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Cisco's response has been added to this story.

SAN JOSE, Calif. (


) --


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current struggles present a buying opportunity to investors, according to analyst Brian White of Ticonderoga Securities, who predicts a rebound in the company's troubled switch business.

Cisco, which refreshed its flagship Catalyst 6500 switch this week, saw its overall switch sales slump 9% year-over-year in its recent

fiscal third-quarter results

, and faces big competition from rivals


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Cisco CEO John Chambers may get some good switching news in 2012.

With switch sales accounting for around 38% of the company's overall revenue, the weakness spooked Cisco investors, who have helped drive shares down more than 22% this year.

But good news lurks, said Ticonderoga's White, who rates the firm a buy.

If Cisco can "catch a break" from an improved switch market in 2012 -- while simultaneously reaping the benefits of its current restructuring efforts and new products -- White said that share growth will follow. "Expectations and sentiment around Cisco have never been lower, in our view," he added. "With the switch market in a funk this year and public spending falling by the wayside on government debt woes, we estimate 40-45% of Cisco's portfolio is exposed to markets that may not grow this year."

The analyst pointed out that it's the switch weakness that forced Cisco to embark on its current

restructuring efforts

, improve its cost structure and refocus its product portfolio.

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While CEO John Chambers refused to address the

recent Cisco layoff rumors

during his speech at this week's Cisco Live! customer event, he did seek to assure customers that his

restructuring will deliver results


"Look at how we have re-invented ourselves in terms of the new product areas," he said, alluding to the revamped, higher-capacity Catalyst 6500. "You will see us move more rapidly in switching."

Cisco describes the Catalyst 6500 as the most widely-deployed network switch on earth, touting a $42 billion installed base of almost 700,000 systems.

HP, however, didn't miss a chance to swipe at Cisco, citing information this week from tech research firm Dell'Oro Group as evidence that it is gaining share from its rival. According to a research report, HP gained 2.5 percentage points in layer 2 and layer 3 Ethernet switching revenue during the first quarter of 2011, while Cisco's share fell 5.8 points.

HP recently launched a

price offensive

in the switch market, which seems to be reaping dividends. Revenue from HP's enterprise servers, storage and networking division climbed 22% during the company's recent fiscal first-quarter results, with HP noting particular strength in its networking products.

Cisco, however, says that it is not worried by its rivals. "We're generally not losing customers to HP, or anyone else," explained a spokeswoman, in an email to


. Recent market share numbers, which are revenue based, she added, reflect a product transition that is underway.

In recent quarters, according to the spokeswoman, Cisco has sold more of its next-generation products, which lowered the average selling price (ASP) of its switches. "What is key to note is that our

networking port share has stayed more consistent," she explained.

Shares of Cisco closed down 3 cents, or 0.19%, at $15.57 on Wednesday. HP shares closed up 17 cents $35.44.

--Written by James Rogers in New York.

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