/ciol/media/agency_attachments/c0E28gS06GM3VmrXNw5G.png)
Follow UsSTOCKHOLM: The chief executive of the world's biggest networking company Cisco Systems Inc. said on Saturday that much of the US economy was in a recession and this threatened to spread to the rest of the world. "It makes no difference what the Federal Reserve or the latest statistics say. What we see now is absolutely not a soft landing. Ask anyone in American manufacturing industry and they will say that we are in a recession," Cisco chief executive John Chambers said in an interview with Swedish business daily newspaper Finantidningen.
"I wish the American central bank had reacted faster, instead of, on old statistics. If they had started to lower rates back in November things would look different today," he said."If the situation does not change before the half year stage there is a risk of a domino effect whereby the rest of the world will be imminently affected." Chambers said to avoid that scenario, the US Federal Reserve must continue an aggressive interest rate cutting program and also welcomed a proposed $1.6 trillion 10-year cut in US taxes by President George W. Bush.
"On my own part I have always preferred spending my own money to having the state spend it for me. But what with the recent economic downturn retroactive tax cuts have become absolutely necessary," Chambers said. Cisco shares fell heavily earlier in February when it posted quarterly results that missed analyst' forecasts and warned a slowdown could continue for at least the next two quarters.
Chambers said Cisco's thus far aggressive acquisition policy would have to be moderated in the short term. "In the coming quarters we will be more careful when it comes to acquisitions and most will be smaller, strategic ones that do not add particularly many employees to our organization," he said.
"We will certainly buy more than 20 companies this year, just like last year. But bear in mind that our share has actually fallen less than most of our competitors' so it is not a problem for us to do more buys," Chambers said. "Besides, the price for unlisted start-up companies is about 20 per cent of what it was a year ago."