Advanced Fibre Communications

(AFCI:Nasdaq) bears an edge in the "bandwidth" business, but so far the specialty hardware supplier has yet to become a household name among tech-stock enthusiasts.

Since the company went public on Sept. 30 at 25, its market cap has taken a rollercoaster ride. Shares surged to 45 in two days, then bounced as high as 61, and are now trading at about 55.

The company would like things to settle down, or up, so to speak. "We'd like to have a higher profile," says firm chairman and CEO Don Green.

To that end, Green, at a

Morgan Stanley

industry conference on Jan. 9, will try to answer the question that so far has befuddled investors: Will Advanced Fibre's mainstay "digital loop carrier" product compete with big rivals in the new year, or will it be pushed to the margin?

The company's success rests almost completely on its flagship UMC 1000 product, an oven-sized rack of electronic cards that acts as a "multiplexer" of lines. Simply put, that digital loop carrier enables telcos to handle more data or phone traffic with less infrastructure.

The UMC 1000 is compatible with every wire, which is key for business with the Baby Bells, whose networks resemble a patchwork of old copper and new high-capacity fiber optic cables.

The UMC 1000 also works with the most advanced data technologies.

"The exciting thing . . . is that it will be compatible with any type of protocol

ISDN, HDSL that the Baby Bells will deploy," says Joe Noel, analyst at

Hambrecht & Quist

, an investment firm that helped underwrite the initial public offering.

In addition, the multi-purpose device will help cable companies send phone calls over their systems, and help telcos deliver cable television. Those two industries are about to cross the lines and battle head-to-head.

"We feel somehat like a munitions maker in a time of war," Green says.

So far Advanced Fibre has burroughed into the low end of the market, peddling its UMC units to more than 350 small, rural carriers. But it is now starting to tackle the high end to compete with the likes of

Northern Telecom

(NT:NYSE).

It already sells to

GTE

(GTE:NYSE) and

Ameritech

(AIT:NYSE), and Green said the company expects to add

Pacific Telesis Group

(PAC:NYSE) and

BellSouth

(BLS:NYSE) to the list soon.

Seiscor Technologies

, a small, tightly-held unit of

Raytheon

(RTN:NYSE) makes a similar product for both large and small phone carriers. While the capacity of some Seiscor models is greater than Advanced Fibre's, the product description materials suggest that Siescor's devices are less flexible, in that they cannot work on certain wires and protocols. Dallas Searcy, vice president of sales and marketing for Seiscor, declined to explain the limitations or to state which customers Seiscor targets.

In the quarter ended Sept. 30, Advanced Fiber reported revenue of $35 million, up from $15.5 million from one year earlier. Net income rose to $3.2 million, or 10 cents per share, from $941,000, or 3 cents a share, one year earlier.

At its IPO, Advanced Fibre sold 4.5 million shares, or 15.4% of shares outstanding. Green attributes the stock's subsequent volatility to the tightness of the float, and says a secondary issuance of stock is "a possibility that we are considering." In addition to

Hambrecht & Quist

,

Morgan Stanley

,

Merrill Lynch

, and

Cowen & Co.

underwrote the IPO.

Green hinted that big product announcements are on the way early next year, though investors should not hold their breath for news at the Morgan Stanley conference. Meanwhile Advanced Fibre can sneak into the big market with its current product line.

By Kevin Petrie