Google has a problem "most companies would love to confront: how to get better returns from investing its cash hoard without being regulated as a mutual fund."
Bloomberg notes that:
Companies whose securities comprise more than 40 percent of their assets can fall under restrictions that govern the mutual fund industry. So Google, which has increased its cash and securities to almost $10 billion since its 2004 initial public offering, asked the U.S. Securities and Exchange Commission late last month for an exemption.
At stake for Mountain View, California-based Google is the chance to move more of its money from low-yielding U.S. government bonds to investment-grade municipal and corporate debt. That would help Google match the investment returns of rivals such as Microsoft Corp., which obtained a similar exemption in 1988.
I had fun on the same subject with a quote picked up by Good Morning Silicon Valley:
"They will probably get the SEC exemption — but if they didn’t, its fascinating to think of what the boys could do with that $10 billion in cash (and securities)," said Barry Ritholtz, chief market strategist for Ritholtz Research. "I strongly doubt we will see a big buyback or a special dividend from them. And there’s only so many jumbo jets anyone really needs. So that makes a major acquisition the next option. Hell, they could buy Tivo, XMSR, half of Amazon.com — and still have a few billion dollars left."
Fun stuff . . .
The SEC got suspicious after that auditor was crushed by a pallet of hundreds
GMSV, August 25, 2006
Google Seeks Fund Rule Exemption to Increase Investment Returns
Bloomberg, Aug. 24 2006