Cisco, Fighting Against the Tide, Rises as Tech Cousins Drop

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By Kevin Petrie
Staff Reporter

Cisco

(CSCO) - Get Report

is fending off a broad technology slide on Monday -- for more reasons than you might think.

Many investors credit Cisco's advance to the Friday-evening announcement of a contract with software king

Microsoft

(MSFT) - Get Report

. The agreement helps solidify the "Wintelco" alliance of Cisco, Microsoft and chip giant

Intel

(INTC) - Get Report

. Microsoft will deploy Cisco gear throughout its corporate network and Internet data centers. But that's not necessarily enough to drive up a stock. For example, Microsoft is trading sharply lower in the afternoon.

Another development is adding fuel to Cisco's rise: It was the brightest spot on

AT&T's

(T) - Get Report

otherwise gloomy earnings report.

AT&T executives told investors in Monday's conference call that revenue from data services for long-distance business customers grew at a "double-digit" annual rate last quarter, drawing on an extensive supply of "frame relay" equipment.

One participant in the conference call, who asked not to be named, knew whom to thank -- Cisco. The company's

Stratacom

unit, acquired in July 1996, makes a lot of money building switches for AT&T. Another source, a money manager, suggests that the AT&T news has driven Cisco shares higher.

And analyst Michael Davies at

Utendahl Capital Partners

, who rates Cisco a buy, says more than pocket change is at stake. "From the beginning, AT&T was a disproportionate share of Stratacom's business." His firm has no underwriting relationship with Cisco.

While a Cisco official confirmed that the company supplies network hardware and software to the long-distance giant, he declined to state what portion of its revenue AT&T represented.

***************

Meanwhile, good news has failed to add loft to another tech concern on Monday.

Hummingbird

(HUMCF)

, the subject of a

July 17 story in

TheStreet.com

, has licensed its network software to

Lucent

(LU)

. Despite that, its shares are tumbling on Monday after a sharp run-up last week.