Nov. 17 (Bloomberg) -- Cisco Systems Inc., the biggest maker of networking equipment, had the largest decline in its share of the router market since the technology slump of 2001 as rivals added customers and the economic slowdown cut into sales.

Cisco's portion of the $3.2 billion market shrank to 61 percent in the third quarter, from 65 percent in the previous three months, according to Dell'Oro Group in Redwood City, California. Juniper Networks Inc. had 18 percent, up from 17 percent. Alcatel-Lucent SA's share widened to 7 percent from 6 percent.

Cisco lost ground after customers completed projects and rivals won orders for routers, which direct and manage traffic on the Internet and corporate networks. Juniper added Nippon Telegraph & Telephone Corp. as a customer in the quarter. AT&T Inc., a Cisco client, finished upgrading its long-distance network, curbing its need for new equipment.

Juniper also made gains with its two-year-old MX series of routers, which are designed to carry data for telecommunications companies, said Shin Umeda, a Dell'Oro analyst.

Huawei Technologies Co.'s share of the market increased to 6 percent from 5 percent in the previous three months, Dell'Oro said.

The total market shrank from $3.4 billion in the second quarter as the global recession forced customers to cut back spending. This month, San Jose, California-based Cisco predicted its first quarterly sales decline in five years.

Cisco might bolster revenue with a new router that sits on the edge of corporate and carrier networks, Umeda said. The ASR 9000, which has six times the capacity of rival products, will be available in the first quarter of 2009, Cisco said last week.

New routers ``will enable us to gain customers,'' said Jim Brady, a Cisco spokesman.

Cisco fell 41 cents to $16.21 at 4 p.m. in Nasdaq Stock Market trading. The shares have lost 40 percent this year. Juniper, based in Sunnyvale, California, lost 31 cents to $14.72 and has declined 56 percent in 2008.

To contact the reporter on this story: Vivek Shankar in San Francisco at vshankar3@bloomberg.net

Last Updated: November 17, 2008 16:31 EST