Cisco says it plans to start paying a dividend before next summer

Cisco to start paying a dividend before summer

NEW YORK — Cisco Systems Inc., the world’s largest maker of computer-networking gear, said Tuesday that it plans to start paying a dividend before the end of its current fiscal year, in July.

Like several other big technology companies, Cisco has a large cash balance, and analysts have speculated that it would use it for a dividend.

Cisco didn’t say how big the dividend would be, saying it would determine it in the coming months while considering tax policy and broader market conditions. Speaking at a conference for analysts and investors, Chief Financial Officer Frank Calderoni said the yield would be “competitive.”

Cisco shares rose 65 cents, or 3.1 percent, to $21.91 in early afternoon trading Tuesday.

Cisco had $40 billion in cash on July 31. However, $33 billion of that sits at overseas subsidiaries. Like other big exporters, Cisco has been reluctant to bring the money back to the U.S., to be taxed at the 35 percent corporate rate.

Because it needs some of its U.S. cash for other corporate needs, Cisco may have to tap its overseas hoard to pay a dividend.

Many companies took advantage of a tax amnesty for repatriating cash in 2004, and some have been pushing for a repeat of what was supposed to be a one-time event. Calderoni said that developments in repatriation rules would affect the size of the dividend.

Cisco has been returning cash to shareholders through buybacks, amounting to $65 billion to 2010. Calderoni said the company is committed to continue doing buybacks and will continue to invest in research and design and purchase other companies.