S&P Puts Google on CreditWatch Positive… Why Is Google Not AAA Already?

Google Inc. (NASDAQ: GOOG) is not being upgraded formally by Standard & Poor’s. but the ratings agency is saying that Google is now on positive credit watch after its revenues have risen almost 30% in the last year.  That $43.1 billion in cash and securities doesn’t hurt either.

So what if Google is a company we identified where shareholders have no say – at all… S&P doesn’t care, and its “AA-” rating is on CreditWatch with positive implications.  That does not assure a AAA rating yet at all because it still has two credit notches to go up before the next notch hits the “AAA” category.

The rating is at the best “A-1+” rating for the short-term and S&P said that it will meet with management to review its strategy, financial policies, and its growth targets before making any formal rating action.

Imagine having an assets/liabilities ratio of better than 5 to 1, with very little long-term debt, over $43 billion in cash, and having almost guaranteed earnings for years out into the future even if the economy goes into recession… and being able to unload cash on many side and pet projects that make no money without it even mattering.  Perhaps the question to ask is why Google does not have a “AAA” rating already.

JON C. OGG