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Cisco's Chambers: U.S. Recovery By December/January

If you forced Cisco Systems chief executive John Chambers to make a $100 bet on when the U.S. economic recovery will begin, he would pick December 2009 or January 2010.

The energetic Chambers just concluded a visit to The Washington Post to meet with reporters and editors.

He noted that a stock market recovery usually precedes an economic recovery by six months, so that means crash-weary investors may be able to start looking at the 401(k) retirement accounts by about mid-summer.

However, Chambers warned, if the economy does not turn around in 12 months, he's worried the U.S. would be in for a second economic trough, leading to much higher unemployment and contraction.

The optimistic Chambers also warned that "if we talk down the economy," the recession will continue.

During the wide-ranging interview, Chambers made this provocative point: If a doctor from 50 years ago came back to life today, they could not practice, as medical technology has advanced so far. But if a teacher from 50 years ago were resurrected, they could walk right into a classroom and pick up where they left off in 1959.

Cisco is best thought of as the company that builds the plumbing for the Internet -- switches and routers and so forth. Chambers said today that he's proud to think of himself as a plumber and that plumbing has been "very lucrative."

But now, Chambers said, Cisco wants to become a "trusted business adviser" by selling companies and governments technologies that will help them work better and more efficiently.

"The plumbing is becoming intelligent," he said.

Chambers is hot on video, saying he believes it is the future. And naturally, he would be: Video puts the heaviest load on the Internet's plumbing, which means it will need upgrades made by ... Cisco. "I'm very upfront about that," Chambers said.

And Chambers acknowledged that President Obama's $3.6 trillion budget, which includes $1.3 billion for rural broadband deployment, and his $787 billion stimulus, which includes $7.2 billion for broadband, will be good for Cisco.

"We'll probably get our part of it," Chambers said.

But what he really wants to do is use his Telepresence video conferencing to change the world.

You may have seen the TV commercials for Telepresence. An earlier one featured a staring contest between two schoolboys on opposite sides of the world. The current one features a simulated giant outdoor Telepresence -- sort of like a two-way, street-mounted Jumbotron that would let crowds of people watch each other.

Chambers is touting the Telepresence system as a way for companies and governments to virtually (pun intended) eliminate travel and travel expenses and to work cheaper and more efficiently. He said Cisco employees and suppliers and clients hold 4,000 Telepresence meetings per week.

"The majority of my interfacing with customers and suppliers will be virtual," said Chambers who, like The Ticker, is a West Virginian, we must disclose.

Chambers is bullish on the economy because his data are showing him that technology will spur an upsurge in workforce productivity of the sort that pushed productivity up 3 to 5 percent 15 years ago, when businesses adopted the Internet.

He said he has changed Cisco's management structure from his beloved command-and-control style to a collaborative-partnership style.

The great thing about command-and-control, Chambers said, is that he can get his 67,647 employees to immediately shift directions. But the drawback is you can only get them to really focus on one or two tasks at a time.

In downturns like now, he said, Chambers likes to move into adjacent markets and diversify his business, which is easier to do with a multi-tasking, collaborative-partnership management style.

(Sounds like someone's been reading "The Starfish and the Spider.")

Chambers was one of Sen. John McCain's (D-Ariz.) presidential campaign co-chairs, but spoke admiringly of President Obama and his top economic adviser, Larry Summers.

Of the stimulus plan, Chambers said: "If 60 to 70 percent of the stimulus package is effective, that's as good as you're going to do."

Shares of Cisco closed up .49 percent yesterday at $14.39. Over the past year, Cisco has lost about 40 percent of its value, about the same as the rest of the Nasdaq.

-- Frank Ahrens
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By Frank Ahrens  |  March 3, 2009; 3:37 PM ET
Categories:  The Ticker  | Tags: Cisco, Internet, John Chambers, Obama, stimulus  
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