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Wall Street's Hoping for a Yawn from Cisco

In this Internet Age we’re living in, few companies are as clear a bellweather for the health of tech than Cisco. So all eyes are on tomorrow’s earnings call—hoping CEO John Chambers’ remarks appropriately reflect investors’ gloomy mood about tech spending, without darkening it too much further. Already, the stock has sunk to its 52-week low of $23. While most analysts seem to think Cisco will hit consensus estimates for this quarter, they’re expecting Chambers to say that revenue growth in the next few quarters will be towards the lower end of the 13%-to-16% range Cisco has promised, rather than the current April quarter consensus estimate of 15.5% growth. “I don’t think there’s much of an issue regarding the January quarter,” says Pacific Crest Securities analyst Tim Daubenspeck. “But he’s probably going to have to acknowledge [some weakness in tech spending]—not a trainwreck, just a slight downtick.”

By current standards, that’d be the rosy view. But one analyst, at least, wonders if Cisco is that good a guidepost for tech’s financial future. JMP analyst Sam Wilson notes that Chambers was one of the last tech execs to wax optimistic before the sickening slide when the Net Bubble burst in early 01. And he notes that just last August, two earnings calls ago, Chambers sounded as optimistic as he (or most other analysts I’ve spoken with) had heard him in years. “Unfortunately, I think [Chambers] may have marked the peak again.”