Why do you think Wall Street is not getting the message?
I think Wall Street always gets the message. The issue is, at the present time, there are a lot of people looking at what the most recent quarter might be. But we don't run our business on a quarter by quarter or month-by-month basis. We run it for the long-term.
Time will tell if our growth rate is in the high single digits, where the market clearly has us, or if it's in the 10 percent to 15 percent range — or potentially, even slightly above that.
One quick follow-up question: Will stock-option reporting affect Cisco?
No one really knows... We deal with the world the way it is. We'll adjust either way, and we'll adjust based on what the shareholders say. I think what you're seeing now is just a period of uncertainty about growth rates and then a period of uncertainty about the economy overall.
What do you see happening in the second half of this year in terms of IT spending?
I can tell you what our customers say. Our customers say that 80 percent to 90 percent of their businesses will see increased earnings this year versus last year. Of that, about 60 percent of the total, I believe, says capital spending will increase but only about a third will hire.
People are talking about the Federal Reserve raising interest rates, and oil prices have been going through the roof. Are companies going to hold back on spending in the second half of the year?
Everybody wants a single silver bullet — "If this occurs, will that occur?" As we all know, the economy probably has five or six major bullets going on at the same time, or variables in the equation, if you will. So I think there are a number of variables in the equation that can have a positive effect on the market, and there are a number of variables in the equation that can have a negative effect. It really comes down to what are their earnings per share. When that tends to go up, they can spend more.
What's your current thinking on paying out a dividend?
If you ask shareholders what they want us to do, a growth company with this type of [price earnings] ratio, I'd say 90 percent of them want us to use our money to either acquire our stock back, or to use it to invest in companies or to acquire other companies.
So, at some point in time will we pay a dividend? As we have said many times before, yes.
Not this year?
No. Most companies that are growth companies pay nominal dividends or not at all. If the market would have a changed perception on that and want us to pay a dividend, then we'd pay that.
What about acquisitions? I mean there's been a lot of talk about acquiring Nortel Networks or something big like that.
I don't know how to do large acquisitions — which is a very nice way of saying I haven't seen any that would be successful.
Our strategy is more to use acquisitions to enter new markets. Our ideal target is about 100 people, primarily in an engineering product area, with good engineers that are just about to bring a new product out (or has just come out.)
