The economic recovery may have found its chief cheerleader. And he lives in Silicon Valley -- not Washington.

John Chambers, chief executive of computer networking giant Cisco Systems Inc., lauded the recovery in his statement accompanying the firm's fiscal second-quarter earnings report Wednesday.

"Our outstanding Q2 results exceeded our expectations and we believe they provide a clear indication that we are entering the second phase of the economic recovery,” Chambers said. “During the quarter we saw dramatic across the board acceleration and sequential improvement in our business in almost all areas."

Cisco’s worldwide sales of routers, switches and other networking equipment rose to $9.82 billion in the quarter ended Jan. 23, up 8% from a year earlier and well ahead of analysts’ mean estimate of $9.4 billion, according to Bloomberg News data.

The San Jose company also said it expected sales in the current quarter to rise as much as 26% from a year earlier, also exceeding Wall Street expectations.

Cisco said it earned $1.85 billion, or 32 cents a share, last quarter, up 23% from $1.5 billion, or 26 cents, a year earlier.

Using another measure of earnings that excludes stock option costs and certain other expenses, Cisco earned 40 cents a share in the quarter. Analysts had expected the company to post profit of 35 cents on that basis, according to Bloomberg data.

Cisco is benefiting as companies worldwide upgrade their computer networks to handle increasing amounts of data, including video. The company said it expected to hire 2,000 to 3,000 workers over the next several quarters to keep up with rising demand. Its global headcount currently is about 66,000.

The technology sector has been a particular bright spot in the latest batch of earnings reports, suggesting that capital spending -- a critical component of the recovery -- was picking up at a brisk pace.

Through Friday, 98% of the tech companies in the Standard & Poor’s 500 index that had reported quarterly results had beaten analysts’ estimates, and the sector’s results overall were 25% above estimates, according to Thomson Reuters. Historically, that’s a spectacular surprise factor.

Yet despite those results, investors have been in a mood to take profits after the surge in tech stocks last year. The average S&P 500 tech issue is down 6.1% year to date, compared with a 1.6% decline for the index overall.

Cisco’s shares edged up 5 cents to $23.07 in trading before the earnings report Wednesday, then jumped to $23.91 after hours. They’re still off from their recent 52-week high of $24.95 on Jan. 14.

The stock’s price-to-earnings ratio is about 17 based on analysts’ mean earnings estimate of $1.44 a share for the fiscal year ending in July.

-- Tom Petruno

Photo: Cisco CEO John Chambers. Credit: Alessandro Della Bella / European Pressphoto Agency

In a replay of late last week, investors are finding plenty of reasons to sell risky assets today and few reasons to buy.

U.S. stocks are getting hammered by disappointing employment data, fresh worries about Europe’s financial system and renewed selling in popular tech issues, including Apple and Qualcomm.

Although Wall Street often cheers the idea of legislative gridlock in Washington, that prospect -- which President Obama acknowledged in his State of the Union address Wednesday -- hasn't reenergized the bulls today.

The Dow Jones industrial average was down 101 points, or 1%, to 10,134 at about 10:35 a.m. PST, though it has pulled up from a loss of 180 points earlier. Tech is by far the market’s weakest sector.

The government’s report of a 0.9% rise in non-transportation durable goods orders in December was better than economists expected, but that was offset by a smaller-than-expected drop in new weekly claims for unemployment benefits.

Europe may be the bigger worry at the moment. Stocks were broadly lower there today amid more signs of contagion from Greece’s financial woes. Investors continued to demand sharply higher yields on Greek government bonds, even though the country successfully borrowed more than $11 billion early this week via five-year notes to give itself more breathing room.

The yield on two-year Greek government notes soared to 5.21% today from 5.02% on Wednesday and 4.70% on Monday, while the country’s prime minister again denied rumors that Greece would seek financial help from Germany and France to finance its surging budget deficit.

More troubling to investors was that yields also jumped today on government bonds of Portugal, Ireland and Spain, raising the risk of a spreading crisis.

Jitters about Europe hammered the euro, which fell to its lowest level since July against the dollar, at $1.397 versus $1.404 on Wednesday.

Finally, anyone hoping that Apple’s announcement of its new iPad tablet computer on Wednesday would reenergize the tech sector woke up to find Apple sinking with the rest of tech today. The shares were down $8.68, or 4.2%, to $199.20 at about 10:35 a.m. PST.

Cellphone chip-maker Qualcomm also is taking a big hit, off $6.71, or 14%, to $40.49, after warning late Wednesday that 2010 sales would be below previous expectations.

Of the 10 major industry sectors in the S&P 500, tech is the worst today, down 2.7%. Second-worst is the basic-materials sector, off 1.6%, as the rising dollar is pulling money out of commodities.

Year-to-date the tech sector is down 6.4%, versus a 2.5% loss for the S&P 500 overall.

