A little over a week after Cisco Systems (NASDAQ:CSCO, news, filings) disappointed Wall Street by announcing that revenue growth wasn't going to justify that family vacation this winter, the company is taking steps to make up and renew its marriage with investors and the media. But what can make up for a 20% hit to the stock price of a tech giant? First there was the obligatory "I'm sorry" from CEO John Chambers, who said the other day at the company's annual meeting, "We won’t surprise you very often, and I apologize that we did." And just in case words weren't enough to heal the wound, Cisco brought out the heavy guns and announced an addition of $10B to its stock buyback program. That must be the box of chocolates. What, no flowers too?
Will the street take Cisco back? After all, it was just money and not infidelity, right? Oops, I forgot this is Wall Street we're talking about here... Okay, okay, I'm laying it on a bit thick. But it's Friday, and I'm just a tad skeptical of the world at the moment. So Cisco missed and its stock dived - it happens. The market deserves to have its illusions destroyed now and then. So John, don't give it up too easily. Let'em stew for a while, where else they gonna go?
One must note though that when Cisco buys back stock, it really buys back stock - over $65B of it since 2001. The extra $10B leaves them with $14.5B remaining of the authorized amount. It's amazing that after spending the last two years buying everything it can lay its hands on, they're still sitting on a $35B cash stockpile.