Networkers and telecom equipment makers were mixed early Tuesday afternoon, as investors shied away from all-or-nothing bets about the future of the sector following

Cisco's

(CSCO) - Get Report

quarterly earnings report.

After the close Monday, Cisco posted earnings, excluding items, of 4 cents a share on revenue of $4.45 billion for its fiscal first quarter. The results were better than analysts expected, though still a big drop from a year ago, when the company earned 18 cents a share on revenue of $6.5 billion. The sharp decline mirrors what other outfits in the sector have been suffering through for the last year as the telecommunications industry continues to cut spending.

Cisco was up 2.4% to $18.33 in midday action.

Juniper

(JNPR) - Get Report

was dropping 2.8% to $21.96.

Extreme Networks

(EXTR) - Get Report

was fractionally higher at $13.70, and

Sycamore

(SCMR)

was climbing 2.3% to $4.88, but

Ciena

(CIEN) - Get Report

was losing 5.2% to $16.04.

Corvis

(CORV) - Get Report

was lower by 3% to $2.28, but both

Nortel

( NT) and

Lucent

( LU) were gaining ground.

Alcatel

( ALA), the French contribution to the telecom equipment game, was up 1.7% to $16.98.

Redback

( RBAK) was one of the stronger issues, gaining 4.6% to $4.35.

Foundry

( FDRY),

Sonus

(SONS)

and

Tellabs

( TLAB) also were trading higher, but

ONI Systems

( ONIS) was giving up 3% to $5.44.

Not surprisingly, several Wall Street analysts liked what they saw from the John Chambers enterprise and raised their ratings and estimates on Cisco. Another group of firms reiterated some degree of a buy rating on the company. Investors, at least those who are still listening to analysts, may be heartened to know that pros can still offer positive comments on the stock, but Cisco and its brethren probably still face a rough road, at least in the near term. Most of the telecom providers, including

AT&T

(T) - Get Report

,

WorldCom

( WCOM) and

Sprint

( FON) have already

slashed their equipment spending budgets for next year. That means the networkers, whose ranks have not slimmed even as the industry's business has withered, will continue to compete for less and less business.

Cisco didn't offer much in the way of an outlook following the earnings report, but it did say it would post a slight sequential improvement in the second quarter, including a single-digit revenue gain. For a deeper analysis of Cisco's results, check out

TheStreet.com's

in-depth story.

The networking group, whose once-high-flying members continue to captivate Wall Street despite the billions of dollars of market capitalization that has vanished during the 18 months, can still lift the overall market, especially the tech-laden

Nasdaq. Cisco often can do it all by itself, a power only a few other companies,

Microsoft

(MSFT) - Get Report

and

Dell

(DELL) - Get Report

among them, can claim.

Tuesday, however, the Nasdaq was hovering around the flatline, tacking on 4 points, to 1798. The blue-chip measures were lower with the

Dow Jones Industrial Average losing 14 points to 9427 and the

S&P 500 shedding 2 points to 1101.

Uncertainty about the timing of a turnaround in the U.S. economy, worries about the outcome of a war in Afghanistan and the knowledge that the

Federal Reserve can only cut rates to zero will keep investors guessing as to whether Cisco, the networkers and equities as a whole are good buys at these levels.

The Fed has aggressively cut rates this year, and the central bank's policymaking arm, the

Federal Open Market Committee, is meeting now to decide whether to lower the

fed funds target rate for the 10th time in 2001. Last week the Treasury Department decided to discontinue the 30-year bond. As these actions filter through the market, corporate borrowing costs should continue to come down. Whether demand will return anytime soon for the networkers is for the optimists and pessimists to debate.

But judging from Tuesday's action in the group, investors aren't willing to place that bet on blind faith. Maybe we have learned something during the last 18 months after all.