Letter to CISCO CEO John Chambers

October 10, 2011

John Chambers, CEO Cisco Corporation 170 West Tasman Drive San Jose, California, 95134-1706

Dear Mr. Chambers:

Now that your quarterly report and forward prospects, together with the press briefing on September 13, 2011, are behind us, the following points need to be made:

1. Cisco shares have remained stagnant. Investor confidence has not increased share value. Indeed, I received numerous emails after the September 13th briefing from stockholders saying they sold their shares (including one large block of over 350,000 shares) upon hearing what you had to say.

2. Although you had one of your colleagues reply to my earlier letter which urged a $1 special dividend and raising the existing dividend to 50 cents a year, his reply was not directed to those points. In a subsequent conversation, he said that all options are being debated internally regarding the disposition of some $45 billion in cash reserves, increasing by nearly $3 billion a quarter. These options were (1) acquisitions; (2) buybacks; (3) dividends; (4) accumulation.

3. After the briefing, your owners emailed me indicating that they feel you are once again inclined to pursue the buyback option and did not respond positively when you were asked about dividend increases. Cisco management has unilaterally spent $60 billion during the past ten years for buybacks. You can see what impact it has had on the falling and now mired Cisco share price now around $15 or $16. What a waste, except for the top executives who have been having quite a party for themselves.

4. My sense is that you really do not resonate with your shareholders who trusted you and relied on you and hung on to their stock which has fallen from $82 in the spring of 2000 to its present price, despite growing sales and profits. Once again, you are their hired hand. They are the company owners. Give them the dividend respect their continuity with you deserves. Delivering some of their wealth will help boost consumer demand during this recession.

5. Should you announce a buyback, you will be testing the prospect of a shareholder revolt. If you do not announce a significant special dividend and annual dividend increase by October 31, 2011, I shall ask Cisco shareholders, which include your employees, to contribute 1 cent per share into a non-profit fund to retain a dynamic full-time person to collect their grievances, which go beyond share value and dividends, to watchdog and prod Cisco management until there is investor justice.

It’s your “business judgment” call.

Sincerely yours,

Ralph Nader

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