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Cisco's Friday announcement adds another large cap tech stock to the list of dividend payers,...

Cisco's Friday announcement adds another large cap tech stock to the list of dividend payers, with INTC yielding 3.6%, MSFT 2.6%, IBM 1.7%, CSCO 1.4%, HPQ 1.2% and ORCL 0.7%. But do rising dividends suggest that tech companies see fewer prospects for profitable investment in growth?
Comments (15)
  • To me it suggests a maturing business. There is currently so much emphasis on social media today that there is little investor interest left for traditional technology businesses. While these business may be experiencing their mid-life crisis there is not reason to believe they are done. New opportunities will arise and these companies have loads of cash and equity with which to participate.
    20 Mar 2011, 06:50 AM Reply Like
  • except for IBM all referenced stocks have been dead money since 2000, off from there 2000 highs anywhere from from 70 to 50 % with only IBM up a paltry 20%, these solid reliable companies are no longer as nimble as their counter parts, they have difficulty growing their market share so they pay dividends to try and maintain loyalty with share holders
    20 Mar 2011, 07:43 AM Reply Like
  • CSCO pays out first dividend. About time!!!

     

    In 1998 CSCO shares were selling for about where they are now. How many dollars in profits have they earned since then? How many bonuses have they paid out. How many of their employees have they made millionaires? How many shares have they issues in stock incentives?

     

    I don't know any of the exact numbers but we all know CSCO is one of the most successful tech stocks out there with profit margins near 18%.

     

    Also, CSCO is sitting on $40 bil in cash. CSCO should be the poster child of corporate America for abuse of their shareholders. CSCO was founded in 1984 and here, 27 years later they decide to finally pay a measly 1.4% dividend. 27 years later they finally decide to share a pittance of their profits with the company owners. What a slap in the face to the shareholders.
    20 Mar 2011, 08:04 AM Reply Like
  • JE- Csco was trading at around 77 in 2000 and here we are a decade later and its trading around 20, regardless of how good a company it is, dividend or not its been dead money plus for LT investors and only small 40% return since its 3/09 lows, why anybody would want to own it is beyond me. For investors CSCOs best days are well behind it
    20 Mar 2011, 09:36 AM Reply Like
  • i would be careful about premature autopsies. csco spends more money and r&d than nearly any company in the world. they are constantly acquiring interesting little tech companies and always on the look out to acquire or develop disruptive technologies. they are clearly in the forefront of the cloud movement, and as the globalization process continues to pick up steam and more and more developing countries come on line, i see great potential. csco can still surpise to the upside, imo. another catalyst is if u.s. govt grants amnesty or tax break to encourage repatriation of cash abroad... damn, you got over 30 billion dollars that could come home and really shake things up. i like csco here.
    20 Mar 2011, 09:52 AM Reply Like
  • I see great potential. CSCO can still surprise to the upside.

     

    Yes, it could as could all the others noted, but none except IBM have and then only 28% stock appreciation in a decade. AAPL was at one time down for the count but surprised and came back roaring like no other, they are the exception not the rule. Old market leaders rarely lead into the future though they play a major supporting role for the new leaders. It's the way it is.
    20 Mar 2011, 10:44 AM Reply Like
  • CSCO is a great company. But sitting on huge cash reserves and not knowing where to invest in the future leaves the investor out in the dark.

     

    CSCO is also going to feel some real pressure from HPQ and their HP Procurve network products. The stock price is fair and where it should be.
    20 Mar 2011, 10:59 AM Reply Like
  • Which is exactly why Cisco started UCS, to compete with HP Servers. UCS is a game changer. It is *not* just another blade technology.
    20 Mar 2011, 11:58 AM Reply Like
  • I suspect a significant portion of the cash may be sitting overseas, hence unable to be repatraited unless CSCO wants to pay taxes on those repatriations.
    20 Mar 2011, 12:05 PM Reply Like
  • INTC is the true winner, AMD cannot compete here.
    20 Mar 2011, 12:13 PM Reply Like
  • I would be careful with having great expectations from the aforementioned UCS. When Cisco goes from networking to servers, it is going from a high margin to a lower margin business.
    When HPQ steps into networking, they are stepping into a higher margin business compared to their existing server business.
    Hence the investor fear as to how much of a margin compression might CSCO experience from competing with HPQ and JNPR.
    HPQ arguably has nothing to lose and everything to gain from selling their products at low margins just to gain entry into a high margin field.
    20 Mar 2011, 12:25 PM Reply Like
  • The real knock on CSCO is not its fall after the Tech Bubble or its lack of a dividend but its apparent lack of interest in its shareholders. The company has good products, is expanding its line of products, it is making money and sitting on a bundle of cash. Yet the perception is that Chambers has been more interested in lining his own pockets and those of key employees than he has been on providing a decent return for his shareholders. Thus the new dividend seems to be more of a small and late attempt to appease a growing cadre' of disgruntled shareholders than it does a real change of corporate direction.
    20 Mar 2011, 11:03 AM Reply Like
  • I Agree al the tech stock are undervalued compared to the retail sector of the stock market. (Wallmart, MCD, KO, and whole bunch oh similar major companies. Their stock has a higher value than the TECH sector has.

     

    Why???
    Resentment from all different investor types.
    These large Tech companies always gets downgraded by the respected core of analysts.
    Clear price exit strategy from the investors, buy a lot at 19 and sell at 21.

     

    I would wish, that I bought APPLE in 1998, and sold them now, that would have been a winning bet.
    20 Mar 2011, 11:18 AM Reply Like
  • This puny payout that Cisco management is calling a dividend means that CSCO stock is yielding 1.4% at super depressed price of 17. Nicely making chumps of shareholders that held on to stock as it traded down from 25. They held on to the stock believing management's assurances that they will start off with a dividend yield between 1% and 2%. Why not just say in advance that they will institute a dividend with yield of only 1%?
    How cheap is John Chambers being?
    The annualized payout is 1.32B against a cash flow of 10.48B and net cash hoard of 25B. This is being conservative to the point of silly.
    20 Mar 2011, 12:14 PM Reply Like
  • They want capital from individuals and mutual and pension funds.

     

    The FED can only buy so much stock (directly or indirectly).
    20 Mar 2011, 12:24 PM Reply Like
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