Following Apple’s (Nasdaq: AAPL) announcement of a dividend and buyback program, some are wondering whether other cash-rich companies will follow its lead.
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One such company is Google (Nasdaq: GOOG), which boasts $44 billion in cash.
Howard Silverblatt, Senior Index Analyst at S&P Indexes, points out, however, that when tech companies “initiate dividends, it’s not really seen as a positive, because the implication is that they can’t find other growth opportunities and technology tends to be a growth sector.”
In the case of Apple, that perception wasn’t as much of a concern. The size of its cash flow means that it still has more than ample funds to spend on growth and acquisitions.
And Google, with its own mountain of cash and the fact that it’s been known almost exclusively for innovation and growth, means that it, too, could be spared from the perception of offering buybacks and dividends as a crutch.