THE WEEK AHEAD: Cisco, Applied Materials on deck

Cisco Systems and Applied Materials will report earnings next week, giving investors at least one more week of good news to trade on before the Federal Reserve Board's meeting May 16.

Despite some less-than-stellar economic reports and the likely prospect of at least a one-quarter point interest-rate hike, technology stocks managed to hold their ground.

For the week the Dow Jones industrial average fell 156 points to 10,577.86 while the Nasdaq composite trimmed 44 points to 3,816.81.

Earlier this week, investors were disturbed by the Labor Department's report that productivity of U.S. workers rose at a smaller-than-expected pace in the first three months of this year while labor costs spiked higher.

Federal Reserve Chief Alan Greenspan did not offer any clues on the central bank's intentions in his speech to a Chicago banking conference Thursday.

"We didn't see a jump in compensation, which would have validated last week's ECI report, said Mike Cloherty, senior market economist at Credit Suisse First Boston. "So given that, we saw a slight amount of pressure. But Greenspan didn't use his speech as an opportunity to signal any faster rate hikes."

Regardless, most analysts believe the market has already factored in a half-point increase, making anything less a bonus.

On the ugly side, Novell (Nasdaq: NOVL) took a beating this week after warning that it would fall woefully short of analysts' estimates this quarter.

Company officials blamed competition from Microsoft's Windows 2000 as well as Linux-based operating system software for the shortfall.

Looking ahead to next week, perhaps the brightest technology stock of the past 10 years will capture investors' attention when Cisco Systems (Nasdaq: CSCO) reports its third-quarter earnings.

First Call Corp. consensus expects Cisco to earn 13 cents a share in the quarter, though most people could easily see 14 cents a share this time around.

"Going forward, the valuation will probably remain on the high end unless they give us something to revise estimates higher," said Martin Pyykkonen, an analyst at CIBC World Markets. "Right now, it's a question of how much competitive distance they can put between themselves and Lucent and Nortel."

Pykkonen sees sales in the neighborhood of $4.68 billion and earnings-per-share of 13 cents.

Last quarter, Cisco easily topped Street estimates, earning $906 million, or 25 cents a share, on sales of $4.35 billion.

Thirty-two of the 33 analysts following the stock rate it either a "buy" or "strong buy."

Applied Materials (Nasdaq: AMAT) will report its second-quarter earnings next week.

First Call Corp. consensus expects it to earn 55 cents a share.

Earlier this quarter, company officials said it would check in with sales in excess of $2 billion as worldwide semiconductor demand continues to grow.

Last quarter, Applied topped Street estimates, earning $328 million, or 40 cents a share, on sales of $1.67 billion.

The stock split 2-for-1 in March.