NEW YORK (CNN/Money) - Cisco Systems Inc. Wednesday reported sales and earnings for the latest quarter that topped most forecasts on Wall Street, and officials at the world's biggest maker of Internet gear said they see signs that business is picking up.

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The news sent Cisco shares on a tear in after-hours trading. The strong results could also fuel a tech rally Thursday as shares of Cisco competitors Ciena (CIEN: Research, Estimates), Nortel Networks (NT: Research, Estimates) and Juniper Networks (JNPR: Research, Estimates) all rose after hours.

The San Jose, Calif.-based company reported net income of $1.1 billion, or 15 cents a share, in its fiscal first quarter ended Oct. 25, up 76 percent from $618 million, or 8 cents a share, a year ago. Excluding certain one-time charges, Cisco's earnings came in at 17 cents a share, two pennies ahead of the consensus estimate of 15 cents a share, according to First Call.

Sales rose 5.3 percent to $5.1 billion, well ahead of expectations of $4.86 billion. This was the first time Cisco reported quarterly sales above $5 billion since the third quarter of fiscal 2001.

"We saw strength across our core switching and routing businesses, as well as traction in our advanced technologies. The service provider and public sector segments, in particular, continue to be solid markets for our products," Cisco CEO John Chambers said in a statement.

Shares of Cisco (CSCO: Research, Estimates) rallied more than 5.5 percent in after-hours trading, according to Island ECN. The stock, which is trading just slightly below its 52-week high, rose 1 percent in regular trading on Nasdaq Wednesday.

Cisco has typically surpassed Wall Street earnings estimates by a penny a share, but the first-quarter report was better than even the most optimistic Cisco bulls were predicting. That has raised hopes that corporate tech spending, which Cisco relies on for the majority of its sales, is really improving and that Cisco's own forecasts will head higher.

"Cisco certainly outdid the whisper numbers, so to speak," said Erik Suppiger, an analyst with Pacific Growth Equities. "It is pretty apparent that estimates will be getting raised going forward."

During a conference call Wednesday afternoon, Cisco Chief Financial Officer Dennis Powell said he expects sales in the second quarter to rise 1 percent to 3 percent from the first quarter, which implies a sales range of $5.15 billion to $5.25 billion for the quarter. The company did not provide an earnings target for the second quarter or sales guidance for the full year, however.

Current Wall Street forecasts for Cisco's fiscal second quarter call for sales of $5 billion and earnings of 16 cents a share. But Cisco's second quarter is historically stronger than its first.

Chambers said future earnings growth for Cisco will be driven more by sales improvements, as opposed to cost cutting, and gave a more upbeat outlook for Cisco and the economy than he has in earlier calls this year. About half of the customers he talks to now think that there is some wind at their backs for the first time in more than two years, he said.

"We are continuing to see a number of signs that could be interpreted with the appropriate caveats as optimistic," Chambers said.

But Chambers added that the other half still refer to the "show-me" economy. Chambers also used the term "fragile" several times to describe macroeconomic conditions.

In order to position itself for a recovery, Cisco has been boosting its presence in new areas such as storage, security and Internet voice-calling technology in a bid to lessen its reliance on routers and switches, which are starting to become commodities.

Sales of routers and switches accounted for 66 percent of total sales in the quarter while emerging technologies accounted for 14 percent.

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Another new area for Cisco is its Linksys division, which sells routers to consumers and small businesses. During the conference call, Powell said sales from Linksys, which Cisco bought in March, came in at $119 million in the first quarter.

But Powell added that Linksys, which is not as profitable as Cisco's other businesses, did cause some erosion to gross margin, a key measure of profitability, in the first quarter. Gross margins for the quarter were 68.7 percent, down from 69.3 percent a year ago. Powell said he expects gross margins of 67 percent to 69 percent in the second quarter.

Overall, Cisco had a solid quarter, said Oppenheimer analyst William Becklean. But he said that since hopes for a pickup in tech spending have been rising as of late, that has already been factored into the stock price. Shares of Cisco have soared 66 percent this year, and the stock now trades at 34 times fiscal 2004 earnings estimates.

And even though Chambers was more positive than he has been all year, the fact that Cisco did not give a full-year outlook is a bit of a concern. "There's still a lot of uncertainty," said Becklean. "Cisco had a good quarter but that doesn't mean that there will be another one out there like this one."