When stock options are exercised, it adds shares to the market, while a buyback removes them and boosts the value of each remaining shareholder's stake.

Cisco's decision highlights the dilemma many companies face in trying to reduce the dilution caused by generous employee stock option plans.

Cisco, the world's largest maker of Internet routers and switches, has been profiting from steadily rising demand for more Internet bandwidth and sophisticated networking gear to handle an influx of voice, video and data content on the Web.

Since Cisco launched its stock buyback program in September 2001, it has been on a tear and seeking for ways to spend its cash horde — currently $24.7 billion — and return that value to shareholders.

The company has bought back 2.3 billion shares for a total of $46.2 billion.

Friday's announcement brings the total amount Cisco's board of directors has authorized for buying back stock to $62 billion.

Cisco's total share count has declined by only 1.2 billion, from 7.3 billion outstanding shares in 2001 to 6.1 billion at the end of October, however. That's mostly a result of employees exercising options on 1.15 billion shares over the same period, the company said Friday. Some of the increase came from funding acquisitions by issuing stock, Cisco said.

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