This time around the Cisco ( CSCO) rally just doesn't have the same legs.

The data-networking king posted modest gains Wednesday, in the wake of Tuesday's solid fourth-quarter financial results and modest growth projections. The upbeat-sounding message was enough to put Wall Street in a buying mood early -- but only briefly, as some observers quickly resumed wondering just how bullish the telecom equipment industry's ongoing Cisco squeeze really is.

Only a few years ago Cisco was one of the market's hottest stocks and one of Silicon Valley's fastest-growing companies. But the collapse in recent years of information technology spending has meant that even a big, well-bankrolled company can't give investors what they want right now: a plausible growth story.

"They did the best job they could in a pretty tough market," says CIBC World Markets analyst Steve Kamman, who rates the stock buy. "But their guidance for the next quarter is relatively flat, and the quarter after that is likely to be relatively flat. And if you think about 2003 IT spending budgets, service providers will probably be down and enterprise at best will be flat."

Stalling

Indeed, a market that's dying to receive a growth-is-back signal got none of that from Cisco Tuesday evening. Even as Wall Street firms racheted up their estimates on the network gearmaker, few laid out any odds that the company would start expanding the way it once did.

While Cisco is clearly having some success in using its size against competitors and in growing more efficient, with the stock trading at a premium multiple there's some question about how long a growth-hungry market will remain patient. Cisco, up 65 cents at $12.72, trades at 48 times trailing earnings and 35 times estimates.

"After a while you are beginning to discuss what spending is going to look like in 2004," adds Kamman. "That kind of sums up their growth outlook."

That's a lot of flat, which is probably much of the reason the market had a flattish tone to it Wednesday. Last quarter's conference call, in which Cisco's obligatory we-shall-overcome speech overshadowed the no-growth forecasting, spurred a huge marketwide rally that of course has since been more than erased. Give Wall Street a point for learning from its mistakes anyway.

Stalwart

Of course, soft growth is hardly the same as falling apart, which has become the norm of late in the tech and telecom businesses. As in recent quarters past, Cisco's strength played well against a backdrop of a weak industry. The company's ability to control costs and flex its market share muscle gives it the appearance of treading water gracefully, while rivals continue to circle the drain.

But with network gear spending still on the skids and customers lining up in bankruptcy court, optimism is in rare supply.

"There's nothing to penalize Cisco for in that, but likewise there's not much Cisco can do to change that," says Kamman.

You can't blame the company for trying. Cisco vowed to use more of its huge cash hoard to buy back stock. The company boosted its stock repurchase budget to $8 billion from $3 billion to send a "very clear message to support the stock," said CEO John Chambers on a call with analysts Tuesday.

While that may help make a floor for the stock price, it's not apparent that the actual sale of Net gear has as much stability. Analysts and investors question Cisco's ability to maintain its eye-popping 68% gross margins.

Analysts say competition from lower-end office network gearmakers like Huawei and Dell ( DELL) over the long term will bring down prices faster than Cisco can lower its own engineering costs.

But until then, you can expect Cisco to keep whistling past the junkyard.

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