$330 billion Auction Rate Securities freezes tech cash

Posted Mar 28th 2008 5:31PM by Peter Cohan
Filed under: Monster Worldwide (MNST), Palm Inc (PALM), Intuit Inc (INTU)

The ARS market has thrust its poisoned tentacles in another direction. After raising interest costs for issuers and wiping out the formerly "safe" cash holdings of individual investors, the Wall Street Journal reports that frozen ARS accounts have hit tech companies as well.

Specifically, the Journal lists $855.7 million worth of ARS holding on the books of these five tech companies, listed as follows:

Monster Worldwide, Inc. (NASDAQ: MNST): $357 mm
Intuit, Inc. (NASDAQ: INTU): $328 mm
Palm, Inc. (NASDAQ: PALM): $74.7 mm
Earthlink, Inc. (NASDAQ: ELNK): $60 mm
MetroPCS Communications, Inc. (NASDAQ: PCS): $36 mm

These companies and others will probably need to write down the value of these securities unless the ARS market unfreezes. If there is an industry that's unscathed by this problem, I'd like to know. But for those who've invested in companies whose cash is frozen in these ARS accounts, there are many restless nights ahead.

In the meantime, please listen to NPR's MarketPlace this evening for my comments on this topic.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Tags: ARS accounts, ARS market, ArsAccounts, ArsMarket, earthlink, inthenews, metropcs