Will it or won’t it? That question has come up again regarding whether Cisco will some day pay a dividend to its shareholders. According to Reuters, Cisco CEO John Chambers this week at the TechNet Innovation Summit indicated that the company aimed to start paying dividends sometime in the future but declined to say when.
Chambers has made that comment before in recent years and the company’s investor Web site says that “Cisco will eventually pay a dividend; however, market conditions lead us to believe that cash is better deployed on acquisitions to boost our technology portfolio, as well as share buyback at this time.” It’s not unusual for hi-tech companies to save their cash for acquisitions – and Cisco has put its cash to such use 123 times.
The question even went to a shareholder vote in 2002, resulting in a 10-to-1 rejection to the proposal. One shareholder commented that Cisco leaders could do better with the money than he could.
The issue bubbled up again in 2004 and in 2005.
With the market for its bread-and-butter networking equipment shrinking and its foray into brand new markets, Cisco should probably save up its cash to acquire its next 123 companies.
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