Just when you thought

Cisco Systems

(CSCO) - Get Report

was at the ground floor, some on Wall Street are warning that its elevator still has a few more floors to fall.

Halfway through Cisco's fiscal third quarter and we know the company is

seeing more of the same slow sales that it first encountered last quarter. But just how slow has been a matter of speculation. A research report released Monday by

UBS PaineWebber

estimates Cisco's sales to be down somewhere between 10% and 30% across most of its businesses already this quarter. (UBS rates Cisco a buy and has done no underwriting for the computer networking giant.)

That's quite a bit lower than the flat to 5% drop that

Cisco told investors to expect last month, when it reported its first earnings shortfall in three years and brought down its guidance for the year. Cisco declined to comment on the UBS report.

Cisco's shares have fallen 46% since the beginning of the year and a fat 69% in one year. But for investors who think all the bad news is priced into Cisco's stock, beware. Cisco's shares were up 75 cents, or 3.8%, to $20.69 in afternoon trading Monday.

The full impact of the pervasive equipment-spending slowdown is still rattling across the industry, and a recovery is far from sight.

Corning

(GLW) - Get Report

, for example,

cut its 2001 earnings forecast by 14% Monday, citing a longer than anticipated rebound in spending.

"The weak business environment over the next two quarters has not been fully appreciated by the market, as evidenced by the continuous estimate reductions," said a Boston-based money manager who has no position in Cisco but is short rival

Juniper

(JNPR) - Get Report

.

So how low can Cisco go?

"It is way too early to fish in Cisco, you can get it cheaper, certainly in the mid-teens," says the hedge fund manager. "At $15, the stock still trades at approximately 30 times 2001 earnings expectations, which are going lower."

Other Cisco observers say the company will probably take a large one-time charge to write down its

mountain of inventory, which rose to a staggering $2.5 billion last quarter. The Street could interpret the charge as Cisco getting the worst behind it and the beginning of a climb back upward.

But even that may be wishful thinking as spending remains soft and

nearly new gear from bankrupt networking upstarts continues to flood the market.

"I think the stock bottoms when the fundamentals bottom," said the hedge fund manager, "And that may not be until the summer."

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