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Cisco's management and employees appear to have pocketed $32 billion of Cisco shareholder cash
Tue, 11/30/10 - 5:15am    View comments

CiscoEarlier this month, Cisco's board of directors authorized up to $10 billion in additional stock buybacks bringing Cisco's total stock buyback authorization to an incredible $82 billion.

Stock buybacks were first authorized by Cisco's board in September 2001 when Cisco's lowest closing stock price that month hit a low of $11.24 per share on September 27th, giving Cisco a stock market capitalization of $82.063 billion.

Astonishingly over the past 10 years, Cisco has extravagantly spent $67.482 billion on stock buybacks in order to increase Cisco's stock market capitalization by a mere +$26.704 billion as of November 29th, 2010 achieving a current market cap of $108.767 billion.

Simultaneously, having spent $67.482 billion on share buybacks, the number of Cisco shares outstanding has only decreased by a mere -23% (7.301 billion shares - 5.595 billion shares = 1.706 billion shares):

Year Dollar Amounts
of Cisco Stock
by Fiscal Year
2011 $ 2.500 billion*
2010 $ 7.803 billion
2009 $ 3.600 billion
2008 $10.350 billion
2007 $ 7.781 billion
2006 $ 8.295 billion
2005 $10.200 billion
2004$ 9.100 billion
2003 $ 6.000 billion
2002 $ 1.853 billion

Total $ 67.482 billion

Source: U.S. Securities and Exchange Commission
*Includes only the 3 months of Cisco Q1 FY'11.

However most revealingly, Cisco has actually repurchased a total of 3.240 billion shares, implying that 1.534 billion in shares were repurchased at a weighted average price per share of $20.83 to support Cisco's dilutive management compensation practices.

So what are Cisco's dilutive management compensation practices?

Cisco's management has handed themselves a ton of stock, then they had Cisco buy it back (indirectly) from themselves. As an example, view the stock buybacks of Cisco CEO John Chambers. Furthermore, keep in mind that any time you see stock options plus buybacks, you're looking at a net transfer of cash from Cisco's shareholder pockets into the pockets of Cisco's management.

Exactly how much of Cisco shareholder cash appears to have been transferred into the pockets of Cisco's management and employees?

Well, over the past 10 years, 1.534 billion of Cisco shares were repurchased at a weighted average price per share of $20.83 = $31.953 billion.

Related stories:

Congratulations to Cisco Insiders for Dumping 6,620,750 Shares, 60% of Holdings in 6 Month; Cisco CEO Whines about Taxes; Is Chambers Worth a Dime?

Cisco CEO John Chambers raked in almost $400 million while Cisco's shareholders lost almost 30% of their investment

John Chambers appears to lack a true conviction that Cisco's stock price will appreciate in value

Cisco CEO John Chambers had perfect timing executing his insider Cisco stock trades

Cisco stock repurchases ... what's the point?

Cisco tops potential options overhang dilution ranking on Motley Fool

What's your take on the $32 billion of Cisco shareholder cash that appears to have been pocketed by Cisco's management and employees?

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