Businesses are cutting back on their plans to beef up branch office networks and to upgrade their wiring closets, according to a report by the financial analysis firm UBS Investment Research.

While data center initiatives seem to be going strong, corporate spending on other infrastructure initiatives face cutbacks, says UBS in a report on Cisco's prospects for its third quarter. (Compare branch office routers.)  

"Our sources point out that certain data center projects have been relatively unaffected by economic slowdowns, however branch office initiatives and some wiring closet upgrades upgrades may see deployment push outs and a decrease in order activity," the report says.

Other areas where corporate customers will be hesitant include Wi-Fi, security and switching, UBS says. (Compare Wi-Fi products.) 

The firm says it has its own tracking system that indicates sales of networking gear will grow modestly over the second quarter.

Cisco's service provider business will be strong, the report predicts based on the success of carrier-grade routers and set-top boxes used by cable TV providers. UBS says it thinks Cisco gear for small and midsize businesses will sell well in the quarter, but the market for enterprise equipment both in the United States and Europe will be soft.

"Based on our checks we expect U.S. and European enterprise along with U.S. federal to remain challenged in the near term," UBS says.

The financial analysis firm says it thinks that expectations for Cisco to rake in $9.73 billion for the quarter are just about on target, but says that expectations for the next quarter may be optimistic. That projection calls for 6% growth over the current quarter.

"Given macro concerns and IT spend weakness due primarily to U.S. and European Enterprise [markets] we expect [Cisco] to guide slightly below consensus," the report says.