9/8/2009 -- Are things set to improve for Cisco Systems Inc. after its less-than-stellar Q2 performance? Possibly.

New research suggests that the enterprise routing space, arguably Cisco's bread-and-butter market segment, might have bottomed out. Router sales are still off relative to year-ago tallies, market watchers say, but they're nonetheless improved compared to where they were earlier this year.

Enterprise router sales as a whole were down almost 10 percent from the year-ago period, says market watcher Infonetics Research. This is in spite of the fact that Cisco and other vendors are arguably shipping more routers than ever, at least in certain segments. Low-end router shipments, for example, jumped by almost one-third; these gains were more than offset by a near-40 percent decline in low-end router revenues, the result of aggressive price-chopping by vendors.

Ditto, to a lesser extent, for high-end router shipments, which increased by 6 percent from the first quarter. Going forward, Infonetics says the enterprise routing high-end should continue to be a growth engine for Cisco and other vendors, thanks to rapidly rising traffic levels.

Cisco's routing unit was especially hard-hit by the economic situation. This is in spite of the fact that it both posted a Q2 profit and beat Wall Street's expectations. For the quarter, the networking giant posted an 11 percent decline (year over year) in enterprise router revenues -- even as competitors like Blue Coast, 3Com, OneAccess and Riverbed managed to post year-over-year gains in the same period.

"Commoditization and declining prices, erratic customer orders and a weak economic climate around the globe combined to keep enterprise router vendor revenue down overall in the second quarter, even as unit shipments increased in the high- and low-end segments," said Matthias Machowinski, directing analyst for enterprise voice and data at Infonetics research, in a statement. "While router sales in all regions are off significantly from a year ago, North America appears to be stabilizing, with sales flat from 1Q09, and down the least of all regions year-over-year." --Stephen Swoyer