Skip to search.

Higher Taxes Mean Making "Compromises" - Including on Jobs, Cisco CFO Says

Posted May 07, 2009 03:20pm EDT by Aaron Task in Investing, Networking and Communication, Newsmakers
Related: CSCO, GOOG, HPQ, IBM, MSFT, ^GSPC, ^DJI
President Obama sent a shot across the bow of U.S. multinationals Monday when he announced plans to close offshore tax loopholes.

Intentionally or not, Cisco Systems is one of the companies potentially most exposed to such changes in the tax code: The WSJ reports Cisco's U.S. tax rate was cut by 16.1 percentage points in fiscal 2008 because it reinvested international earnings overseas, a common practice among U.S. firms Obama wants to halt.

"If we are in a situation where we have a higher tax rate than what we have today, we will have to make some compromises within our business, says Cisco CFO Frank Calderoni. "It gets down to a discussion about where you make investments...that [are] tied to jobs. That comes into play when you are a global business and you have to balance where you do make investment in order to continue to deliver the right return to your shareholders."

Calderoni also downplayed Obama's claims that changes to the tax code will give U.S. companies incentives to keep jobs in America, but stressed it's "hard to speculate" what any changes would actually mean for Cisco's effective tax rate (estimated to be 22% in fiscal 2009).

At this point, more debate and dialogue between U.S. multinationals (including Cisco) and the administration is necessary, the CFO says.

Stay tuned.

Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.