Market mover: Cisco

If you put a graph of Cisco's performance since 11 September next to one for the overall Nasdaq market, you would notice very little difference.

Not only is the company weighted as one of the index's five biggest stocks, but as a network equipment-maker its trading patterns have become a useful proxy for most of the hi-tech sector. Cisco, like so many other giants of the new economy, has been hard-hit by the downturn in US spending, especially in spending by corporates.

The market entered last week expecting more dire news from John Chambers' mighty group, and it came; the group-wide first quarter loss was $268m (pounds 190m). But compared with analyst expectations, which had been driven into the deepest gloom by recent events, the news was great. For a start, the loss included a write-down of bubble- era investments. With those out of the way, the books should soon look healthier. Then the company said it had reduced expenses by $2bn annually, twice the forecast. But news that set investors' hearts racing was that Cisco's revenues had managed to beat forecasts, despite the slump in telecoms spending. The company has been quietly stealing market share, and Mr Chambers is predicting a better next quarter.

That was the first encouraging news the sector has had for at least six months, and the market perked up instantly. Cisco surged 5 per cent on the day, and continued to rise. The Nasdaq followed the trend closely, and rose for four straight days.

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