Ralph Nader took Cisco to task Tuesday for its “paltry” dividend and urged the company to return some of its excess cash to shareholders.
“They acknowledged they’re sitting on $45 billion of the shareholders’ money, and they have a very paltry dividend of 6 cents per quarter that’s just been recently declared, and they’re considering what to do with the money,” the consumer advocate, former presidential candidate and Cisco shareholder said on “Fast Money.”
“None of this makes sense other than to give it out in dividends,” he said. “The company has gone down in its shareholder valuation from a high of $82 in March 2000 down to about $19 now. It’s five times bigger, more profitable year after year and the shareholders are being left out to dry.”
Nader said he recently launched what he called a “penny brigade” to raise a penny for each of its outstanding 5.38 billion shares owned by investors to fund a Cisco watchdog advocate.
“If we can get Vanguard and Fidelity and some of these giant pension and mutual funds behind it, I think we can return more of the shareholders’ money to the shareholders and start a precedent for all these other giant corporations, who in their totality are sitting on $2 trillion of idle cash while the economy desperately needs more money for consumer demand to create more jobs,” Nader said.
The issue of dividends has been raised often with cash-rich companies such as Apple, which sits on nearly $100 billion. Many analysts expect the company will return some of that to shareholders, but the company has not explicitly said it would do so.
“We’re going to really start something big here,” Nader said. “No one in American history has ever managed to find a way to organize millions of American investor shareholders. We’re going to try.”
Among the “Fast Money” traders, reactions were mixed.
“When was loyalty in the business world ever something to be rewarded?” said Guy Adami of Drakon Capital.
Trader Karen Finerman said it shows support for management over the long-term, in effect saying, “You’ve made a lot of money, you should give some back to the shareholders particularly when the stock doesn’t get to a fair valuation because the cash weighs on it. Apple is the most perfect example.”
Mike Khouw of Cantor Fitzgerald said “reasonable tax policy” would help companies considering an increase in dividends.
“First of all, I’m glad to see more advocates for shareholders, but I think one of the important parts of this dialogue that hasn’t been mentioned yet is repatriation of cash is part of the calculus when you’re trying to determine what kind of dividends can be paid,” he said. “I think in Cisco’s case, you’re dealing with 70 to 80 percent of the cash on their balance sheet may actually be international.”
Cisco shares closed up 0.4 percent at $19.65.
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Trader disclosure: On Jan. 31, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Adami owns C; Adami owns GS; Adami owns MSFT; Adami owns AGU; Adami owns NUE; Adami owns INTC; Adami owns BTU; Finerman owns AAPL; Finerman owns BAC; Finerman owns JPM; Finerman owns MSFT; Finerman owns IBM; Finerman owns GOOG; Finerman owns ORCL; Finerman owns GPN; Finerman owns CF; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long EMC; Terranova is long AXP; Terranova is long JOY; Terranova is long MCD; Terranova is long OXY; Terranova is long IBM; Terranova is long SU; Terranova is long TRLG; Terranova is long CNX; Terranova is long SBUX; Terranova is long SNDK; Terranova is long GOOG; Terranova is long MA; Terranova is long UNG April $5 puts; Terranova is long AAPL Feb 430 puts; Terranova is short AAPL put spread; Terranova is short AAPL Feb 440 puts;
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