Cisco Sees Recovery, but No Clue If It'll Last

NEW YORK (TheStreet) -- Cisco (CSCO) says it will end the year strongly but offered no assurances beyond that.

The networking gearmaker plowed over fiscal first-quarter targets and raised its second quarter guidance above analysts' forecasts Wednesday, giving the impression that there is an improving momentum to Cisco's business.

CEO John Chambers helped fan the near-term enthusiasm by saying the May quarter "appears to have been the bottom," with sales momentum starting to build through the summer, fall and presumably through the rest of the year.

While Chambers' optimism is a welcome sign amid a slump in tech spending, he stopped short of any long-range forecasts for Cisco or the sector.

On an earnings call, Chambers urged analysts and investors to remain cautious, saying it would be prudent to wait until the conclusion of the fiscal second quarter to see "additional quarterly data before becoming overly optimistic."

One reason to be skeptical that a full-blown recovery is afoot is that the current quarter is typically one of Cisco's strongest. IT departments and telco project managers usually have some left over money at the end of the year, which can translate into a rush of equipment orders.

This so-called budget flush is part of Cisco's fiscal second-quarter sales guidance, leaving the distinct possibility that orders will drop off steeply early next year.

Chambers, however, remains hopeful that the turning point he saw midyear was the beginning of something better and more akin to a normal economy. "This would indicate a continuation into the next phase of the economic recovery," Chambers said on the call.