Chambers' Prognostications

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Cisco CEO John Chambers answered press and analyst questions about the changes that he foreshadowed in a memo to employees. Chambers said the company would make some tough and bold decisions.

He also noted that public sector spending remains depressed in the United States and elsewhere and has been further thrown into question by political unrest in the Middle East and by the natural catastrophe in Japan.

Considered one of Silicon Valley's top prognosticators, Chambers was among the first to warn of the impact of the financial crisis on the sector in late 2007.

Cisco's status has been somewhat diminished lately, after its last two quarterly results disappointed the market. Cisco said in November that sales growth would be lower than analysts had expected. In February, it warned of dwindling public spending and weaker margins from tough competition.

Cisco shares have dropped a third of their value over the past 52 weeks and the company has been criticized for losing touch with its customers and expanding too broadly into consumer products, such as set-top boxes.

Indeed, analysts speculate that Cisco may be forced to whittle down a largely unspectacular consumer-oriented business -- from Flip cameras to its Umi home conferencing product -- while refocusing on its core Internet routing and switching business.

Shares of Cisco fell 22 cents, or 1.2 percent, to $17.85 in afternoon trading. (Editing by Tim Dobbyn and Gerald E. McCormick)