Shares of

Ancor Communications

, a small maker of electronic switching devices for transmitting and storing information, shot up nearly 60% in heavy trading Tuesday after the company signed a deal with

EMC

, one of the largest data storage companies.

Ancor

(ANCR)

rose 11 3/8 to 31 1/2 from 21 13/16 in midafternoon trading. (Ancor closed up 13 5/16, or 66%, at 33 3/8.)

Some analysts said the high-volume rally was partly fueled by short-sellers, who had bet the shares would fall but were forced to purchase shares on news of the EMC deal to limit their losses.

Short-sellers had targeted the company because, among other things, it is considered vulnerable to a larger rival,

Brocade Communications Systems

(BRCD)

.

Under the terms of the agreement, Ancor will provide its fiber channel switches for use in EMC's storage network that houses and protects electronic data for Fortune 100 companies. Financial terms were not disclosed.

"We are very pleased that EMC spent the energy and resources to qualify us," Ken Henderickson, chief executive officer, said in an interview. "We think this speaks volumes about the quality of our products." Henderickson said Ancor is also signing on a lot of channel partners like

Bell Microproducts

(BELM)

, and

Consan

, a

Gates/Arrow

company. "Look for some more announcements of new integrators and distributors and OEMs

original equipment manufacturers," he added.

The worldwide fiber channel hub and switch market shot up 227% to $236.4 million in 1999, according to industry research firm

IDC

. IDC said in a report that revenue in this market will increase at an 85% compound annual growth rate through to $2.7 billion by 2003. Rival Brocade is the dominant force in the industry with a 40% market share.

"We chose Ancor because our customers are looking for ways to connect departmental storage area networks into larger storage networks," a company spokesman for EMC said.

"Ancor's 16-port Connectrix switch is a more appropriate solution compared with the 32- and 64-port Connectrix."

The switch allows customers to consolidate information onto a centralized storage area, giving users the ability to share information between departments. "More and more people can benefit from having access to the same information within a company," the spokesman said.

Though the terms of the deal were not released, speculation across message boards were a soup of elation and skepticism.

One Ancor investor, called Medford, wrote on a message board: "The

company cares more about business, now & forever, not what our stock price is doing. Think long term here, as you have placed yourself in a very volatile stock. Company future looks real bright & I think this contract is substantial....we'll see."

An investor on

Yahoo!'s

message board, who goes by torfsg, said, "I can't blame people shorting this stock now. Fifty percent-plus in one day is just too much. That is one of the reasons why the markets have been acting so crazy the last two weeks."

Another Ancor investor by the name of ouchris_2000 shot back, "It's not a good idea to short something after big news. It could go up ten points tommorrow and then back down 15 the next day....who knows. ''

The Eden Prairie, Minn.-based company introduced its SANbox line of fiber channel switches in last November to facilitate the high-speed transfer of data over networks. These switches will be marketed by EMC as the Connectrix DS-16A fiber channel switches.

Earlier this month

Forbes ASAP

, a magazine that focuses on technology, named Ancor to its top 10 fastest-growing, best-managed technology companies.

Ancor's stock, however, has fallen more than 44% since the beginning of the year as investors were not enthusiastic about the company's lingering attention to the crowded ethernet market. Kenneth Hendrickson, Ancor's chief executive officer, rerouted the company into the faster-growing market for storage area network switches, a segment growing by 200% annually.

In January, the giant of the microprocessor industry, Intel, bought 280,000 shares of Ancor valued at $14.8 million to develop switches based on Infiniband architecture for faster microchips used in computers.