Corporations Remain Tight-Fisted Despite Surplus Of Cash

Unprecedented levels of cash have been reported at corporate levels, as noted by

. Howard Silverblatt, Standard & Poor's senior index analyst and statistical guru recently compared the sums to other money measures, found that, according to Barron's, "second-quarter cash and equivalents for the "old" S&P industrials posted their seventh consecutive record quarter, jumping to $842.5 billion from $836.8 billion in the first. On aggregate, that cash stash represented 11.6% of current market value, 75.6 weeks of 2010 estimated operating income, five times annual dividend payments and 4.4 times the past 12 months' worth of stock buybacks." Barron's goes on to note that ""Old" industrials consist of the S&P 500 minus financials, utilities and transportation issues, since these traditionally maintain high cash reserves. When GICs—guaranteed investment contracts—came along, one of the new sectors was the industrials, hence the former group's designation as S&P industrials/old." "Given the current uncertainty over economics, politics, expenditures, taxes and [frugal consumers], my unfortunate observation is that, from a corporate view, it is difficult to find fault" with their actions, Silverblatt declares. He adds that until the climate changes, "increased spending and job creation will be difficult to obtain." According to Silverblatt, the reality is that "for now, corporations remain tight-fisted. They have prudently hiked dividends, done buybacks at a required level to neutralize earnings dilution due to options, done necessary maintenance, and selectively resumed mergers and acquisitions." Associate editor Andrew Bary reported in last week's issue of Barron's how technology companies are doing shareholders a dis-service by resisting the payment of higher dividends. Editor Eric Savitz examined what troubles Silicon Valley, including its refusal to return cash to shareholders. Both zeroed in on Cisco Systems

, according to Barron's. Get free trades at