Well ... in the generic it's certainly true that rising inventories are a must in order to meet rising backlog and higher sequential seasonal demand .... IF that's what you have.
But order backlogs for Cisco FELL from $2.0 billion to $1.9 billion.
The rationale Cisco gave for rising inventories is that it's cutting its the length of its supply chain delivery time by that amount (5%), so the backlog remains proportional in equivalent terms -- i.e. no drop in end-demand.
Whether you buy that or not ... that's a judgment call.
I think the reaction here is severely overdone as much of telecom and telecom-related semis are getting whacked in pre-market (i.e. SSB came out and downgraded Cypress Semi - nice job penguin morons!!)
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