“The numbers are indicating us being in the early, initial phase of a recovery — with the U.S. leading the way,” Chambers said in an interview yesterday, following the release of Ciscos fiscal first-quarter results. “The numbers for U.S. enterprise orders were dramatic, going from a minus 20 percent order rate a quarter ago to plus 10 percent. Thats beyond a tipping point.”

Sales will grow 1 percent to 4 percent in the second quarter from a year earlier, Cisco said yesterday. That equates to at least $9.18 billion, topping the $8.96 billion average estimate of analysts surveyed by Bloomberg. The rebound follows four straight quarters of declines.

After putting off orders during the recession, customers are resuming spending on networking gear to handle growing traffic. Cisco, the biggest maker of network equipment, also is benefiting from cost reductions over the past year, including a hiring freeze and travel cutbacks. As demand bounces back, Cisco is stepping up investments and acquisitions.

“Spending on data-networking gear is a tide that will lift all boats,” said John Krause, an Appleton, Wisconsin-based analyst for Thrivent Financial for Lutherans, which owned 4.4 million shares as of Sept. 30, according to Bloomberg data. “Were likely to see this improvement continue on into 2010.”

Shares Climb

Cisco, based in San Jose, California, rose as much as 4.6 percent to $24.35 in late trading after the results were released. The shares, up 43 percent this year, closed at $23.29 yesterday on the Nasdaq Stock Market.

In November 2007, Chambers reported a “dramatic” decline in sales to automobile and financial companies. The remarks triggered the biggest technology sell-off in more than four years and foreshadowed the recession.

Cisco has announced four acquisitions and a joint venture since Oct. 1, living up to a pledge by Chambers last month to get more aggressive in mergers and partnerships.

One of those deals, the acquisition of Tandberg ASA for about $3 billion, has yet to win shareholder support. A group of investors owning more than 24 percent of Tandbergs shares has pressed Cisco for a higher bid. By Norwegian law, 90 percent of a companys shareholders must approve the transaction.

Odds Are Very High

“The odds are very high we will find a way to make this work,” Chambers, 60, said in the interview. “Its in our interest and Tandbergs interest to do so. We think we paid a fair price, and we will play out the hand appropriately. If we cant get a fair price, weve walked from several deals already this year.”

The U.S. economy grew about 3.5 percent last quarter, re- emerging from the longest recession since World War II. As demand recovers, companies are stepping up investments in their networks. AT&T Inc., the largest U.S. phone company, expects to spend at least $5 billion on capital equipment in the final three months of 2009.

In September, Goldman Sachs Group Inc. forecast that worldwide spending on technology products will decline 8 percent this year. The industry will post 2 percent growth in 2010, Goldman Sachs estimated.

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