Cisco Systems CEO John Chambers was one of the first tech executives to predict that the recession–then limited to the financial sector–would spread to the rest of the economy. Now he’s among the first to say it’s on the way back.

The economy has started a “gradual recovery,” Chambers said Wednesday during a meeting with Wall Street Journal reporters and editors, echoing optimism he expressed when discussing Cisco’s fourth-quarter results in August. Chambers said that he bases his assessment of the economy on several factors, including the stock market, conversations with customers and the rate at which Cisco (CSCO) receives orders. Based on these criteria, he believes that the U.S. is coming out of the recession. He added that Asia seems to be picking up as well, but that he expects Europe to lag behind.

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Cisco (CSCO) CEO John Chambers doesn’t just talk a good game about telepresence, the videoconferencing technology that creates the illusion you’re in a room with someone who’s actually thousands of miles away. He’s planning to install his company’s high-end system in his Silicon Valley home, provided he and his wife can agree on a spot for it.

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Cisco (CSCO) CEO John Chambers just might be one the most careful executives in the Valley about talking to the press; in a brief chat with Tech Trader Daily at a media reception last night, he didn’t give away much about his views on the state of the economy or the current quarter. But he did have a few things to say. Here’s a summary.

• On the state of the economy: “I’m going to pass on the economy question,” he said. But he did say that in the current environment, “companies with cash are king, queen and the royal family.” Cisco has close to $27 billion in cash and short-term investments, and the total continues to climb.
• On acquisitions: Chambers says Cisco is always aggressive in making acquisitions during downturns. He says the best time to make acquisitions is during downturns.

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The hand-wringing on Cisco (CSCO) continues.

This morning, the Street churned out some more research filled with fretting over what CEO John Chambers is going to say tomorrow about the company’s prospects for growth in the January quarter and beyond. While the company has previously forecast growth for the January quarter in the 7.5 to 9.5 percent range, the Street is increasingly convinced that Cisco is going to bring numbers down. The question is how far down will they go – and how long will the downturn last.

Merrill Lynch analyst Tal Liani this morning said that the Street is looking for Cisco “to report weak results and provide weak guidance.” He notes that normally wide spread nervousness would be a good thing – but that this time around he remains cautious, and worries that “near-term trends could still be worse than expected.” Liani notes that demand for both high-end and low-end switches has weakened “considerably,” with growing price pressure.

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Cisco Systems shares are under pressure, ahead of the company’s Wednesday afternoon announcement of earnings for its fiscal second quarter ended January. The looming Cisco results are giving some investors the jitters, given what happened the last time they reported earnings: CEO John Chambers cautioned that the company was seeing a year-over-year decline in U.S. enterprise orders, and the broad stock market plunged.

While certainly investors will be watching for any sign of trouble in the January quarter results, the real issue is going to be what the company says about the rest of its fiscal year, which ends in July.

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