“Cisco Systems, Inc. (CSCO - yield 2.90%) is a world leader in networking and other data transmission products. ... Cisco finally appears to be on the verge of breaking out of its more than decade-long doldrums. While the company has not given up on acquisitions entirely, it is now focused on building up its market-leading positions in some of the most important technology segments in order to build profits and cash flow.
“Moreover, the company is now committed to returning a significant portion of that growing cash flow to shareholders. ... The company’s balance sheet is impeccable, with more than $48 billion in cash and equivalents and relatively little debt. Cash flows are growing, and management is committed to returning 50% of free cash flow to shareholders through dividends and share repurchases. The company’s nearly 3% dividend yield puts it in the top echelon of dividend payers in the tech sector. Cisco has been like the sleeping giant of the technology industry since the Internet bubble burst in 2000. We now believe that the giant is awakening, and will give shareholders a good ride in the coming years. We recommend buying Cisco stock up to 26.”
George Putnam, III, The Turnaround Letter, September 2012
