Cisco Systems Inc., the largest maker of networking equipment, added as much as $10 billion to its stock repurchase program, giving a boost to investors after the shares fell 17 percent last week.
“Today’s decision to increase Cisco’s stock repurchase program is part of our continued commitment to return cash to shareholders,” Chief Financial Officer Frank Calderoni said yesterday in a statement. “We are confident in our strategy, product portfolio and ability to capture and lead new markets.”
The company’s board had already authorized as much as $72 billion in stock buybacks. And in September, Chief Executive Officer John Chambers announced Cisco would issue the first dividend in the company’s history, providing another reward to investors. Cisco is looking at a dividend yield of 1 percent to 2 percent, he said at the time.
Cisco’s shares plunged 16 percent on Nov. 11, the biggest one-day drop in more than 12 years, after the company’s profit and sales forecast fell short of analysts’ estimates. Revenue in the fiscal second quarter will be about $10.1 billion to $10.3 billion, San Jose, California-based Cisco indicated on a conference call.
Excluding some costs, earnings will be 35 cents a share at most. Analysts projected sales of $11.1 billion and profit of 42 cents on average, according to estimates compiled by Bloomberg.
The company faced a “challenging economic environment” last quarter, Chambers said. He blamed the slump on lower government spending in developed countries and market-share losses to rivals such as Motorola Inc. Competition also has forced Cisco to cut prices on some products and seek acquisitions to maintain growth.
“I never want to let down our shareholders, even if I believe it’s a short-term bump,” Chambers said in an interview at the time. “I like for the stock to go up all the time. Obviously, we’ve got to get confidence back.”
Cisco rose 3 cents to $19.64 at 9:49 a.m. New York time in Nasdaq Stock Market trading. The shares had dropped 18 percent this year before today. The company had almost $39 billion in cash and short-term investments at the end of October.
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