Consumer watchdog Nader wants Cisco to atone for the negative movement in its stock over the past year. Cisco is the worst-performing component on the Dow Jones Industrials this year, . Shares are down nearly 25% this year, on top of a more than 15% decline in 2010.
Cisco is using some of its hoarded cash to after long ignoring calls to do so. But Nader wants the company to ante up some more.
ANALYSIS:
In a letter to CEO John Chambers, Nader calls on the company to boost its dividend and its shares. The letter was sent privately on June 13, but .
In the letter, Nader criticizes Chambers for not doing enough to boost the company's share and suggested it might be time for a "shareholder revolt against a management that is oblivious to building or even maintaining shareholder value."
The WSJ notes that Cisco stock is off 75% from its all-time, tech-bubble high, while the Nasdaq index is down about 48% from its all-time high in March 2000.
Among the specific actions Nader suggested in the letter are the distribution of a one-time dividend of $1 a share and an increase in Cisco's annual dividend to 50 cents from 24 cents. Cisco just started paying a dividend to shareholders this year.
"If they can't give shareholders value, then they have to give cash," Nader said in an interview with The WSJ last week. Cisco holds $43 billion in cash, nearly half of its market value, and all but $5 billion of it from overseas profits. Bringing it back here would subject Cisco to a of nearly 35%.
According to The WSJ, a Cisco spokeswoman said the company welcomes input from shareholders and added that the company is considering "capital allocation and returns to our shareholders," but declined to discuss specifically whether a dividend increase or one-time payout are on the table.
Nader, famous for going after big business and for his 1965 report on the American automobile business, "Unsafe at Any Speed," said he wrote the letter to Chambers because he objects to the "powerlessness of owner shareholders." Nader's own investment in Cisco stock -- 18,000 shares -- was valued at $1 million in 2000, but last week it was valued at $278,000.
Nader bought Cisco stock for $7 a share in 1995.
Even if Cisco adopted the changes he suggests, Nader would only stand to gain $27,000, according to The WSJ.
"Just think of what people who have been loyal to them have endured," Nader said to The WSJ. "It's absurd."
Nader said he personally didn't sell his Cisco stake because he thought the shares would rebound.
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