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Europe's Tech Spending Slump Is Finally Bottoming Out, Cisco CEO Says

Photographer: Paul Sakuma/AP Photo

A Cisco UCS B440 M1 High-Performance Blade Server at a conference in San Francisco in 2010. Close

A Cisco UCS B440 M1 High-Performance Blade Server at a conference in San Francisco in 2010.

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Photographer: Paul Sakuma/AP Photo

A Cisco UCS B440 M1 High-Performance Blade Server at a conference in San Francisco in 2010.

The economic crisis in Europe has depressed spending on just about everything, including technology. But there may be some good news on the horizon.

Sales in northern Europe have started to "bottom out," said John Chambers, the chief executive officer at Cisco Systems. The company, which is the world's biggest network-equipment maker, is a barometer of tech spending across the industry. So when Chambers talks, tech execs pay attention.

While parts of Europe show economic progress, the trouble is far from over. Speaking on Cisco's quarterly earnings call today, Chambers purposely excluded southern Europe from the group. Spain and Greece were among the hardest-hit countries during the Euro crisis, so don't expect to see them buying a bunch of routers. And with France falling back into recession, it's clear that Europe's economy has a long way to go.

As more people around the world get smartphones and binge on online video, demand for networking equipment grows. And that feeds back into consumer-Internet businesses because network upgrades lead to faster online connections. In a way, Cisco's performance can provide a glimpse into the future.

Because Cisco's fiscal quarters end about a month after many other large tech companies', the results provide the most recent view into the situation. Last month, Juniper Networks revealed that Europe was showing early signs of life when CEO Kevin Johnson disclosed that orders from the region were increasing.

However, many of the wounds are not ready to heal.

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