Tech company Cisco Systems, Inc. (NASDAQ: CSCO) plans to reallocate $67 billion dollars in profits in the near future. Cisco that is a big firm for computer networks states that they will be bringing their offshore cash back to the U.S and they plan to give it back to the shareholders over the next two years. Cisco is one of the many U.S companies that have announced plans to bring home money that has been stored offshore. The reason for this is because in prior years companies would have faced heavy taxes on the cash, however, thanks to the new Tax Laws signed into effect by President Trump, offers a lower rate on the funds.
The new tax changes were set in place to give incentive to large companies to bring money held offshore back to the U.S to help boost the economy and by increasing jobs. However, firms are bringing the cash back into the U.S and instead of stimulating hiring are choosing to give back to shareholders through dividends and buybacks.
Cisco is also following this trend as they announced on Wednesday that they will be giving back to their shareholders causing their stock to increase my approximately 7%. Despite the fact that the tax reform is saving companies money, Cisco still reported a $8.8 billion dollar loss in the last quarter of the 2017 Fiscal year.