Laid-off Cisco workers undoubtedly thrilled for company's shareholders over planned dividend
Networking giant flush with cash, profits after pink-slipping 2,000 workers
Let me just start by acknowledging that public corporations clearly have a responsibility to their shareholders. No argument there; it's right in any corporation's charter. I get it.
That being said, I can't help but wonder how the news that Cisco Systems will be offering its first dividend to shareholders is being received by the more than 2,000 workers who were laid off from the networking equipment giant over the past two years.
In making the layoffs -- euphemistically referred to as a "realignment and restructuring of resources" -- Cisco was able to cut $1.5 billion in expenses, which undoubtedly helped the company avoid imminent bankruptcy.
Oh, wait. It seems revenue climbed 11 percent to $40 billion in the 2010 fiscal year (which ended July 31), while profits soared 27 percent to $7.8 billion. Whew! Close call!
Not only that, Cisco CEO John Chambers was compensated to the tune of $18.9 million in fiscal 2010, up 33 percent from the previous year. (Clearly that tune isn't "Brother, Can You Spare a Dime?") How many rank-and-file jobs Chambers' increased compensation alone would have allowed Cisco to save is anybody's guess.
There's more. Cisco happens to be sitting on $30 billion in cash. But it's overseas. You know, where many of the company's jobs were outsourced, along with the jobs of tens of thousands of workers formerly employed by other tech companies.
Of course, how much of a dividend Cisco will award shareholders -- Chambers is ballparking 1% to 2% -- depends on how much the U.S. government decides to tax overseas profits that patriotic American corporate job offshorers like Cisco want to bring back into the country. Chambers told Wall Street analysts that it would be a "major mistake" by the U.S. government not to allow repatriation of profits made overseas. Arguably even un-American.
Again, before the cries of "socialist" fill up the comments section, I realize corporations have a responsibility to maximize shareholder value, and that's understandable. But is that the only responsibility they have?
I really would like to hear what laid-off Cisco workers -- and anyone else -- think of the company's dividend plans and Chambers' concerns about the U.S. taxing overseas profits. I'm guessing most will be genuinely pleased for the shareholders, who, after all, never have received a dividend from the company before. Ever! And after all, haven't they suffered enough?
Meanwhile, I hear they're hiring at Wal-mart.