The thinking on the part of investors seems to be this: If Apple finally bit the bullet and decided to return cash to shareholders, maybe Google will too, so why not buy in in anticipation of such an announcement?
But there are differences between the two big tech companies.
Apple had nearly $100 billion in cash last quarter. Next month, we'll hear it has more like $115 billion when it releases fiscal second quarter financial results -- and that will be as of the end of March.
Google had $44 billion of cash as of the end of December -- a significant hoard to be sure, but less than half Apple's stash.
There's another big difference between their abilities to pay out a cash dividend (or conduct a stock buyback): their operating cash flow levels. Apple had $45 billion in operating cash flow last year, while Google had $15 billion -- one-third as much.
It's out of operating cash flow that a company pays out a dividend. Microsoft (MSFT) has been paying out a dividend for some time. Its operating cash flow last year was $30 billion.
Google's cash and cash flow levels are certainly bigger than the vast majority of companies that pay out a dividend, so it's certainly conceivable that they could. Google, however, is playing in a much more competitive space than most other companies are.
Consider that Google is spending $12.5 billion to buy Motorola Mobility (MMI) -- and that's before the lawyers jump in and regulatory lobbying begins. That's one year's worth of their operating cash flow right there. What happens if Google commits to paying out a big dividend to keep up with Apple but then is forced to buy another Motorola-sized company to beef up its patents? Or what happens if Google is forced to pay a large settlement for patent infringement to Oracle (ORCL) for "borrowing" from Java, or to Apple on behalf of the Android ecosystem?
Of course, patent settlements might negatively affect Apple, too, but it has more of a cash cushion to protect against such an outcome compared to Google.
Apple is also a much more diversified company than Google. Ninety-six percent of Google's revenue is based on Internet index search. Its supremacy is unrivaled, but things can change. If people suddenly did all their Google searches on their mobile devices instead of their desktops, there would be a huge ding to Google's $40 billion in annual revenue.
There's also the matter of not being able to use offshore cash (or cash flow) to pay the dividend.
So, I don't rule out Google announcing a small dividend. I believe its board would be putting the company in a weakened position if they announced a large dividend just to keep up with the Joneses.