With no growth in sight and no major deals in the hopper,


(CSCO) - Get Report

has had a change of heart on dividends.

Though CEO John Chambers feels stock buybacks are the best use of the company's $21 billion cash pile, he conceded Wednesday that Cisco would "probably" pay a dividend at some point. Chambers made his comments during a presentation to investors at the Merrill Lynch Global Communications conference in New York.

Until now, Chambers has been known as one of the most vociferous opponents of the growing dividend movement, even as other tech giants like


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jumped on the trend. But it seems Chambers may be partly influenced by Cisco's flagging stock, which has dropped 20% in the past two months.

A Cisco representative said Chambers' remarks don't mark "a change of strategy," adding that Chambers has mentioned dividends as far back as last fall.

But some observers disagree.

Still Hung Over
Cisco over five years

"That's a big change" in Cisco's tune, says Sanford Bernstein analyst Paul Sagawa, who has a hold rating on the stock. "But what else are they going to do? They certainly don't need to keep $21 billion in cash. And if they tried to use it in a big deal, the market would kill them."

Though Chambers says he's not "religious" about the issue, the company has preferred to use its cash to fund stock buybacks. Over the past two years, Cisco has pumped more than $8 billion into stock repurchases, and the company recently

allocated another $7 billion to the program.

But despite the heavy buyback effort, the company has failed to offset the number of new shares issued for employee stock compensation. Critics charge that circle of buybacks and employee stock compensation has

funneled billions of dollars away from shareholders and into Cisco workers' pockets -- particularly those of high-paid executives.

On Wednesday, Cisco shares added 23 cents to $23.35.