-- Tom Petruno

My colleague Michael Hiltzik wasn't blown away by Apple's initial arguments for the iPad, but he did see the sleek tablet making trouble for Amazon's Kindle. Other journalists predict the iPad will kill the netbook market, or that it will somehow save newspapers and magazines. I'm more interested in its impact on the televisions, or rather, the amount of time people will devote to passive entertainment in their living rooms. I don't know whether the iPad will be a phenomenon or a flop, but I'm quite confident that there is an opportunity for new devices like it that map better to the interactive, on-demand era than 20th-century gadgets like TVs. That's because the shift from analog to digital (and from static to mobile) that is transforming all manner of media and information demands new devices too.

For more, read my Opinion L.A. blog post on the iPad's niche.

Photo: Justin Sullivan / Getty Images

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

Here's your whoppingly Wednesday roundup of consumer news from around the Web:

-- The Apple tablet ... oooooooooooh!

-- The federal government has banned texting by commercial drivers. Of course, some people will wonder why truckers and delivery guys would be boneheaded enough to send text messages while behind the wheel. But that's beside the point. The point is that it's now illegal. And we've all seen how well such prohibitions work with ordinary drivers ....

-- I guess we shouldn't be surprised, all things considered, but officials are warning of scams targeting families of Haitian quake survivors. The victims are contacted with an offer to cut through bureaucratic red tape in helping loved ones. All it will cost is $500. But the documents you receive are bogus, and there's no special flight to whisk family members to safety. Best advice: Always make sure you're dealing with an honest-to-goodness government agency. Accept no imitations.

-- David Lazarus

The FCC sent a fusillade of inquiry letters out Tuesday to the nation's four major wireless providers -- plus Google -- asking for an explanation of early termination fees. That's the industry practice of charging users hundreds of dollars for opting out of their cellphone contracts before they expire.

One of the questions was, in essence, what's the point of these fees?

"Press reports and public statements from wireless companies have attributed ETFs to several different factors," the FCC letters read.  "What is the rationale for your ETF(s)?"

For more on the story, including why Google was included in the inquiry, read the full post at our Technology blog.

-- David Sarno

Photo:  Google's Nexus One smartphone.  Photo credit: Simone Brunozzi / Flickr

Major automakers are readying a wave of plug-in hybrid and electric vehicles for consumers, but one local school district is already taking advantage of the technology.

The Ventura Unified School District unveiled a $200,000, state-of-the-art, plug-in hybrid electric school bus today, the first in Southern California. The bus will start hauling students this week and replaces a polluting, 1977 model.

The bus, built by the IC Bus division of Navistar, is powered by a lithium ion battery pack and is expected to improve fuel economy by up to 30% and reduce emissions by up to 40% over a conventional gasoline-powered school bus.

Michael Chiacos of the Community Environmental Council believes the bus will do even better, improving fuel economy by more than 60% compared to a traditional school bus.

"We are thrilled to be the first district in Southern California to have a plug-in hybrid bus," said Dr. Trudy T. Arriaga, superintendent of Ventura Unified School District. "The bus reflects our commitment to being a green school district as we ensure safe and healthy learning environments for our students. Ventura Unified School District is on the cutting edge of providing safe, healthy and environmentally sound transportation to our students."

The bus comes to the district through a nationwide initiative called the Plug-In Hybrid Electric School Bus Project. The Community Environmental Council, based in Santa Barbara, applied for funding through the federal Environmental Protection Agency and the Ventura County Air Pollution Control District.

“While school buses are first to the market, consumer plug-in hybrid cars will soon be available from many manufacturers,” said Chiacos, transportation specialist at the Community Environmental Council. “Plug-in hybrids and electric cars are the largest revolution in a century of vehicles. As electric motors are three times as efficient as gasoline motors, and can be powered by renewable electricity, plug-in cars will help us transition to a future free from dependence on imported fossil fuels.”

-- Jerry Hirsch
Twitter.com/LATimesJerry

Photo: The Ventura Unified School District's new plug-in hybrid bus. Credit: Ventura Unified School District

I like to pretend that the years I spent trying to be a rock star in the 1980s were the best times of my life, but in truth, the laughs were far outnumbered by the howls of frustration. My pal David Givens, a.k.a. Rapmaster D Luxx, spent more time trying to land gigs and attract a record deal than he did writing his cruelly underappreciated lyrics. And the expenses I rang up on equipment were more than two orders of magnitude larger than our royalties from LP sales. Had I spent that money on bonds, I think I'd have paid off my mortgage by now.

The situation for indie bands is easier in some ways today, given the profusion of inexpensive tools to record and distribute music, connect with fans and promote yourself online. But it's no easier to stand out in the (increasingly dense) crowd of wanna-be Radioheads and Taylor Swifts. Artists may not need a record label as desperately as before, but they still could use some help. That's the role Los Angeles-based Hello Music wants to play. The company, which made its official debut today at the Midem music conference in Cannes, considers itself an "opportunity engine for artists." To read more about its approach and its partners, click over to the Times' Technology blog.

