Looks like good news is on the horizon.
Advanced Fibre Communications
Dow Jones Newswires -- October 23, 1998
Advanced Fibre Gains For 2nd Day; Bell Contract Seen
By Shawn Young
NEW YORK (Dow Jones)--Shares of Advanced Fibre Communications Inc. (AFCI) rose for a second day Friday after the company said it is close to signing a major contract.
The Petaluma, Calif., telecommunications equipment maker said Thursday at a conference sponsored by Volpe Brown Whelan & Co. that it is near to signing a contract with one of the regional Bell companies. It didn't identify the Bell.
The contract could bring the company $100 million in revenue each year for three years, Volpe Brown analysts Timothy Savageuax and Frank LaPlaca said in a subsequent research note, in which they upgraded their investment rating on Advanced Fibre's stocl to buy from neutral.
News of the possible Bell contract lifted Advanced Fibre's shares 25% Thursday and another 7/16, or 5% to 9 3/16 earlier Friday in very heavy Nasdaq trading. The shares hit a 52-week high of 44 3/4 on April 20 and a 52-week low of 4 1/32 on Oct. 7.
A company spokeswoman confirmed that executives said a Bell contract is on the horizon. She declined to comment on the stock activity.
The Volpe Brown report said Advanced Fibre has done significant business with Ameritech Corp. (AIT) and also has "minor penetration" into BellSouth Corp. (BLS) and Pacific Bell, a unit of SBC Communications Inc. (SBC). A major contract with one of the Bells would help restore investor confidence in the company's competitive postion, the analysts said.
In addition, they said, the company's appearance at the firm's Internet and Communications conference included "a powerful and detailed presentation aimed at a range of corrective actions to address near-term operating challenges," the Volpe Brown analysts said.
On Oct. 13, Advanced Fibre reported third-quarter revenue of $66.5 million, down from $76.8 million a year ago. Net income fell to $2.15 million, or 3 cents a diluted share, from $10.8 million, or 14 cents in the year-ago period. The results fell short of the First Call Corp. consensus estimate of 4 cents.
-By Shawn Young; 201-938-5248
shawn.young@cor.dowjones.com
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