NEW YORK — Cisco Systems Inc. (Nasdaq: CSCO) has promised to institute its first dividend before the July end of its fiscal year. The amount isn’t set yet, but will depend in part on Cisco’s ability to bring back, or repatriate, money it’s earned overseas without having it taxed at the full U.S. corporate tax rate. Of its $40.2 billion in cash, only $3.1 billion is in the U.S.
CEO John Chambers discussed the topic on a conference call with analysts Wednesday.
QUESTION: Could you give us an update on the dividend and your expectations around repatriation?
CHAMBERS: “The dividend: very much on track. We will pay it by the end of this fiscal year. We will announce our payment by the end of the fiscal year. … The only question is: Is it at 1 percent or 2 percent?
“In terms of our country’s understanding of the importance of bringing back foreign earnings into our own country’s investment for jobs, for plant and equipment, even for acquisitions, I think you are now seeing political leaders at all levels understand that. And at the risk of repeating the theme, every major developed country in the world — it doesn’t matter if it is Japan, it doesn’t matter if it is Germany, France, you go right down through the list — all of them bring back those foreign earnings at 0 to 2 percent.
“So we have a tax policy that is just broken. It is at an unreasonable high rate, and then it is the worst of all worlds. The majority of our growth, almost 70 percent of our market, and probably 90 percent of long-term growth is outside the country.
“And we have a policy that makes us noncompetitive outside the country. And then not only doesn’t encourage us to bring it back, but penalizes us with double taxation.
“That is a nice way of saying: I think this one has well over a 60 percent probability of being resolved in a positive way.
“I do believe that Republicans, Democrats and the administration are much more receptive to this than they were just 6 or 12 months ago for combinations of reasons.”
( Read here for more details about Chambers’ earlier call for tax changes.)
Chambers’ comments came after Cisco announced its most recent quarterly earnings. Read the details here.
Cisco employs some 4,000 people at its campus in Research Triangle Park, N.C.
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