Here’s Ralph Nader’s Unsolicited Advice for Cisco
Ralph Nader is calling for tech giant Cisco (NASDAQ:CSCO) to pay a bigger dividend to boost its shares. Nader is a long-time investor in Cisco, and in a private letter sent to CEO John Chambers on June 13, Nader claimed Cisco wasn’t doing enough to lift shares, writing, “it is time for a long overdue Cisco shareholder revolt against a management that is oblivious to building or even maintaining shareholder value.”
Cisco’s shares (NASDAQ:CSCO) are down nearly a third in the past year and are currently trading 75% off their highest trade price during the tech bubble. Cisco trades on the tech-heavy Nasdaq (NASDAQ:QQQ), which is down 48% from its record high during the tech bubble in March 2000. Nader’s letter to Cisco outlined suggestions for improving the stock, such as a one-time dividend of $1 a share, or an increase in Cisco’s annual dividend, stating that, “If they can’t give shareholders value, then they have to give cash.” Despite weak growth, Cisco has $43 billion in cash, nearly half its market value.
Nader currently owns 18,000 shares, which were valued at around $1 million in 2000, but have now diminished to $278,460. Were Cisco to heed Nader’s advice and issue returns to shareholders, he would only stand to gain $27,000. The company was once the dominant computer networking-gear business, but over the years has faced competition from Asia and smaller competitors. However, while shares have been dropping since the tech bubble, only recently has Cisco (NASDAQ:CSCO) begun to show decreased profit and revenue. In May, they reported an 18% decline in profit for their most recent quarter.
This most recent letter is not Nader’s first time writing to Cisco’s chief executive. In October he wrote a similar letter calling for a dividend, after which Cisco instituted its 24 cent/share annual dividend, though the company says the dividend had been in consideration before they received Nader’s letter. And rather than selling out of Cisco (NASDAQ:CSCO) and cutting his losses, it seems likely Nader will maintain his shares and continue advising the company on financial matters. He has been talking to other investors who are equally as unhappy with the stock’s performance, and has taken it up as a personal cause.