Tech Stocks Ride on Cisco's Outlook

Updated from 7:59 a.m. EDT

Looking for signs of a tech recovery, investors are turning their eyes to Cisco's (CSCO Quote) earnings report after the bell Wednesday.

Cisco's April quarter sales are expected to show another a steep decline, somewhere in the range of 20% down from year-ago levels, but Wall Street is tuning in for CEO John Chambers' special message on the business outlook.

So far, gear peers like Alcatel-Lucent (ALU Quote), Ericsson (ERIC Quote) and Juniper (JNPR Quote) have not exactly offered a rosy forecast for the current quarter as telcos remain stingy on orders.

And in the recent round of first-quarter earnings, six of 13 big tech shops said there were signs of stability after months of tumbling demand. But that whiff of stability came from an early and possibly fragile blossom: consumer spending. Few signs suggested that demand had stopped falling in the corporate IT market.

Cisco is a big player in IT, selling routers and switches to businesses with large data networks.

Analysts who have checked Cisco's sales channels offer a mixed view on the quarter.

"Our U.S.-centric checks suggest Cisco had a slow start to the quarter, but business picked up in late March and into April," Jefferies analyst Bill Choi wrote in a research note Tuesday.

Other analysts had a different view. "March was good, but April sales were down below Cisco's own targets," says Telecom Pragmatics analyst Sam Greenholtz.

The business conditions in the last quarter of the month tend to influence a company's outlook. Bulls want to hear that Cisco has turned the corner, but if there's more rough road ahead, the stock may suffer.