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him on Twitter: @jcahealey

YouTube is about to show live, for the first time, a major sports event. But is that cricket?

Unfortunately, for sports fans in the U.S., it is.

The online video service, owned by Google, will be showing 60 cricket matches of an upcoming India Premier League tournament. 

Cricket is not exactly a big deal in the U.S. But even fans of the sport who reside here will not be able to watch the YouTube presentation -- it will be blocked from computers in this country.

For details, see the Tech Blog.  

-- David Colker

Photo: Cricket is coming to YouTube. Credit: India Premier League site.

Here's your flippingly Friday roundup of consumer news from around the Web:

--When the going gets tough, the tough order a Big Mac. McDonald's Corp. says its quarterly profit jumped 23% as consumers around the world turned to the fast-food giant for their happy meals. Mickey D's has performed consistently well throughout the recession, benefiting from people turning away from higher-priced restaurant fare and looking downmarket instead. Oh, and the nation is experiencing an obesity epidemic. Just a coincidence, probably.

--We all know that driving and cellphones don't mix. But what about a chat with a passenger in the car? Researchers at the University of Illinois say that even a simple in-the-car conversation can be hazardous to your health. "Whether driving an automobile interferes with the ability to process and remember language," the researchers concluded, the answer is "unequivocally affirmative." No word, though, on whether it's still cool to sing along with the radio, no matter how much our children might hate us for it.

--Hate hopping into a cold bed? Me too. But one British hotel has a solution: human bed warmers. A Holiday Inn in Kensington will send a staffer to your room to climb into bed for a few minutes and warm the sheets before your slumber time. A hotel spokesman likened the service to "having a giant hot water bottle in your bed." Another way of looking at it, of course, is having a stranger under your covers, which is a little weird. But who am I to question good old-fashioned British ingenuity?

-- David Lazarus

Wall Street’s slump today wiped out the last of the Dow Jones industrial average’s year-to-date gain -- and fueled fresh expectations that the market finally was on the verge of a significant decline.

And yes, you’ve heard the latter line before.

The 30-stock Dow ended down 213.27 points, or 2%, at 10,389.88, the biggest one-day drop since Oct. 30. The sell-off left the Dow off 0.4% for the year. As of Tuesday, the index had been up 2.8% for the year.

Some broader indexes are clinging to 2010 gains. The Standard & Poor’s 500, off 1.9% to 1,116.48 today, is up 0.1% for the year. The Russell 2,000 small-stock index still is up 0.5% for the year after losing 1.8% today.

The Dow was slammed by heavy losses in its big-bank shares, including JPMorgan Chase and Bank of America, after President Obama proposed limiting the size of the megabanks and restricting their ability to engage in securities trading for their own accounts. JPMorgan slid $2.86, or 6.6%, to $40.54; Bank of America fell $1.02, or 6.2%, to $15.47.

But most of the market’s biggest losers today were commodity-related stocks, apparently reacting to worries about China’s plans to restrain bank lending and slow its economy.

Of the 10 major stock sectors in the S&P 500, the commodities sector sank 4.3% for the day, compared with a 3% decline for the financial sector. All 10 sectors were down in active trading.

Caterpillar, the maker of earth-moving equipment and a favorite way to bet on China, fell 4.9% to $56.85. Its loss accounted for 22 Dow points.

Some traders said market players have had their finger on the sell trigger since stocks hit 15-month highs on Tuesday. Today, Obama and China provided convenient excuses to pull back. Some analysts also pointed to fourth-quarter corporate earnings reports that haven’t shown the significantly better-than-expected numbers the bulls had hoped for.

After the market closed, Google reported fourth-quarter sales that missed some estimates. The stock tumbled to $557 after hours after rising $2.57 to $582.98 in regular trading.

For the last 10 months, as stocks have rallied with only minor interruptions, even the bulls have warned that at some point a “correction” would hit -- meaning a drop of at least 10% in major indexes.

Is this finally it? The market’s two-day slide has pulled the Dow down 3.1% from Tuesday’s 15-month high. The S&P is off 2.9% and the Russell 2,000 is down 3.2%. If this is the correction, it’s still early.

Joe Saluzzi, veteran trader at Themis Trading in Chatham, N.J., said he believed that “the bulls still have control of the market. I think they’re going to try to buy the dip.”

Barry Ritholtz, head of market research firm FusionIQ in New York, also said he doubted that the market rally had peaked.

A pullback at this point “would likely create more pessimism and fear and then create one last leg up that would create the overconfidence associated with a top or a very long and protracted trading range,” he said.

They both think too many people are looking for a correction, and therefore that the market won’t give the crowd what it wants.

But it's also true that the crowd sometimes gets it right.

-- Tom Petruno

Photo: The New York Stock Exchange floor. Credit: Richard Drew / Associated Press