Feeds

Cisco shells out first dividend

Calming screaming shareholders with shiny pennies

High performance access to file storage

Cisco Systems has finally grown up and is starting to pay a quarterly dividend to shareholders.

The networking giant has been a bigtime IT player for the past decade and a half, since the Internet buildout, of course, but its expansion into new enterprise products such as servers and consumer products like Flip digital cameras has come at a time when the global economy has smacked Cisco around perhaps a bit harder than its networking peers and its partners and competitors in the IT racket. Hence, the payola to keep shareholders from showing up at the Cisco annual meeting with pitchforks and torches.

"As the role of the network expands across the IT sector, Cisco's leadership position in the markets we serve is strong, and the time is right for Cisco to pay our first-ever cash dividend," said Frank Calderoni, Cisco's chief financial officer, in a statement this morning. "This dividend complements our leading position, and is an important part of our commitment to bring value to shareholders."

You won't hear anyone from Cisco copping to the payola factor regarding the dividend, or that the very presence of the dividend is meant to help Cisco's share price, which drives the compensation of the top brass at the company.

But, lo and behold, as Cisco announced its six cent per share dividend this morning as Wall Street opened for business, the company's stock was up 2.6 per cent to $17.44 per share as El Reg went to press. That's well off the $27.74 per share that Cisco was trading at in April 2010. Cisco's stock price has been a sawtooth wiggling down, more or less at a 45 degree angle in the wrong direction, for a bunch of complicated reasons.

Cisco is not actually trying to get customers to buy in to its strategy of moving out of its core networking into so many adjacent markets. But the dividend is meant to shore up the stock price and investor patience as the company works through major product upgrades across most of its key switching and routing product lines.

As Cisco put it when discussing its fiscal Q2 results back in early February, such transitions normally occur over a two year-span and are staggered, but Cisco is doing them all at the same time and before the economic recovery is complete.

"Our timing on market transitions appears to be pretty solid," John Chambers, Cisco's chief executive officer, said to Wall Street back in February. "I think we will look back on this period of time and wish that we could avoid it. But in the end it will make us stronger."

The quarter was not that bad, with sales up six per cent to $10.4bn, but net income dropped by 17.9 per cent to $1.52bn. And Cisco said it only expected 4 to 6 per cent revenue growth in fiscal Q4, ending in April, and maybe 8 to 11 per cent in fiscal Q4, ending in July. This is why Cisco's stock has been falling. Even still, Cisco has 5.88 billion shares outstanding and a market capitalization of $95bn.

Sure, as the Great Recession started in late 2007, Cisco was worth twice that. But during the dot-com boom, the stock was trading at a completely ridiculous $80 a pop.

All told, at six cents per share, Cisco is forking over $353m to the pitchfork-wielding shareholders in its first-ever quarterly dividend. At this rate, we're talking about $1.41bn a year; which while being nothing to be sniffed at, doesn't even scratch the $40.2bn in cash Cisco has squirreled away in the bank.

Still, the dividend does put a bit of a dent in the average of $5.76bn in cash Cisco threw off in each of the previous four quarters. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Cisco reps flog Whiptail's Invicta arrays against EMC and Pure
Storage reseller report reveals who's selling what
Bored with trading oil and gold? Why not flog some CLOUD servers?
Chicago Mercantile Exchange plans cloud spot exchange
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.