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Cisco, On Deck, Looking for Share Boost

SAN JOSE, Calif. (TheStreet) --Cisco's (CSCO) stock hasn't done much recently, so will the company's first-quarter results, released after market close on Wednesday, serve as a catalyst for share growth?

The tech bellwether's shares have dipped 0.82% during the last three months, as unease continued to cloud the broader technology sector. Cisco, a key barometer for tech spending, put out solid fourth-quarter numbers during the summer, but CEO John Chambers spooked investors when he noted a decrease in customers' orders in late June and early July.

Cisco
Cisco CEO John Chambers

Investors were also underwhelmed by Cisco's cautious first-quarter outlook, although Wall Street is feeling increasingly bullish about the company. Credit Suisse, for example, raised its 2011 and 2012 EPS estimates for Cisco on Wednesday. The investment firm cited improvements in the Asia-Pacific region and emerging markets ahead of earnings, and reiterated its market outperform rating for the company.

Paul Mansky, an analyst at Canaccord Genuity, also notes decent demand for Cisco's products. "Checks on the demand side suggest the October quarter was solid, particularly relative to the unstable macro commentary used as the guidance backdrop in August," he wrote in a note released Wednesday. Cisco, he added, could offer investors growth-at-a-reasonable-price (GARP) as the company exits 2010.

Analysts surveyed by Thomson Reuters expect Cisco to post revenue of $10.74 billion and earnings of 40 cents a share after market close, compared to sales of $9 billion and earnings of 36 cents a share in the same period last year. Cisco itself has forecast revenue between $10.64 billion and $10.82 billion.

Cisco, which competes with HP (HPQ), Juniper (JNPR), and Alcatel-Lucent (ALU), has undergone something of a metamorphosis in recent years, entering the server market and targeting consumers with its Flip video camera, acquired from Pure Digital.

The networking giant has also pushed into enterprise social networks with its Quad product and has recently been making a song and dance about home videoconferencing.

Although infinitely less sexy, Cisco's networking gear could prove crucial in the next couple of quarters. The company's switching, routing and collaboration products are doing particularly well, according to Jayson Noland, an analyst at Robert W. Baird.

"[The] demand environment [is] generally improving," he explained, in a recent note. "Following a tough IT spend environment with negative year-over-year growth in 2009, we believe that Cisco stands to benefit from an improving business environment."

Noland cites a recent survey of resellers who report that Cisco is best positioned in switching, routing and unified communications, a collaboration tool for linking applications, devices and networks. "Survey results from 99 resellers indicated respondents continue to have a healthy demand outlook for bookings," he wrote.

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