Cisco Says CEO Didn't Predict Recovery

Updated from 8:47 a.m. EDT

Communications equipment stocks gave back some ground Wednesday after Cisco (CSCO Quote) disavowed a media report saying CEO John Chambers had forecast an imminent uptick in information technology spending.

Shares in the networking sector rose sharply early in the session following a report in the Dutch daily Het Financieele Dagblad. That article, which quoted Chambers as saying IT spending would pick up in the next two to four months, was picked up by Reuters and other U.S. news agencies. Investors took the report as a bullish sign, because even though Chambers has repeatedly indicated that he believes in the industry's long-term prospects, he has stopped short of saying a recovery is imminent.

But around midday a Cisco spokeswoman told Reuters that the Dutch paper had misconstrued Chambers' remarks, which he made last evening to a group of reporters in San Jose. She said Chambers was merely reiterating his long-held stance that industrywide spending will start rising about two to four months after IT customers begin to see their own businesses turning up, whenever that is.

Shares in Cisco and rivals such as Ciena (CIEN Quote) rose sharply early Wednesday before retreating at midday to smaller gains. Cisco was up 26 cents, to $18.99, while Ciena was 39 cents higher at $6.14.