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Optical/IP

Cisco CEO Misquoted

Cisco Systems Inc. (Nasdaq: CSCO) stock got a brief boost today as a widely circulated misquote in a Dutch newspaper fed investors’ hopes that a recovery is just around the corner.

This morning Het Financieele Dagblad, a newspaper published in the Netherlands, heated the market faster than a Dutch oven when it quoted Cisco CEO John Chambers as saying that he expects an information technology spending recovery in two to four months. Reuters included the quote in a story it ran early this morning, fanning the flames of excitement. Cisco’s shares were up $0.26 (1.29%) to $18.99 before losing much of the gain.

“Everyone is looking for some confirmation that the market is turning,” says Stephen Kammn of CIBC World Markets.

Cisco officials quickly dampened the excitement by setting the record straight on Wednesday. Robyn Jenkins, a spokeswoman for the company, said that the Dutch paper had “misinterpreted” Chambers comments about a recovery. [Ed. note: Chambers also did not -- repeat, did not -- suggest that Regis Philbin should win the Nobel Peace Prize.]

“John did not provide any new information, and his remarks were not on update on the quarter,” she said in an email. “He said something similar at a Thomas Weisel financial analyst conference in mid June.”

So what did Chambers actually say? The same thing he has been saying for the past two years, according to Cisco officials -- that the timing of a recovery is uncertain. But once a turnaround in the economy is underway, information technology spending will improve roughly two to four months after that. And service provider spending is expected to follow that by about two to six quarters (see Cisco's Chambers Glows at N+I).

For the past few years, Chambers has been an industry bellwether. Even his most lukewarm comments have been known to move the market. During the bubble he was bullish on Cisco’s prospects. And even as the economy began to melt down in early 2001, Chambers remained optimistic (see Chambers: Cisco's Ready to Brawl and Cisco Misscos!).

But since Cisco itself started stumbling, Chambers has toned down his rhetoric to a much more subdued outlook. In the past two years, his comments on the state of the industry recovery have varied little (see Cisco Tops Expectations and Chambers Fires Up Market).

On the past two earnings calls he has used the exact same phrasing in describing a possible recovery: “We believe we have uniquely positioned Cisco as the inevitable recovery occurs, whether it is [in] one quarter or multiple quarters.” (See Cisco Profits Up, Outlook Down and Cisco: Profit, With No Nasty Surprises.)

“The one day that he stands up and says something new, it will be big news,” says Kamman. “When a recovery is real, he will make sure that everyone knows that the message has changed. John Chambers is not Alan Greenspan. He tends to be very clear about what his company’s position is.”

— Marguerite Reardon, Senior Editor, Light Reading

belas_knap 12/4/2012 | 11:46:44 PM
re: Cisco CEO Misquoted Words of wisdom indeed - you're completely wasted in the Telecomms industry (if, indeed, you're still working in it). BTW - Cisco stock leapt up to $19.98 yesterday on the statement until it was retracted - pure fluke.
BobbyMax 12/4/2012 | 11:46:44 PM
re: Cisco CEO Misquoted The Cisco CEO does not have any more insight into the market than many people follow and understand the market. For many years, Cisco has managed the stock prices to the detriment of investors. Any statement from a CEO is not good enoogh reason to boost the stock price. The dot com, internet and telecom bubbles are examples of stock price manipulations that led to the fall of these stocks.

The telecom recovery is at least five years away. During this period more mergers and acquistions would take place and many telecom equipment manufacturers and service providers would disappear.
gea 12/4/2012 | 11:46:41 PM
re: Cisco CEO Misquoted BobbyMax:

All your base are belong to us.
gea 12/4/2012 | 11:46:40 PM
re: Cisco CEO Misquoted I guess the obvious question is, can you be a little more precise regarding which kind of Dutch Oven you were referring to in the article?(!)
sriharivarada 12/4/2012 | 11:46:35 PM
re: Cisco CEO Misquoted Referring to what John Chamber's actually said, is the information technology sector that he mentioned an enterprise sector? or, he meant in a much broader sense. Is there any one who analyzed it can share their thoughts?
D&K 12/4/2012 | 11:46:07 PM
re: Cisco CEO Misquoted Within the broader sector of the sector of the country where mountains reign, there is a sector of recovery taking place whereas natural gas pipeline is being put into the ground in preparation for the continued improvement of the sector of this country that still lives in the stix, drinks out of wells and thinks natural gas comes from the buttocks not the ground.

So, the sector of the economy that is now waiting for natural gas will in turn have to wait for the fiber becuase it will have to pulled into the retired gas lines when they are decomissioned sometime in the sector of 80-100 years or when they start leaking, whichever comes first.

Thus it begins technically in the redneck sector, which is an enterprising sector indeed, whne you throw in the technology that goes into hay balers and pipe laying.

Confused? I am and continue to be. Poor ole Booby is really on the pipe these days (sic). And the rest of us are just waiting for some sign that there is someone in a sector out there that understands that all of these sectors are just quadrants next to my tractor seat for lifting and lowering crap.

What John Chambers knows about sectors right now and a roll Northern might get your sector clean but I doubt it.

The evil horsemen of the industry would come and take the innocent lamb of the ugly capatilistic pig in 2-4 months, tops.

That is, when Booby see the recovery.

Booby, what do the crystal ball say?
The cards?
The chicken bones?
The runes?

Happy sectoring,

D&K
whyiswhy 12/4/2012 | 11:46:04 PM
re: Cisco CEO Misquoted Dutch Oven: WRT the original and even the re-stated remarks, it is a short glass tube to which a charred brown residue is usually attached.
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