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Smith Barney Pumps Up AFC

Light Reading
News Analysis
Light Reading
4/8/2004
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Today Smith Barney Equity Research analyst Alex Henderson came up with a rah-rah note on Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI), saying its fiber-to-the-premises (FTTP) win at Verizon Communications Inc. (NYSE: VZ) has actually raised its profile as a company and helped it win more narrowband (POTS) business.

Henderson's morning research note says he sees plenty of upside for AFC, and he raised his price target for the stock to $30. It's a gutsy call, since the growth opportunity in FTTP is difficult to size up -- especially when it could actually replace AFC's older copper-based products.

Shares of AFC responded by climbing $0.17 (0.76%) to $22.59 in trading today.

AFC, at one time, suggested that FTTP might take away some DSL and POTS linecard wins. One of its marketing staff told Light Reading last year: "We might as well cannibalize ourselves rather than watch someone else do it.” (See AFC Comes Clean on FTTP .)

Henderson reckons that, while Verizon has an eye on the future with its FTTP plans, it is still running copper lines to a lot of new housing builds. Fortunately for AFC, its AccessMax digital loop carrier (DLC) platform can provide POTS and DSL connections now, and, when the time is right, an optical line terminal (OLT) card can be added for FTTP services.

Hence, Henderson writes that AFC is seeing a “significant uptick” in orders for narrowband blades from Verizon in the first quarter. And why not? The chassis are already in place for some kind of connection, so Verizon may as well use them.

But even if FTTP does seem a pipe dream, Henderson says there will be some revenues trickling in during AFC’s next quarter. “We now expect a couple hundred thousand in revenues in AFC's [first quarter] and between $2 million and $6 million in Q2,” he writes.

AFC will announce its first-quarter results on April 28. The consensus of analysts surveyed by First Call is that AFC will report revenues of about $96.6 million for the quarter.

— Phil Harvey, News Editor, Light Reading

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truelight
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truelight,
User Rank: Light Beer
12/5/2012 | 2:05:29 AM
re: Smith Barney Pumps Up AFC
The market clearly ignored this News from Smith Barney. Perhaps in recent months AFC has been overhyped and investors are now looking for tangible results not analasses pumping the stock ;-)

Real AFC orders and FTTP deployment with Verizon will boost the access market.

palaeozoic
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palaeozoic,
User Rank: Light Beer
12/5/2012 | 2:05:25 AM
re: Smith Barney Pumps Up AFC
With a PE over 72 the current stock price already reflects investor expectation of pretty steep VZ FTTP business. Getting that business will not make the stock go up; rather, they'll earn the price they already have. Failure to get the business, or failure to produce the revenue spike investors expect, will, however, push the price down.

Did bankers learn nothing in the 90s?
optical Mike
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optical Mike,
User Rank: Light Sabre
12/5/2012 | 2:05:15 AM
re: Smith Barney Pumps Up AFC
The last I herd was AFC didn't have a product suitable for lab evaluation much less deployment so Verizon called Alcatel to take another look at their pricing and prepare for a lab trial
optical Mike
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optical Mike,
User Rank: Light Sabre
12/5/2012 | 2:05:14 AM
re: Smith Barney Pumps Up AFC
See...
http://www.lightreading.com/do...
mrdid13
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mrdid13,
User Rank: Light Beer
12/5/2012 | 2:04:47 AM
re: Smith Barney Pumps Up AFC
Hey guys....the AFC platform isn't all that bad. They do indeed have a functional product. It works as advertized. They were a little late with a delivery to Verizon, but things have been on schedule. In general, there ADSL deliveries for Q1 '04 have exceeded expectations which is cool, and the impending release of their IGMP, gigE, and OC-48 are really very cool. The downside for some is that their video delivery system is RF to optical and kinda bogus considering the fact that most folk prefer switched digital video...but that's another story.

No...I am not an employee...I kinda just know some behind the scenes stuff. Keep watching...they do have a story and they do have a product.

I am a shareholder though and want wonderful things!!!!

MrDid

technonerd
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technonerd,
User Rank: Light Beer
12/5/2012 | 2:04:46 AM
re: Smith Barney Pumps Up AFC
Keep watching...they do have a story and they do have a product. I am a shareholder though and want wonderful things!!!!
Well gawwwwwwwwly Sergeant Carter, doesn't that just sound dandy?
truelight
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truelight,
User Rank: Light Beer
12/5/2012 | 2:04:37 AM
re: Smith Barney Pumps Up AFC
Rumour has it "old technology with dififcult software base". Difficult to please CEO with finger point executive management.
Big Red
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Big Red,
User Rank: Light Beer
12/5/2012 | 2:04:27 AM
re: Smith Barney Pumps Up AFC
MrDid,

This doesn't sound like you are referring to their FTTP solution. So, for other solutions with in Verizon you may be correct. But as far as the FTTP solution goes, you are way way off.

Red
bonnyman
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bonnyman,
User Rank: Light Beer
12/5/2012 | 2:04:24 AM
re: Smith Barney Pumps Up AFC
Optical Mike wrote:
"The last I herd was AFC didn't have a product suitable for lab evaluation much less deployment so Verizon called Alcatel to take another look at their pricing and prepare for a lab trial

Why not Optical Solutions? They've been in the FSAN PON space longer than any other players and probably have more of an installed base. Why don't I hear much about them and the Bells?

Is it their size? Is it something else? Thanks for any light you all can shed.
optical Mike
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optical Mike,
User Rank: Light Sabre
12/5/2012 | 2:04:18 AM
re: Smith Barney Pumps Up AFC
I've tried to answer this question myself, there is no logical reason for this being that Optical Solutions has been shipping BPON systems for a couple of years now and the FSAN GPON system is running in several sites and is presently being evaluated by Sprint in Kansas City. My personal belief is Verizon chose the company with the least possibility of being able to provide a system in a timely manner that way any delay in deployment can be blamed on the vendor.
P.S. Being an employee and stock holder of Optical Solutions Inc. my views maybe biased
http://www.opticalsolutions.co...
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