Thursday's disappointing reversal underscores the harshest reality in tech: Even Cisco (CSCO) - Get Report can't easily shake off a three-pronged attack.

Its staunchest critics readily concede that the San Jose, Calif., networking shop is one of the best-managed businesses in the industry. Yet in the wake of Wednesday's

soft second-quarter forecast, doubt has descended anew regarding Cisco's ability to triumph over a host of formidable foes -- including a weak economy, skittish IT spending and low-balling competitors -- all at once.

The landscape in the once-heady communications technology business has grown so marshy that Cisco's rose-tinted CEO, John Chambers, offered limited optimism on Wednesday's call. Yes, Chambers said, Cisco trimmed costs, boosted margins and gained market share. But no, he as much as said by omission, we will not be able to give Wall Street the growth stock it craves in the midst a two-year-long industry downturn, with no end in sight.

"I think they gave a reading of what's going on as clearly as it could be done," says Whitman Capital's Doug Whitman, a longtime Cisco bull. "The only thing that's not going right for them is the economy."

Chill Out

To that end, Chambers told analysts and investors on an earnings call Wednesday that he saw an increasing chill among buyers, many of whom are increasingly uncertain of their own prospects. Cisco said it expected sales could fall as much as 4% sequentially this quarter, historically the company's strongest quarter. Thursday, Cisco slid 61 cents to close at $12.35, pulling down sodden rivals such as

Nortel

and

Lucent

, which had ridden Cisco's coattails during the last month's stealth rally.

So as Cisco waits out the tech recession, analysts point to a few distant but troubling developments on the computer networker's home court.

While Cisco currently enjoys a market dominance in the sales of networking gear to corporate customers, a quality probably best reflected in its nearly 70% gross margins, the arrival of two new contenders --

Dell

(DELL) - Get Report

and China's

Huawei

-- won't allow Cisco to rest easy.

Dell's ability to get a foot in on the low end of a market and apply its now legendary efficiencies toward ascent is not lost on industry analysts. And Net hardware maker Huawei's ability to sell data equipment nearly identical to Cisco's for about 30% less has the communications gear industry buzzing.

Cisco wouldn't address Dell and Huawei specifically, but a spokeswoman said the company "has a healthy respect for competition" and suggested that it would help improve Cisco's effort to innovate and please customers.

I Love What You Do for Me!

But while Cisco can shrug off the challenge today, it may be harder to dismiss in a year or two, says CIBC World Markets analyst Steve Kamman, who has a neutral rating on the stock. Kamman likens Huawei's threat to Cisco today to

Toyota's

threat to the U.S. car market a few decades ago.

"I'm talking about the Toyota of 1975, not the Toyota of 1995," says Kamman. "In 1975, people laughed at Toyota."

Notably, Cisco has always deflected questions about pricing by stressing that it was not one of the top considerations among its customers. The company changed that tune Wednesday, saying it had cut the prices on nine products last quarter.

To many observers, that means one of two things: Either customers are getting even more price-conscious, or Cisco is hoping to win more market share in the absence of sales growth.

One thing's for sure: Unlike its floundering competitors, Cisco still has a few levers to pull.

"There's no question that they have phenomenal control over their business," says Kamman. "It's like you are in the car with a really good driver."

And given the uncertain road ahead, Cisco's driving skills will likely be challenged.

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