Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 75.19

-0.1%

Jan 16 9:30 AM EST

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To: Stock Farmer who wrote (55952)	10/15/2001 5:48:26 PM
From: RetiredNow	Read Replies (2) of 77400

No. Stock buyback programs when used consistently over time can add tremendous value to a company's stockholders. I wouldn't recommend spending $18 billion today to buy back stock. But I would recommend always having a stock buyback program in place to whittle that o/s share number down. Stock buybacks are similar to dividends in that companies can reduce their agency problems of having such large cash hoards on the books, not to mention the benefits of greater EPS over time. One thing I agree with you on is this. If Cisco issues 150-200 million shares to employees per year and Cisco can't afford to buy back those shares on the open market at today's price of $16, for $3.2 billion, then it is obvious to even the most dense stockholder that Cisco shouldn't be issuing that many shares. Cisco has been printing options like mad and it has caught up with them. You are right that today's Cisco has played out their ponzi scheme. The only way to set things right again is to start being prudent in all areas and that includes in the area of stock option grants. I say continue to give them to their top 10% and forget about the rest. If they are serious about attracting and retaining the top 10%, then the choice is obvious. And they should implement this policy not just at the rank and file level. VPs, Directors and Managers shouldn't get options just because they are management. They should be held to their MBOs and be evaluated on them. If they don't hit their goals, then no options and no bonuses. Very simple and very effective. I still say Cisco is a must have stock, but they have some serious compensation issues to address before the stockholders will start to benefit in the way we've become accustomed to. That's why I won't nibble again until it's under $13. I think the upside is limited for awhile - at least the next year or so.

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