Cisco CEO says will pay dividend before retiring

BOSTON (Reuters) - Cisco Systems Inc (CSCO.O) Chief Executive John Chambers said he will pay a dividend before he retires but sees stock buybacks and takeovers as better investments for the next two to three years.

"I will pay one before I leave. I would like to see the growth rate of the country and of our stock be stronger at the time that occurs," the head of the world's biggest maker of routers and switches told reporters on Friday. "Right now there are huge opportunities for acquisitions, very good opportunities for investments."

Chambers, who has led Cisco since 1995 -- an unusually long run for the fast-changing world of Silicon Valley -- said last week that he aims to remain CEO for at least three to five years.

"If we're right on our growth scenarios, you've got to say it's a good time to be buying the stock over the next two to three years," Chambers said after addressing the Boston College Chief Executives' Club.

So far this year, Cisco shares have lost about 5 percent of their value, a less-steep decline than the 11 percent fall of the Standard & Poor's communications equipment index .GSPCOMM.

SEES NEED FOR CONFIDENCE

Overall, Chambers said he was confident that the world economy is recovering. In its most recent quarter, Cisco reported a 34 percent rise in U.S. orders and a 30 percent increase in Europe.

"Southern Europe is clearly a challenge, but that's less than 4 percent of our business, in terms of Spain and Portugal and Italy and Ireland," Chambers said. "Is there the possibility that this could spread? Of course, but my view is that you look at the long term and you take the most likely approach. And we do it with our eyes wide open."

What the economy needs, he said, are CEOs who are more willing to take the risk of adding jobs. Even as the U.S. economy has pulled out of its worst recession in decades, unemployment has remained stubbornly high.

"My personal view is that what we're missing is confidence, the ability of business leaders to take risks and add to the headcount," said Chambers. He was one of the first in the technology industry to predict that the rapid growth of Internet traffic starting in the 1990s would drive demand for advanced switches and routers.

Cisco itself added about 1,000 jobs in the last quarter and plans to add another 1,500 to its staff of about 70,000 in the current quarter.

(Reporting by Scott Malone; Editing by Gary Hill and Richard Chang)