Because cash, even when held in an account without payout, is easier to value than any other asset or investment.
It's also a cushion for a down cycle in the global economy.
It's also a cushion for a down cycle in the global economy.
I fail to remember when cash helped struggling tech company. Sun? Yahoo? Who could make better use of cash in the time of struggle than they could in the time of growth and ability?
Tech companies do not need to hoard cash. They never die because of lack of cash. They always get murdered by more able competitor or innovation in their field. Thus, preferring to keep cash instead of investing is basically a crime for one.
If you cate about assets and cushions, maybe you should invest in your pillow instead?
Yet cash allows them to respond to those competitors as necessary. I see Facebook's acquisition of Instagram as both a strategic and defensive move. Strategic because they see photos as the primary focus of what gets shared on their social network. Defensive to prevent Google or Apple or someone else from jump-starting their own social platform. Cash affords a company the ability to be agile when necessary.
Having cash is nice, but if you can invest in raw growth makes zero sense not to.
Build vs buy analysis still applies, and "running circles around" could get expensive, as at early stage it's difficult to tell which innovations will pan out and which will fail.
Apple, for one, negotiates better manufacturing deals due to the wide knowledge of them having a fat checking account http://www.quora.com/Apple-Inc-2/What-would-be-a-good-use-of... A lot of dealings in the offline world (datacenter leases, procuring manufacturing capacity, loans of credit, bond issuance, contracting suppliers) is easier if you have a fat account to show.