Updated from 7:23 a.m. EST

Expect Cisco's ( CSCO) earnings report to reward bulls who are sniffing for a whiff of tech-industry progress.

The immediate implication will be that the computer-networking heavyweight is knocking its weaker rivals out of the ring. The even larger implication, and the one many tech backers will surely seize upon, is that the networking industry bellwether is registering the first signs of an improving economy, despite the crumbling of optical networking competitor Ciena ( CIEN).

Cisco had been expected to report second-quarter earnings of 5 cents a share on revenue of $4.5 billion Wednesday afternoon. In fact, we now know it will exceed those estimates, thanks to the itchy trigger finger of a top executive who previewed the results in a company memo Tuesday night. Such a performance, while a far cry from the year-ago 18-cent profit on revenue of $6.7 billion, would allow the maker of telecom networking gear to deliver its second sequential quarter of sales and profit improvements.

Investors, with Cisco's help, may be encouraged to view the company's stabilization as evidence of a slowly stabilizing national economy, says Wells Fargo Securities analyst Chet White.

" WorldCom ( WCOM) has fallen to the $7 range; we've seen lots of telecom disaster like that in the market place," says White, who rates Cisco buy. "I think Cisco will demonstrate that it's a leader and show that, at least on the enterprise side, we have some signs of a recovery."

Having beaten a retreat from the punishing business of selling phone companies next generation networking gear, Cisco is much more at home in its original duties of selling data network systems to large companies.

But why should investors believe a company that glaringly misread a looming telecom spending slowdown in 2000?

"Unlike the long order, install and book buying cycle of telecom, Cisco's enterprise business is entirely predictable," says Tom Lauria, an independent industry consultant with Avtera Management in Guttenberg, N.J. "Because they have contact with so many companies, their level of information is something others don't have. I think that prepares them well for when they have to talk to Wall Street."

Among the things Cisco is likely to tell the Street is how the company continues to clean up on market share as the leading supplier with the deepest pockets in the industry. The ability to dish out sweet financing arrangements has reportedly taken food off the tables of rivals like Juniper ( JNPR), Extreme and Foundry.

"I think that could be a sustainable trend," says Lauria, referring to Cisco's ability to use its financial muscle against weaker competitors.

Still, don't count on any specific long-range visibility. "They'll be able to say something about the next three or four months out," says Wells Fargo's White. "Certainly nothing to jump up and down about, but at least they will say things are not deteriorating at this point."

Hey, selloff-weary bulls aren't likely to complain about the scraps of good news that fall their way.

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