Technology firms listed on the Nasdaq 100 had around a half a billion dollars in cash reserves at the end of 2013. With this much liquidity, Facebook's decision to buy WhatsApp does not seem surprising. But the strength of companies such as Apple, Microsoft, Cisco and Qualcomm raises the question of whether it is positive to sit on so much cash.
There are only two options. First, the companies can pay higher dividends to investors. Second, they can spend the money through acquisitions or mergers. If neither happens, then investors will start to think that the companies are out of ideas. This is the worst possible scenario for tech companies that trade on constant and tenacious change. Making purchases is the primary way that they can dispel rumors that they are out of ideas.
