Martin A. Sullivan (Tax Analysts) has published Cisco CEO Seeks Relief for Profits Shifted Overseas, 129 Tax Notes 951 (Nov. 29, 2010):

Cisco’s limited ability to make shareholders happy with dividends may stem from its efforts to make shareholders happy with higher earnings per share. It has become routine for America’s largest corporations to improve their bottom line by cutting their effective tax rates. A reduction in the effective tax rate from 35% to 25%, for example, increases reported profits by 15%. Figure 1 shows that Cisco has cut its effective tax rate in half since the late 1990s. In fiscal 2010 (ending in July), it reached a new low of 17.5%.

 
By far the most important driver of this reduction in the tax rate is the increasing share of Cisco profits in foreign jurisdictions with low tax rates. In the 1990s, low rates on foreign profits had little impact on Cisco’s effective tax rate. By 2010 they accounted for an almost 20 percentage point decline in the effective tax rate. This is shown in Figure 2.

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