Cisco Shares Rise After Better 2Q Sales Forecast

November 05, 12:30 PM ET

NEW YORK (AP) - Shares of Cisco Systems Inc. jumped Thursday after the world's largest networking gear maker forecast better-than-expected revenue for the current quarter, signaling that a recovery is under way for the technology sector.

Cisco expects revenue to grow 1 percent to 4 percent in the fiscal second quarter, which ends in January. This translates to sales of $9.2 billion to $9.5 billion. Analysts polled by Thomson Reuters are expecting sales of $8.97 billion.

Cisco urged caution, however, and said the pace of order improvement is still slow, with a lot of uncertainty about the economy.

Nonetheless, investors sent the San Jose, Calif., company's shares up 44 cents to $23.73 in late morning trading, rising as much as 3.3 percent earlier in the session on heavier-than-normal volume.

Jefferies & Co. analyst William Choi said Cisco is "clearly seeing an upturn in its business with orders and revenues returning to normal pattern." He kept a "Buy" rating on the company's shares. The company, he added, is seeing solid demand for new products.

Morgan Keegan analyst Simon M. Leopold also kept an "Outperform" rating on Cisco and said the company's recovery "sounds stronger than we imagined."

"With the earlier recovery, we think pent up demand, stimulus opportunities and emerging markets can return Cisco to double-digit growth in (2010)," the analyst wrote in a note to investors.

Kaufman Bros. analyst Shaw Wu called Cisco's guidance "constructive" and said the results are a good sign for the health of technology spending and for companies such as Hewlett-Packard Co., Apple Inc. and others.