During Cisco's Q2'FY11 earnings call, Cisco EVP and Chief Financial Officer - Frank Calderoni, appeared to state for financial transparency purposes:
"For the quarter, we repurchased $1.8 billion of common stock under the stock repurchase program or 89 million shares at an average price of $20.15 per share. The remaining approved amount for stock repurchases under this program was approximately $12.7 billion as of quarter end."
However, yours truly was not impressed. Why not?
Well, because Calderoni conveniently omitted that Cisco reduced its outstanding share count by a mere 44 million shares (i.e. 5,577 billion - 5,533 billion = 44 million) during Q2'FY11.
Q2'FY11 page 3 and 28 vs. Q1'FY11 page 3 and 25.
That means a whopping 45 million shares (i.e. 50.56% and/or $910 million in Cisco shareholder cash) of Cisco's total Q2'FY11 stock buybacks went to support Cisco's dilutive management compensation practices!
Interestingly, stock buybacks were first authorized by Cisco's board in September 2001. So over the past 10-years the number of Cisco shares outstanding has decreased by 1.768 billion shares, however, Cisco has actually repurchased a total of 3.329 billion shares at a a weighted average price per share of $20.81
That means a staggering 1.561 billion of Cisco's shares that were repurchased (i.e. $32.484 billion of Cisco shareholder cash), went to support Cisco's dilutive management compensation practices over the past 10-years.
