Once you start adding dividends, our thought is to keep increasing them over time, Cisco Systems CEO John Chambers told CNBC’s “Closing Bell” on Wednesday after the networking giant announced a 75-percent increase to its dividend.
“This was the time to do it,” Chambers said of the dividend increase.
After making $11.5 billion in free cash flow in the last fiscal year, Chambers said that “we were very comfortable in our ability to pay that (dividend) even without repatriation.” Chambers was referring to the cash the company holds overseas that would be subject to additional taxation if it was brought back to the U.S.
In a subsequent interview on CNBC, Kenneth Langone, CEO of Invemed Associates, said that Cisco's dividend increase showed that "there's no incentive to put the money back into the business because of what's going on in the country." (Watch a clip of the Langone interview.)
Cisco had what Chambers characterized as an “unusually strong quarter — especially in Asia-Pacific.” Chambers said India is coming back and China had a very good quarter.
“We feel good about Asia," Chambers said. "Part of it is market-share gains but part of it is we see their economies doing okay.”
“The U.S. saw some positive trends,” Chambers added. "Europe was a bit challenged.” Chambers expects Europe to get tougher before it gets better.
“In the U.S., we started to see especially in the second half of the quarter, very slight improvement in enterprise, very slight improvement in the commercial marketplace. We’ve seen state and local government come back. Federal government is going to be tough for the next couple of quarters.”
The company earned 45 cents a share on revenue of $11.7 billion in its fiscal fourth quarter, both ahead of expectations.
“Our market-share gains have probably never been better than in the last 12 months,” Chambers noted.