SAN JOSE, Calif. (


) --


(HPQ) - Get HP Inc. (HPQ) Report

is turning up the heat on networking rival


(CSCO) - Get Cisco Systems, Inc. Report

in the cash-strapped public sector, according to the latest research from analyst firm Robert W. Baird.

A recent Baird survey of almost 100 Cisco resellers, who account for around 12% of the networker's annual sales, found that HP is gaining ground thanks to its

aggressive pricing strategy


HP is increasing the pressure on Cisco, according to analyst firm Robert W. Baird.

"HP Networking

is showing more progress," said Jayson Noland, an analyst at Robert W. Baird, in a note released Monday. "We saw incrementally more participants cite HP Networking as 'influencing deal terms' or 'winning' over Cisco."

The results run counter to recent comments from Cisco that it is

fending off HP in the U.S. market

and highlight the price tension in the public sector, which makes up around 20% of the beleaguered networker's business.

The survey found that a lot of HP's wins are in state and local government, a market that's particularly sensitive to price at the moment. With Washington struggling to resolve the U.S. debt crisis, a host of tech companies, including


(IBM) - Get International Business Machines (IBM) Report

, have

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cited weakness in public sector spending

. Last week, Cisco networking rival


(JNPR) - Get Juniper Networks, Inc. (JNPR) Report

warned of

reduced government spending

in the second half of the year, which could impact IT budgets.

Cisco saw its overall switch sales slump 9% year-over-year

in its recent third-quarter results

as the company wrestled with ongoing weakness in its public sector and consumer business.

In contrast, HP's enterprise servers, storage and networking division climbed 15% during its recent fiscal second quarter.

Cisco, which reports fiscal fourth-quarter results next week, is in the throes of a major restructuring, recently announcing plans to cut 16% of its workforce and making a slew of management changes as it attempts to get its business back on track.

Overall, Robert W. Baird expects that Cisco's fourth-quarter results will be "OK" but hardly dazzling, based on the feedback from resellers. "North America responses trended down into the fiscal fourth quarter while Europe, the Middle East and Africa trended up," explained Noland. Organizational changes planned for August, he added, have served as a distraction for Cisco.

Analysts surveyed by Thomson Reuters are looking for Cisco to report fourth-quarter revenue of $10.97 billion and earnings of 38 cents a share next week, compared to $10.8 billion and 43 cents a share in the prior year's quarter.

Shares of Cisco have plunged almost 22% this year as investors have responded negatively to the company's travails. Cisco's stock was down 21 cents, or 1.31%, to $15.76 on Monday.

--Written by James Rogers in New York.

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