“Instead of each month looking and not knowing where the bottom is, they are for the first time getting something tangible underneath them,” he said yesterday in an interview. “No one is predicting an upturn yet, but you have to have stabilization or leveling out before you can have an upturn.”

Cisco, the worlds largest maker of networking equipment, is coping with a plunge in orders from corporate customers and phone companies. To adjust to lower demand, the company set out to cut at least $1 billion in costs by July — a goal Cisco is close to exceeding, Chambers said. That helped the companys third-quarter profit top analysts estimates yesterday.

Cisco, based in San Jose, California, rose 49 cents, or 2.5 percent, to $19.83 in late trading after the results were released. The shares, up 20 percent this year, closed at $19.61 yesterday on the Nasdaq Stock Market.

Third-quarter net income amounted to $1.35 billion, or 23 cents a share, compared with $1.77 billion, or 29 cents, a year earlier, the company said. Excluding costs such as stock compensation, profit was 30 cents. Analysts in a Bloomberg survey had estimated 25 cents on average.

How to Squeeze

The company has curbed hiring, reduced business trips and combined offices to cut costs.

“They know how to squeeze and not have it massively affect the organization,” said Sam Wilson, a San Francisco-based analyst for JMP Securities LLC. He expects the shares to perform better than the market.

Fourth-quarter sales will fall between 17 percent and 20 percent, Cisco said. That would be about $8.29 billion to $8.6 billion, compared with the $8.36 billion predicted by analysts.

Revenue fell 17 percent to $8.16 billion in the third quarter, which ended April 24, in line with analysts estimates. Sales in emerging markets fell more steeply, with a 22 percent drop. Still, large and small customers across all industries are now seeing sales bottom out, Chambers said.

“Things were in free fall in the past few quarters — now hes seeing some leveling,” said Jason Ader, an analyst with William Blair & Co. in Boston. “Investors are more glass-half- full in their sentiment, and are willing to look out a few quarters, into October and January, and the year-over-year comparisons will be a lot easier.”

TelePresence Sales

TelePresence uses giant plasma screens to transmit life- size images, creating the impression that two callers are sharing the same room. While the devices can cost hundreds of thousands of dollars to set up, they help companies cut travel expenses.

The U.S. economy shrank 6.1 percent in the first quarter, following a 6.3 percent drop in the previous period. Economists estimate that the nations unemployment rate was 8.9 percent in April, the highest level since 1983, according to a Bloomberg survey.

Investors view Cisco as a technology-industry bellwether because its the dominant seller of routers and switches, products that direct and control the flow of data. Large companies account for most sales of switches, which are used to run their corporate networks. Phone carriers and Internet- service providers mostly purchase routers.

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