For the second time in barely a week, Wall Street is feeling antsy about Cisco (CSCO) - Get Report.

One after another, the major communications equipment makers are admitting that their already poor sales trends have turned even worse. The latest setback in telco equipment land was

Nortel's

(NT)

warning late Wednesday that third-quarter revenue would fall 15% sequentially, rather than as much as 10% as previously forecast. Nortel and other big telco gear makers plunged Thursday.

Most unsettling to investors is that the Canadian gearmaker's latest prediction underlines the big phone companies' determination to spend less. And like

Lucent's

(LU)

dismal projection two weeks ago, the newest weakness stems from what once looked like the industry's lone remaining bright spot, wireless gear sales.

Its strong financial position and broader customer base have thus far been spared the brunt of the storm. But with shortfalls sweeping across the industry, investors are growing more willing to believe that Cisco too may soon fall ill. Cisco dropped 49 cents Thursday to $11.47.

Insulators

Bulls, and there are many of them despite the stock's long retreat, point out that only 20% to 25% of Cisco's revenue comes from telcos. That should insulate the company from the big telcos' increasing stinginess, they argue.

"I continue to believe that the overwhelming problem with these companies lies on the carrier side," says Justin McNichols, a money manager with San Francisco asset management firm Osborne Partners, which holds Cisco. "Capital spending is nearly nonexistent."

But capital spending isn't on the back burner only in telcoland, others point out. In fact, information technology spending remains weak in general, which McNichols says means the fundamentals and sentiment aren't running in his favor.

Moreover Cisco, which books more than three-quarters of its revenue from sales of computer networking gear to companies, has been less than upbeat about its outlook of late. CEO John Chambers told investors at a recent conference that his customers were finding it more difficult to predict the state of their businesses.

That sense of uncertainty has contributed to the growing pessimism among tech investors. The not-so-rosy pronouncements follow Cisco's fright-inspiring

annual report last week that showed backlog -- products ordered but not yet shipped or booked as revenue -- dropped 30% over the year ended Sept. 9.

And if recent patterns continue, Wall Street will be soon be abuzz with the quarterly speculation that Cisco will warn.

"We will get the rumor, which is always good for 50 cents," says McNichols, referring to trades that benefit from the attendant fall on the rumor and rise on the news that it was merely a rumor.

Bouncing

McNichols says he thinks Cisco will likely bounce along until the corporate earnings start to improve and spending freezes thaw. For now, McNichols says Cisco at $10 is a buy and at $18 it's a sell.

Analysts say with the company barely halfway through its quarter, it's too early to make any definitive predictions. And some add that Cisco's strong balance sheet, with hundreds of millions in deferred revenues, over a billion dollars' worth of order backlog and a $21 billion bankroll, make it hard to get too anxious about a near-term shortfall.

But as CIBC analyst Steve Kamman notes, last quarter was the first time Cisco linked its fortunes with that of the economy. Kamman, who rates the company a neutral, says he wouldn't be surprised if management tried to guide down investor expectations if it fails to see any immediate sign of economic recovery.

Cisco's slide Thursday shows that at least some investors aren't expecting good news on that front.