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Halftime: Did Cisco Just Ignite Big Tech Frenzy?

Silicon Valley rocked Wall Street on Tuesday after CEO John Chambers said Cisco would begin paying a dividend between 1-2% for the first time in 2011.

(Cisco will decided the amount in the spring based on tax policy and other factors.)

The news triggered a flurry of speculation about which cash rich tech titan would be next.

Just one day earlier, published reports suggested that Microsoft was planning a debt sale with the money going toward either dividends or buybacks?

How should you trade it?

Instant Insights with the Fast Money traders

Cisco had been dead money in recent years but the dividend could attract buyers and ignite the share price, explains Joe Terranova. A lot of the institutional investors may now find Cisco compelling. It makes me want to buy.

Cisco’s dividend is the icing on the cupcake, adds Patty Edwards and I suspect we see more cupcakes getting iced in technology.

Like Patty, I also suspect the move pressures other big tech cash rich companies to do the same, adds Steve Cortes. And it should. Expect tech companies to either take a hard look at paying dividends or going out and using cash on the balance sheet to make strategic acquisitions.

In the space, I suspect investors will be keeping a close eye on Apple, says Jon Najarian. With $45 billion sitting on its balance sheet I think pressure is mounting on Apple to do something with it. The stock could ramp over the next few weeks based on that speculation – as well as the other organic catalysts.

Also options investors are starting to bet that Microsoft will be the next player in big tech to put money into dividends.

I’d be surprised to see Apple do any kind of permanent dividend, adds CNBC's Jon Fortt. Steve Jobs has said he just doesn’t like it.

In tech I like the software trade. I’d play it long Oracle and SAP , says Joe Terranova. But I’m cautious on Microsoft . I don’t really understand what they’re going to be doing with their cash and now they’re going to have more cash.

Looking at this development from another angle, CEO John Chambers has said that before he retires he wanted to see Cisco pay a dividend, reminds host Melissa Lee. Does this suggest he’s thinking about retirement, she muses.

I don’t think so, replies CNBC’s John Fortt. At the analyst meeting he was talking about his plans for the next 5 years.


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H-P LEADS DOW

Elsewhere in tech, Hewlett Packard led the Dow higher, largely due to speculation that the company is close to naming its new CEO.

What’s the trade?

Officially, HP says they’re not going to name someone today, explains Jon Najarian, but I still think they’re very close.

I’m long Hewlett -Packard for the long-term, says Patty Edwards. It’s an attractively priced stock, right here.

I also find HP attractive, says Steve Cortes. The stock is over-hated and the fact they’ve made major acquisitions without a permanent CEO suggests their bench is very strong.

I agree that HP is cheap, says Joe Terranova, however in the space, I think the trade is longIBM .

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Trader disclosure: On September 14th, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (ARST) calls; Jon Najarian owns (CSCO) call spreads; Jon Najarian owns (RHT) call spreads; Terranova Owns (APA), (AAPL), (ARUN), (BMO), (C), (DO), (EOG), (FCX), (FTO), (XBI), (GS), (HES), (IBM), (JOYG), (NBR), (NOV), (OXY), (ORCL), (PEP), (POT), (RSH), (GLD), (SLB), (SWN), (SU), (SPLS), (RIG), (UPL)

For Joe Terranova
Terranova is chief market strategist of Virtus Investment Partners, LTD.
Virtus Investment Partners own more than 1% of (ABAX)
Virtus Investment Partners own more than 1% of (ALK)
Virtus Investment Partners own more than 1% of (AMKR)
Virtus Investment Partners own more than 1% of (CASS)
Virtus Investment Partners own more than 1% of (CSVI)
Virtus Investment Partners own more than 1% of (IGE)
Virtus Investment Partners own more than 1% of (LDR)
Virtus Investment Partners own more than 1% of (LPHI)
Virtus Investment Partners own more than 1% of (MGRC)
Virtus Investment Partners own more than 1% of (NRCI)
Virtus Investment Partners own more than 1% of (DBV)
Virtus Investment Partners own more than 1% of (XLB)
Virtus Investment Partners own more than 1% of (XLP)
Virtus Investment Partners own more than 1% of (XLY)
Virtus Investment Partners own more than 1% of (XLF)
Virtus Investment Partners own more than 1% of (XLI)
Virtus Investment Partners own more than 1% of (XLU)
Virtus Investment Partners own more than 1% of (SUBK)
Virtus Investment Partners own more than 1% of (WDFC)
Virtus Investment Partners own more than 1% of (YDNT)
Virtus Investment Partners own more than 1% of (DLUEY)
Virtus Investment Partners own more than 1% of (DRYS)


For Patty Edwards
Edwards owns (HPQ) for clients
Edwards owns (MSFT) for clients
Edwards owns (BAC) for clients
Edwards owns (GLW) for clients
Edwards owns (GLD) for clients
Edwards owns (SPY) for clients
Edwards owns (VXX) for clients
Edwards owns (PGM) for clients
Edwards owns (C) for clients

For Steve Cortes
***No Disclosures***

CNBC.com with wires.

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CSCO
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HPQ
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MSFT
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ORCL
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SAP
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IBM
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AAPL
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