demanding process of pitching to VCs and negotiating terms. Hence why having a big war-chest ready to fire, can be a competitive advant…

Ya, that's finance 101. But here's Finance 5400: Smart, wealthy shareholders love cash hoarding. Especially if the cash is held tax free in overseas accounts. The share price is boosted allowing them to get returns in the form of pure capital gains. If the company were to pay dividends, sure, most of those dividends would be taxed at capital gains rates as well. But that money has to be taxed at the highest US corpor…

> Ya, that's finance 101. But here's Finance 5400:

And another point: you have to imagine that the richest companies in the world have the best possible financial expertise on staff. It is safe to assume they know what they are doing.

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