In the midst of a jobless recovery and credit-crunched financial sector, U.S. companies have been hoarding $1.9 trillion in cash. The Wall Street Journal
“„At a time of low interest rates, reopened credit markets and growing optimism about the economy, CEOs and their boards seem to be questioning the wisdom of sitting on all that cash. And with the S&P 500 still trading 29% below its October 2007 peak, companies are deciding that cash is their preferred currency for acquisitions—rather than shares they see as undervalued.
“„Like a lot of U.S. companies, Walgreen cut costs during the past year, in its case halting store openings and reducing inventory. Mr. Miquelon said the moves saved the company about $2 billion in cash—freeing up money it later used in the Duane Reade deal. “We are conservative with our cash, but hoarding it right now isn’t probably the best use of it,” he said.
“„Alcoa Inc., for example, pegged top executives’ 2009 compensation to goals for increasing the company’s stash of cash, according to regulatory filings. The aluminum maker cut 28,000 jobs, or 32% of its work force in 2009, and reduced capital expenditures by 53%. Despite a 31% drop in revenue, Alcoa nearly doubled its cash to $1.5 billion during the year.