Editor's Note: This column first appeared in The Tech Edge , a proprietary newsletter, on Tuesday, June 17. For more information on The Tech Edge, click here .

Even the coolest market can feel downright temperate when you've got a hot product. Which is why investors are starting to warm up to Alcatel ( ALA).

Yes, spending in the telecommunications industry remains chilly at best, as shareholders in the network equipment stocks are well aware. But by offering the right product at a price that even the Baby Bells can't seem to say no to, Alcatel appears to be headed for a thaw as rivals continue to shiver.

Of course, the French company is dealing with the same problems as everyone else in tech, which is to say that it's in a weak position in dealing with its big customers. To that end, New York telco Verizon ( VZ) this month squeezed lower prices out of Alcatel in a big order for digital subscriber line gear. And now, bulls say, SBC ( SBC) is in a similar position as it takes its turn across the bargaining table.

DSL is about the only corner of the phone networking business in which equipment spending is increasing instead of decreasing. Apparently, the Baby Bells are getting serious about getting in on this so-called broadband bandwagon before it leaves the station altogether.

Alcatel has what the Bells want and is willing to sell it cheap enough to win the business. "They are an odds-on favorite to get the SBC business, too," says Sam Greenholtz with Telecom Pragmatics, a Westminster, Md., consulting and research shop.

Whatever Alcatel sacrificed on price, the company should be able to make up in volume, say observers. The gear in question is DSL line cards, the snap-in components that allow telcos to serve more fast-Net-access line customers from the same network box.

Alcatel happens to be the line-card leader at the very time when the Bells are close to finishing the biggest portion of their DSL network box installations. The next step is to add customers -- in other words, more line cards.

Shares of Alcatel were at a 52-week high of $10 Tuesday, marking a nearly fivefold increase from September. The company is still what some investors call a turnaround story, and trades at 0.7 times 2003 sales estimates.

By comparison, Lucent ( LU), which is pretty much in the same situation -- minus a hot product -- trades at nearly parity with this year's projected sales. And while it is easy to see Alcatel as a cheaper Lucent, this is still a very unforgiving market for gearmakers.

Alcatel will probably enjoy some Wall Street attention around the SBC contract, but once the glee fades, investors will once again start to question the value of a company with limited sales growth and little or no profits. But hey, enjoy spring while it lasts.