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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.26

+0.1%

12:26 PM EST

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To: RetiredNow who wrote (63544)	4/14/2003 2:10:02 AM
From: Don Lloyd	Read Replies (2) of 77400

mindmeld, However, dilution is never* good for shareholders, and with Cisco dilution has reached problematic proportions....* Isn't this a pretty one-sided analysis? It's like saying that paying for production materials is never good for shareholders. Or that paying salaries is never good for shareholders. Are there NO actions that a company can take that are of net benefit to shareholders if they happen to result in any dilution? The only cure for that is buybacks coupled with a cessation of grants. Please explain just exactly how a stock buyback cures anything. When a company either buys or sells stock at the current market price, the change in the shareholders' share of the company cash after the transaction is exactly offset by the change in their ownership proportion of the total company. All that changes is the company's leverage as measured by its price to cash ratio. If a company has too many shares, however that is possible, maybe because their accounting software can't handle that big a number, wouldn't a reverse split accomplish the same result without expending any shareholder cash? Regards, Don

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