An analyst's upgrade and the award of new employee share options helped to lift Cisco, the internet equipment manufacturer, ahead of its third-quarter earnings yesterday.

Shares in the company rose by as much as 5% to just over $20 (£14) yesterday amid indications that the company would also reprice options for its senior managers.

Tim Ghriskey, a fund manager of Dreyfus, said the change suggested that Cisco management believed that a price bottom had been reached.

Shares in the Silicon Valley-based company have fallen more than 70% in the past year from a 52-week high of $70.

The company's shares were helped yesterday when Christopher Stix, an analyst at Morgan Stanley, said the company would "outperform" the market as its business improved.

The company was still expected to report sharply lower earnings last night.

Several analysts said that hints about its future performance would be far more important that the historic numbers.

Mr Ghriskey said: "The key here is really what the outlook is. The guidance they give is all important. It will help what the tech sector does as a whole."

Last month, Cisco warned that its third-quarter results would be far below forecasts and that sales would decline for the first time in its history.

The company also announced plans to cut 8,500 jobs - or 17% of its workforce - and to write down $2.5bn of inventory.

With sales overseas as well as in the US being affected, Cisco said that turnover in the fourth quarter could fall as much as 10%.