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Wednesday, September 06, 2006

Cisco’s CEO Sell Some Shares


John Chambers, the long time CEO of Cisco, sold over 1.2 million shares a couple of weeks ago, according to Form 4s filed with the SEC. Most of the sales were in the $20.50 range, and the option price was $12.27. So, Mr. Chambers brought in about $25 million and kept a little less than half of that. He remains the beneficial owner of 2.7 million shares after these sales.

Oddly enough, Cisco hit a 52-week high last week. Good time to sell. Cisco peaked at $22.35, and now trades at $22.11. With the exception of a fairly brief period at the end of 2003 and early 2004, the stock has not been this high in five years.

So, why sell now? Maybe Mr. Chambers is doing estate planning or diversifying his investments.

Cisco’s last quarter for the period ending April 29, was very, very good. Revenue hit $7.322 billion and operating profit $1.653 billion.

However, recent results from companies in the optical network equipment business have been notably poor, especially from JDS Uniphase and Ciena. Juniper’s stock price has also been down lately, although its does have Nasdaq listing problems.

Citigroup analyst B. Alexander Henderson recently told Forbes that Juniper, Cisco, and JDS Uniphase where among his top picks in the telecommunications equipment sector for the second half.

But, over the last week, results in the sector have been soft, probably softer than expected. Cisco is a much larger and more diverse company that JDSU, Ciena, or Juniper, but it is not immune from the marketplace that seems to be troubling them now.

Maybe Mr. Chambers is smart to unload a few shares.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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