"I create jobs overseas," Chambers told interviewer Lesley Stahl on the CBS News program "60 Minutes" in March. "I build plants overseas and I badly want to bring that money back."
The company needs that cash to prop up its share price -- which explains its support for the tax break, said Sandeep Shyamsukha, a communications analyst at Auriga USA LLC in San Francisco. Since 2006, Cisco has spent $43.5 billion on stock buy-backs. In April, it paid its first shareholder dividend. Consumer advocate Ralph Nader, who owns Cisco stock, this month called for doubling the payout, as first reported in the Wall Street Journal.
'Tremendous Pressure'
"The stock is struggling, the company has reached a mature phase and investors are demanding more returns," said Shyamsukha, who has a "hold" recommendation on Cisco shares. "There's tremendous pressure on the management to give out dividends and higher buybacks and that's probably what's pushing them in this direction."
U.S. companies used $312 billion they repatriated under a 2004 tax holiday largely for stock repurchases, while doing little direct hiring or domestic investment, according to a paper in the current issue of the Journal of Finance by professors at the University of Illinois, Harvard University, and the Massachusetts Institute of Technology. It was the latest in a series of studies that reached similar conclusions.
While Treasury Secretary Timothy F. Geithner has expressed skepticism about a new repatriation break, Representative Kevin Brady, a Texas Republican, introduced a bill on May 11 that, like the 2004 measure, would not require companies to use their cash for hiring.
Lower The Gate
Brady declined to address why his measure does not include a hiring requirement. "With millions of Americans seeking work it makes good economic sense to temporarily lower the tax gate and allow up to a trillion dollars of stranded American profits to flow back into our economy," he said in a statement.
The idea gained momentum last week after Senator Charles Schumer, a New York Democrat, said his party's caucus was discussing whether short-term revenue from the holiday could fund an "infrastructure bank" to create jobs. Senator John Kerry, a Massachusetts Democrat, has also signaled that he may reconsider his previous opposition.
Cisco, Oracle Corp., Microsoft Corp. and others formed a coalition called WIN America Campaign that plans to spend several million dollars pushing the issue. The group is being advised by SKDKnickerbocker, a Washington-based political consulting firm for which Anita Dunn, President Obama's former communications director, is a managing director.
"We simply don't think it's a good idea to do nothing while a trillion dollars sits overseas," said Doug Thornell, a vice president for the firm who is advising the campaign.