Checking Channels at Cisco

Investors are hoping a move into video will restart the stock.
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The great Cisco (CSCO) - Get Report debate is about to reach a quarterly crescendo.

The San Jose, Calif., tech giant is due to deliver its latest round of earnings after the market closes Tuesday. Bears who have seen the disappointing performances across tech in recent weeks, particularly among gear peers such as

Juniper

(JNPR) - Get Report

and

Lucent

(LU)

, are expecting similarly dreary results from Cisco.

But the optimists have found reason for hope. Bulls expect to learn after the close that Cisco booked solid numbers in its fiscal second quarter ended last month. More important, fans are waiting for a reasonably sunny outlook from the Internet gearmaker.

Of course, there's a third group that exited the debate about a year and a half ago, when the company's sales rut started holding the stock down in earnest.

"Cisco trades between $17 and $19, who cares," says one investor with no Cisco positions. "I've got names like

SanDisk

(SNDK)

that go from $20 to $80."

It seems even the most patient Cisco believers have had little to show for their loyalty.

The stock opened the year with a rally as tech investors appeared ready to return to some favorite stocks. But after hitting $19.40 briefly last month, the shares have dropped below $18.

There could be reward ahead for those hale types who are willing to look beyond Cisco's dormant core business of routers and switches, say some analysts.

Cisco signaled its dissatisfaction with the status quo in November with a $5.3 billion deal to buy cable TV gearmaker

Scientific-Atlanta

(SFA)

. And fans say Cisco is entering the video market at a pretty good time.

"Following the acquisition of Scientific-Atlanta, we believe Cisco should be able to participate in two new service provider-based growth cycles -- HDTV set-tops in the U.S. and IPTV in the U.S. and internationally -- both of which should lead to top-line upside," J.P. Morgan Chase analyst Ehud Gelblum writes in a research report. Gelblum has a buy rating on the stock.

But of course not everyone is as optimistic about Cisco's chances in this new market.

"The bulls presume that Cisco will come in strong as the leader in this business, but that's not going to be easy, and they are not without competition," says the Cisco skeptic.

As for the numbers, analysts expect Cisco to report adjusted earnings of 25 cents a share on sales of $6.62 billion in the fiscal second quarter. Looking ahead, Cisco is expected to improve the bottom line by a penny to 26 cents on $6.9 billion, or 4% sequential growth, for the third quarter.

Cisco shares fell 17 cents to close at $17.98 Monday.