Dresdner Kleinwort Benson

downgraded

Cisco Systems

(CSCO) - Get Report

to add from buy, slashed its target price and cut earnings projections for the fiscal year just one day before the networking company is scheduled to report second-quarter earnings.

Cisco ended regular

Nasdaq

trading at $34.56, down 88 cents on the day, but rebounded slightly to $34.68 in after-hours

TST Recommends

Island

activity.

Dresdner didn't cut this quarter's earnings projection of 18 cents, but did lower the fiscal year earnings forecast to 73 cents from 77 cents a share. Thirty-two analysts polled by

First Call/Thomson Financial

are calling for the company to earn 19 cents in the second quarter. Wall Street expects the company to earn 77 cents for the year.

The firm lowered its target price to $48 from $61 a share, and also cut its 2002 earnings forecast to 93 cents from $1 a share.

"We expect revenue growth guidance to be significantly lowered during Cisco's fiscal Q2 earnings conference call," the firm wrote in a report. "We also expect provisions against bad debt to increase and inventory levels to show only modest improvement relative to Q1."

The firm said a large number of the company's customers are no longer in a position to contribute to Cisco's revenue in the future, which is likely to create a slowdown in revenue growth, lead to increased reserves against bad debt and cause margins to come down faster than in the past.