Updated from Aug. 8

Cisco

(CSCO) - Get Report

opened 13% higher Wednesday after CEO John Chambers guided toward stronger-than-expected revenue growth for fiscal 2007.

"We are gaining market share against nearly all our peers in the service provider segment," Chambers said on a postclose conference call. The rally partly reverses a sharp decline in Cisco shares since they hit $20 just ahead of the nation's July 4 holiday.

Early Wednesday, Cisco rose $2.23 to $19.53.

The San Jose, Calif., company made $1.54 billion, or 25 cents a share, for the quarter ended July 29. That includes 2 cents a share worth of stock-compensation expense and compares with the year-ago $1.54 billion, or 24 cents a share. On a pro forma basis, excluding certain costs, latest-quarter earnings were 30 cents a share.

Revenue rose to $7.98 billion in the latest quarter from $6.6 billion a year earlier. The acquisition of cable set-top box maker Scientific-Atlanta contributed $582 million to latest-quarter sales.

Analysts surveyed by Thomson Financial were looking for a 28-cent profit on sales of $7.92 billion.

On a postclose conference call, Chambers said he sees fiscal 2007 revenue growth of 15%-20% -- above the 15.5% Wall Street estimate.

Chambers says video technology strength from Scientific-Atlanta has changed Cisco's role to a "strategic business partner relationship." Cisco is helping cable and phone companies design their networks, he adds.

"I would personally parallel this progress with the IT market in the '90s," Chambers said.

Cisco pointed to 20% increase in sales reps as part of added strength during the latest quarter. The company has been hiring sales staff to help beef up orders among smaller businesses and developing markets.

Asked about concerns with other companies and stock option backdating, Cisco CFO Dennis Powell said: "We are comfortable with our accounting for stock options." Powell said Cisco did a thorough review of its employee stock option practices and found no changes in grant dates.

For the latest quarter, cash flows from operations were $2.3 billion, down from the year-ago $2.4 billion and flat with $2.3 billion for the third quarter.

Cisco repurchased 139 million shares of common stock at an average price of $20.35 per share, for a total of $2.8 billion.