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Cisco's New Box Earns It an Upgrade

Wedbush Morgan upgrades Cisco to buy on the strength of its new Internet Service Router



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has gained an analyst upgrade on the strength of a new product launch.

Back to its roots, Cisco has started selling a new version of its 5-year-old Internet Service Router, a core networking device used by nearly all big businesses to access the Internet.

"We view the ISR to be the anchor product of Cisco's enterprise networking business and the single largest margin contributor in the company," Wedbush Morgan analyst Matthew Robison wrote in a note Wednesday.

Robison also notes that Cisco, which he upgraded to buy, has been more aggressive lately -- presumably in pricing -- in an effort to gain lost market share in the so-called enterprise market. If true, the effects may be apparent when router rival

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reports earnings Thursday.

Corporate IT spending, which has been in a


even prior to the financial crisis, has not yet shown any signs of improvement. But Robison says Cisco will flex its market dominance and turn the ISR upgrade into a big win.

"Cisco is virtually uncontested in enterprise routing, so the ISR G2 transition offers good potential to offset the lower margin expansion initiatives in consumer, computing and switching," Robison wrote in his note.

Cisco is expected to report earnings Nov. 4.

Cisco shares were up 0.7% to $24.28 in Wednesday morning trading.