Cisco Pays, Not

Cisco Systems has nearly $40 billion in cash (Madness). Maybe when Cisco gets to $50 billion it will finally feel comfortable using some of that moolah to pay a dividend.

To that end, Cisco says on its investor relations Web site that while the company "routinely" evaluates whether to pay a dividend, it believes that the stock buyback program and strategic investments "are in the best interest of our shareholders."


The above mentioned is the point of view from the management.


But most of the public who invested in the company yearn for dividends instead of the company making acquisitons and investments.

Hmmm... I find it pretty intriguing in the sense that should is this a long term versus short term conundrum again?


For the people looking into the long term, there is a proclivity for the liking towards the invested company pouring the money into R&D instead and eventually the money will come back to them.


What if I tell you that the company has been doing R&D for the past few decades already and they have made billions out of it, but none of it went into the investors' pockets.


Don't you think it's more of a vicious cycle here? This is the case where the company just made future promises and that future just never seems to solidify.


Conversely, you might think of people who ask for a return/dividend as being myopic. But how sure are you that they weren't once the people who thought about the long-term goal in the past?


Perhaps, they have waited far too long for the return that they just lost all their patience.

I trust that this case is synonymous to the infamous remuneration versus culture point in all corporate organisations.



Some companies believe that a great culture will motivate people and that random events will boost morale. However, does that mean that you can cut back on the incentives like bonuses and perquisites?


The answer is no. In actual fact, we humans need both soft and hard. Soft as in culture and hard as in cold-hard cash. It is imperative that we strike and sustain that impeccable balance throughout in order to stay at the top.

There will be a point in time whereby an increment in pay will not satisfy us anymore. Till then, we will need the culture to boost our pride and morale.


Similarly in Cisco's case, I believe that they should pay dividends once in a while for people to buy into their strategic long term plan.


Otherwise, people might just leave for other companies like Hewlett-Packard or IBM.



Credits -cnn, -skymetercorp, -smh, -banksavingsaccounts, -informationr