"The environment has continued to change dramatically in the last few months," Chambers said. "It is clear now that we are in a global economic slowdown. ... (Cisco) will obviously be impacted."

The company is not considering layoffs today, Chambers said, defining that as a cut of 10 percent or more of the workforce. But as the company goes through normal realignment of resources, that could result in job reduction of 1,500 to 2,000 in the near term, he said. Overall, Cisco is ahead of its plan to cut expenses by $1 billion per year, Chambers said.

Priority is going to Cisco's top five opportunities, which the company will make sure are funded, according to Chambers. Those are next-generation company and customer relations, dubbed Cisco 3.0; collaboration and Web 2.0; video; data centers and virtualization; and globalization, he said.

The company will also continue a plan to invest in emerging economies, with China and India in the first wave of that strategy and Mexico, Brazil, Saudi Arabia and Russia coming in a second wave, Chambers said.

The CEO said most executives he talks to don't expect a recovery until 2010, but he is more optimistic. The U.S. and other governments have generally responded well to the world financial crisis, Chambers said, giving him hope for a possible upturn before the end of this year. The recovery will begin in the U.S., and the rest of the world will follow, he believes.