Cisco Needs to Offer Value to Investors, One Way or Another
Networking giant Cisco has seen its stock decline drastically throughout the past four quarters; something that, according to Barron’s, means this can be a good time to buy shares of the company. Cisco has reached a low, and buying cheap now may prove to be a good choice if the company will manage to regain some of its lost momentum in the near term.
“We think the stock can perform better when Cisco can demonstrate that it has refocused and can maintain share and margin. We believe this can occur in less than a year, so with limited downside to the shares, we remain buyers.”
The Barron’s report did take on a somewhat optimistic point of view, but the fact remains that Cisco shares are cheap compared to the rest of the market, and have a chance of going up. This would mean good news to the company’s shareholders, but Ralph Nader doesn’t think that’s nearly enough. The consumer advocate is going after the company, saying in a Monday appearance on CNBC that Cisco should pay a one-time dividend of $1 a share and increase the annual number from 24 cents to as much as 50 cents a share.
Cisco starting issuing dividends fairly recently, and Nader thinks they are over-due. He further explained that Cisco is sitting on $43.5 billion in cash with no plans for acquisitions, meaning that $1 per each of its 5 billion shares is a sum Cisco would be able to absorb.
Another topic the networking company and its CEO John Chambers have been involved with is corporate taxes. Cisco, along with several other companies, keep their money oversees to pay as little taxes as possible, and now it submitted a proposal to Congress asking to waive most federal taxes when corporations transfer their money to the U.S from overseas. Google and Apple are among the supporters of this tax holiday.
Even as Cisco works on its financial standing on a few levels, it’s also in the midst of rebuilding, in more ways than one, and introducing efficiency and value too investors will be a key part of that process. The same can be said of keeping up with the competition; for example, Alcatel-Lucent’s new FP3 router chips.
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