Tech firms hoard instead of paying dividends

[Newsjock]

Source: San Francisco Chronicle

Two cable TV shows, "Hoarders" and "Hoarding: Buried Alive," feature troubled souls who can't let go of their personal possessions.

Perhaps these reality shows should visit Silicon Valley, where many tech companies are compulsively hoarding cash, refusing to pay shareholders more than a token dividend or, in most cases, any dividend at all.

Cisco Systems, the biggest hoarder of all, said this week it would begin paying a small dividend before its fiscal year ends in July, but it's not clear whether Cisco is trying to please shareholders or use them as a political ploy. It remains to be seen whether Cisco's move encourages fellow hoarders such as Apple and Google to follow suit.

Cisco has almost $40 billion in cash and short-term investments, more than any other nonfinancial company in America, according to Standard & Poor's Howard Silverblatt. That stash represents about 32 percent of Cisco's market value, and about half of it is in government securities.

... Some companies say they won't pay dividends because much of their cash was earned and remains overseas. If they bring it back home, they will have to pay a U.S. tax on repatriated earnings.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/09/16/BU861FE1H4.DTL&tsp=1

[Warpy]

1. Dividends in my portfolio have been down across the board

because they're all hoarding cash, uncertain of what the future will bring but halfheartedly betting on deflation. If deflation starts to occur, cash will be king at that level and they'll go on buying sprees, snapping up all the little companies that didn't hoard unless somebody in government remembers we still have antitrust laws on the books.

Tech firms aren't the only hoarders. However, my portfolio is light in tech stocks because they've traditionally been pretty stingy when it comes to dividends.