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Cisco Ready to Roll

Investors are expecting sales momentum to continue.

Investors will be checking under the hood at


(CSCO) - Get Cisco Systems, Inc. Report

later today to see if the big tech shop is still firing on all cylinders.

Cisco is due to report fiscal second-quarter earnings after the market closes Tuesday. Most analysts who have checked sales and supply channels are confident that the San Jose, Calif., networking giant will deliver a solid report.

The real anxiety, however, is what CEO John Chambers will say on a postclose conference call, when he typically offers his sales outlook for coming periods. Will he speak of "continued momentum" and "good balance," as he did the last two times around? Or will he slam on the brakes by pointing to "increased caution" and challenges ahead?

Analysts expect Cisco to post an adjusted profit of 31 cents a share on $8.28 billion in sales for the fiscal second quarter ended last month, according to Thomson First Call. Looking ahead to the fiscal third quarter, analysts expect pro forma earnings of 33 cents a share on $8.56 billion.

Shares rose 43 cents Monday to $27.57.

Since its acquisition of TV set-top box maker


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a year ago, Cisco has been on a bit of a winning streak. The upswing in spending on high-definition video gear has happened to coincide nicely with an increased demand for Internet equipment among telcos.

But the rebirth and scope of Cisco's dominance has investors wondering how far they should go with the adoration.

Cisco is up 60% since August, when Chambers started sounding a lot more optimistic about sales. At the time, going into the new fiscal year, the company raised its guidance for sales growth to as high as 20% from the 15% it previously had been calling for.

Last month, after the stock hit a two-year high, the company earned a rare downgrade. Merrill Lynch analyst Tal Liani said the stock had had a nice run.

Liani cut his rating to neutral from buy, cautioning that Cisco's fiscal second half of the year would not compare as well to a strong period a year ago -- at least not as well as the past two quarters.

"We could see a moderation of the strong trends," Liani wrote, "as the impact of some of Cisco's smart moves begin to fade." As a result, "year-over-year comparisons will become more challenging," according to Liani.

But bulls say Cisco has worked its way into the leadership position in several areas where spending trends look quite favorable.

Initiating his coverage of Cisco last week with a buy rating, American Technology Research analyst Shaw Wu pointed to the markets that matter most in networking.

"Cisco is the world's leading provider of IP (Internet protocol) network infrastructure used in enterprise, government, service providers, cable operators, and homes," wrote Wu.

If those are some of the cylinders, then Wu says Cisco is hitting them all.