Alphabet is facing a new and, by most accounts, welcome problem – how to spend its rapidly expanding pile of cash.
The Google owner generated nearly $29 billion in cash in the second quarter after cutting thousands of jobs and efforts to stem losses in its various moonshot projects.
That left Alphabet with cash and short-term marketable securities of about $118 billion, more than any other company in the Nasdaq 100 Stock Index aside from Apple’s total of about $167 billion.
However, unlike Apple, which aims to give back most of its cash to shareholders via stock buybacks and dividends, Alphabet has a less clearly-defined capital return strategy, leaving investors seeking more detail on its plans.
“We haven’t really had to address this issue with Alphabet in the past because they hadn’t been as prolific with generating this kind of cash,” Daniel Morgan, senior portfolio manager at Synovus Trust, said in an interview. His funds own Alphabet shares.
Generally, investors aren’t fond of companies sitting on large amounts of cash and expect the money to be invested for better returns or given back to shareholders.
The top three cash generators in the Nasdaq 100 – Alphabet, Apple and Microsoft – brought in a combined $84 billion in the last quarter, the biggest haul for any such non-holiday period in history, according to data compiled by Bloomberg.
Alphabet has stepped up buybacks and expanded its repurchase authorisation to $70 billion in April. But last quarter, the firm spent $15 billion on its own shares, barely half of the cash it brought in.
By contrast, Apple in the past five fiscal years has returned almost $5 billion more than the record $454 billion in cash it generated.
Last month, Alphabet said Ruth Porat, who has served as chief financial officer since 2015, will assume a newly created role of president and chief investment officer.
Alphabet doesn’t pay a dividend like Apple and Microsoft. And in contrast with Microsoft, which agreed to pay $69 billion for video game maker Activision Blizzard last year, Alphabet has shied away from big acquisitions.
Even if executives wanted to, Alphabet may not be able to pull off a big acquisition given heightened regulatory scrutiny. Microsoft’s road to closing its Activision deal has been rocky and Amazon’s acquisition of Roomba maker iRobot is still being probed by regulators.
“Having the ability to make a big splash the way Microsoft is doing with Activision is difficult given the regulatory environment,” said Angelo Zino, senior equity analyst at CFRA Research. Alphabet is more likely to continue to make incremental deals “at a very small level", he said.
Although Alphabet could always consider initiating a small dividend, we think it’s more likely to stick to the buyback approach
Angelo Zino,
senior equity analyst at CFRA Research
To Synovus Trust’s Mr Morgan, it might be wiser for Alphabet to make more strategic investments like Microsoft has done with ChatGPT owner OpenAI. This would instantly boost shareholder value and help the company gain recognition for making inroads into industries that it’s not traditionally been as strong in, he said.
But for now, share buybacks seem like the most popular tool being implemented to return cash to shareholders at big tech firms that bring in tens of billions in earnings every quarter.
“Although Alphabet could always consider initiating a small dividend, we think it’s more likely to stick to the buyback approach,” Mr Zino said. “A dividend could send a perception that growth opportunities may not be as strong.”
Hotel Silence
Auður Ava Ólafsdóttir
Pushkin Press
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
The Book of Collateral Damage
Sinan Antoon
(Yale University Press)
'HIJRAH%3A%20IN%20THE%20FOOTSTEPS%20OF%20THE%20PROPHET'
%3Cp%3E%3Cstrong%3EEdited%20by%3A%3C%2Fstrong%3E%20Idries%20Trevathan%3Cbr%3E%3Cstrong%3EPages%3A%3C%2Fstrong%3E%20240%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Hirmer%20Publishers%3Cbr%3E%3Cstrong%3EAvailable%3A%3C%2Fstrong%3E%20Now%3C%2Fp%3E%0A
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
- Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
- Biodiversity: Support species like sea turtles, dugongs, and seabirds
- Coastal protection: Reduce erosion and improve water quality
MATCH INFO
Uefa Champions League, last 16, first leg
Liverpool v Bayern Munich, midnight (Wednesday), BeIN Sports
The biog
Name: Abeer Al Shahi
Emirate: Sharjah – Khor Fakkan
Education: Master’s degree in special education, preparing for a PhD in philosophy.
Favourite activities: Bungee jumping
Favourite quote: “My people and I will not settle for anything less than first place” – Sheikh Mohammed bin Rashid.
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HAJJAN
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Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
EA Sports FC 25
Developer: EA Vancouver, EA Romania
Publisher: EA Sports
Consoles: Nintendo Switch, PlayStation 4&5, Xbox One and Xbox Series X/S
Rating: 3.5/5
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Uefa Champions League semi-final, first leg
Barcelona v Liverpool, Wednesday, 11pm (UAE).
Second leg
Liverpool v Barcelona, Tuesday, May 7, 11pm
Games on BeIN Sports
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
PREMIER LEAGUE FIXTURES
All kick-off times UAE ( 4 GMT)
Saturday
Liverpool v Manchester United - 3.30pm
Burnley v West Ham United - 6pm
Crystal Palace v Chelsea - 6pm
Manchester City v Stoke City - 6pm
Swansea City v Huddersfield Town - 6pm
Tottenham Hotspur v Bournemouth - 6pm
Watford v Arsenal - 8.30pm
Sunday
Brighton and Hove Albion v Everton - 4.30pm
Southampton v Newcastle United - 7pm
Monday
Leicester City v West Bromwich Albion - 11pm
About Krews
Founder: Ahmed Al Qubaisi
Based: Abu Dhabi
Founded: January 2019
Number of employees: 10
Sector: Technology/Social media
Funding to date: Estimated $300,000 from Hub71 in-kind support
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The Africa Institute 101
Housed on the same site as the original Africa Hall, which first hosted an Arab-African Symposium in 1976, the newly renovated building will be home to a think tank and postgraduate studies hub (it will offer master’s and PhD programmes). The centre will focus on both the historical and contemporary links between Africa and the Gulf, and will serve as a meeting place for conferences, symposia, lectures, film screenings, plays, musical performances and more. In fact, today it is hosting a symposium – 5-plus-1: Rethinking Abstraction that will look at the six decades of Frank Bowling’s career, as well as those of his contemporaries that invested social, cultural and personal meaning into abstraction.
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
AUSTRALIA SQUAD v SOUTH AFRICA
Aaron Finch (capt), Shaun Marsh, Travis Head, Chris Lynn, Glenn Maxwell, D'Arcy Short, Marcus Stoinis, Alex Carey, Ashton Agar, Mitchell Starc, Josh Hazlewood, Pat Cummins, Nathan Coulter-Nile, Adam Zampa
LIKELY TEAMS
South Africa
Faf du Plessis (captain), Dean Elgar, Aiden Markram, Hashim Amla, AB de Villiers, Quinton de Kock (wkt), Vernon Philander, Keshav Maharaj, Kagiso Rabada, Morne Morkel, Lungi Ngidi.
India (from)
Virat Kohli (captain), Murali Vijay, Lokesh Rahul, Cheteshwar Pujara, Rohit Sharma, Ajinkya Rahane, Hardik Pandya, Dinesh Karthik (wkt), Ravichandran Ashwin, Bhuvneshwar Kumar, Ishant Sharma, Mohammad Shami, Jasprit Bumrah.
