Is Cisco Systems (CSCO) management following the Carl Icahn plan? It may be looking at what the famous hedge-fund raider has been up to at Apple (AAPL), as he has called for more share buybacks and dividends. Cisco announced last night that it will increase its dividend by 12%, or two cents per share, now paying out a yield of 3.3.%. It also continue to scarf up it's own stock, having repurchased $4 billion worth of stock -- or 185 million shares -- in the quarter.
The dividend boost and large buyback came as a surprise. But it all makes sense, as what else is Cisco to do? Growth has dried up. With cash piling up on the balance sheet and it's growth prospects cloudy for the next year, Cisco is trying to keep shareholders happy by directing its cash toward a dividend and buybacks. Perhaps Cisco CEO John Chambers feels Captain Carl may prey on him next.
Cisco reported second quarter of fiscal year 2014 sales of $11.16 billion, close to consensus estimates. It reported earnings per share of $0.47, exceeding $0.46 consenus estimate by a penny, aided by lower expenses and a lower share count, helped by the buyback.
Yet despite these okay numbers, Cisco shares are trading down about 4% today, last trading hands around $22.