Cisco, a 32-year-old technology company (let that sink in), is facing massive existential threats.
Chambers keeps selling his stock...
8 replies (most recent on top)
"spent nearly a hundred billion in buybacks at what you suggest is an effective price far above the highest price it ever sold for"
No one suggested that at all... If you want to justify your agenda so be it. But no the poster did nothing of the sort to suggest that. In fact they brought to light the gravity of the situation
+Did the Forbes article say "Since 2001, Cisco has spent about $96.6 billion on buybacks, which represents about 57% of the company’s entire market value today"?
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Is "about $96.6B" "nearly a hundred billion"?
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Adjusting for splits, has the stock price not been higher than the $82 intraday high on March 27, 2000 which occurred after the last split?
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Did the poster I quoted say [emphasis mine] "...Cisco is effectively retiring shares at roughly $88/share"?
Words like "light" and "gravity" are pretty vacuous so you're going to have to do a lot more to connect the dots in a completely orthogonal way. The Forbes article seemed to be in at least partial agreement with the poster previous to me which is why I questioned the use of the word "moron" against the Forbes author.
Any employee, regardless of the company has to execute on stock grants within a set period or they go away.
RSUs become yours in either cash or stock at the moment of vesting and stock options when I was at Cisco were exercisable up to 9 years after the grant. One could buy and hold stock options with real tax advantages if you hold the stock for a period of time which meets certain criteria. You take the tax hit by selling before the end of that period of time when you believe the stock is a higher risk than the tax advantage or that the money is better invested elsewhere.
As for Chambers in particular, when you have a billion dollar net worth and you keep only a bit over 5% in your own stock it's just not a sign of confidence. Even if he loses half that value over the next five years (cash on hand is almost 43% of the stock price now so operating value minus debt would be close to nothing) it won't affect his lifestyle but just as everyone has to coddle him by saying "limited restructuring" because he is too fragile to hear the word "layoff" it's part of not having to face the consequences of his own actions. I'd be far more impressed even for something simple like not overriding the stop on his bonus payout when he missed his numbers when stockholders, customers and employees were making meaningful sacrifices.
"spent nearly a hundred billion in buybacks at what you suggest is an effective price far above the highest price it ever sold for"
No one suggested that at all... If you want to justify your agenda so be it. But no the poster did nothing of the sort to suggest that. In fact they brought to light the gravity of the situation
"rewarding those who are presiding over this lack of growth who themselves aren't confident enough in the stock to hold it"
Any employee, regardless of the company has to execute on stock grants within a set period or they go away. Chamber takes the tack of essentially saying "every year, I will sell X shares regardless of the price". There's no price timing, manipulation, whatever. I give the man credit for being transparent and upfront.
If you want to argue whether or not Chambers (or Robbins) are the CEO to take Cisco from a $50B company to a $100B company... that is fair game. And I would agree neither are "that person".
Moaning about the fact that he's giving guidance to people in advance of his stock sales... that's called transparency, and kudos for him doing that.
The Forbes author is a moron.
...Cisco is effectively retiring shares at roughly $88/share.
Buybacks don't amount to much more than under the covers exec compensation.
So Cisco has no growth after having spent tens of billions on acquisitions over just the past few years, spent nearly a hundred billion in buybacks at what you suggest is an effective price far above the highest price it ever sold for, is rewarding those who are presiding over this lack of growth who themselves aren't confident enough in the stock to hold it, and has significant annual layoffs which the senior leadership used as the definition of bad leadership and you think the author is the "moron" for suggesting some of these things are bad signs for investors?
Except, Chambers does not have to have a selling plan. He could choose to hold his grants. The shocking thing is that no one on the Board owns a material stake in the company, yet Chambers acts like a founder and has his Board reward him with more. To me, if you want to sell, fine, but don't be on the Board.
The Forbes author is a moron. Chambers has always had predefined selling of option intervals. No news there.
Buybacks are interesting, but author misses the boat. Buybacks are "aimed" to retire shares. If you look at the number of outstanding shares now vs the start of the buybacks, you'll Cisco is effectively retiring shares at roughly $88/share. Why? Re-dilution through stock awards and acquisitions. Two steps forward, one step back.
Buybacks don't amount to much more than under the covers exec compensation.
https://www.forbes.com/sites/aalsin/2017/04/10/ciscos-board-has-some-explaining-to-do/#299ab7b34e5d
The article says $96b in stock buybacls since 2001
Not the router/switch company... say IT AIN'T SO...
If you are an employee or shareholder, both ways you are screwed. You should do quick-sell right away as soon as you acquire the ESPP shares.