Investors seeking comforting words from the big networking gearmakers this earnings season should settle in for a good long wait.

Sure, executives and analysts mostly say the worst of the tech recession is over, and some companies appear headed for strong quarters. Take Juniper ( JNPR), the Cisco ( CSCO) rival that on Friday closed its acquisition of Net security outfit Netscreen.

Still, no one seems firmly convinced that rollicking good times are ahead for the sector's rank-and-file. And Wall Street's prerecovery jitters haven't exactly been soothed by the events of recent weeks.

Investors surveying the sector will find deepening accounting investigations at Nortel ( NT) and Sonus ( SONS), along with a series of corruption-cleanup firings at Lucent ( LU). Perhaps worst of all, they'll take note of grumblings about light orders among Cisco suppliers.

Smoldering bookkeeping issues aside, common sense would suggest that the industry is close to getting back on its feet. CFOs, to a large degree, have stopped cutting costs dramatically, and once-embattled CTOs are having dreams of eventual expansion.

But so far, there has been no meaningful growth in hiring or information technology spending. And just as businesses have been a little slow in placing orders for gear, phone companies have also been lagging in putting together their spending plans.

The big telcos are running "a little later than usual" with their shopping lists, says Sam Greenholtz, an analyst with Telecom Pragmatics. "We'll see a big surge in bid requests later this summer, but right now they are still gathering info about what they want to do with the network and testing products to see what fits."

The crosswinds come as investors reconsider their early year love affair with this sector. Lucent and Nortel in particular ran up in January and February on hopes that phone company spending would explode, but the shares have since stumbled as confirming evidence has been slow to arrive. On Friday, Lucent slipped a penny to $4.21 and Nortel dropped 20 cents to $5.43.

Cast of Thousands

It promises to be a busy week, in any case. Lucent will offer the first look Tuesday as it kicks off the telecom earnings parade with its second-quarter financial report. The New Jersey phone gear peddler is likely to give a mixed report, showing more strength in its wireless infrastructure sales as its other businesses slacken.

Analysts are looking for a 2-cent-a-share profit on sales of $2.2 billion. Those numbers would be a virtual repeat of the company's prior quarter, ended in December, when it posted net income of 3 cents on the same revenue.

"I think they will beat expectations, but not exuberantly," says Duncan Stewart of Tera Capital, who holds Nortel shares. "Lucent isn't getting the contracts that they should be. No one seems to be losing to Lucent on head-to-head fights."

Juniper follows Wednesday with its first-quarter report. The stock is up 35% this year after the company beat its targets and raised expectations in January. Analysts are looking for net income of 8 cents a share on sales of $215 million. The company was on a hot streak until this spring's Netscreen buy cooled the shares, and a strong slate could win back Wall Street's favor.

Nation's Breadbox

The real puzzle for networking investors is Nortel, which reports April 29.

The Brampton, Ontario, phone equipment shop has pulled a shroud over its financials by calling for an internal audit that led to a restatement. That smooth move has led in turn to another pending restatement and a Securities and Exchange Commission investigation.

The book-mangling hasn't been good for the stock. After hitting a high of $8.37 in February on blowout fourth-quarter sales, Nortel shares have dropped 35% as investors ponder the risks of a full-blown accounting investigation.

"I'm looking for a breadbox disclosure," says money manager Stewart. "They should be able to tell us if it's bigger than a breadbox or smaller than a breadbox. We need to have some sense of the magnitude of the problem."

Analysts are looking for Nortel to post net income of 3 cents per share on $2.5 billion in sales. That compares to an 8-cent profit on sales of $2.8 billion in the previous quarter and a penny-a-share loss on $2.4 billion in sales a year ago.

But CIBC World Markets analyst Steve Kamman says now that the lawyers are calling the shots at Nortel, he's not expecting the company to be very forthcoming with financial information. Kamman has a neutral rating on Nortel, and CIBC has been an underwriter for Nortel.

"I think there's a risk that this could go on longer than people think," says Kamman.

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