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Despite an impressive list of customers, actual revenues, and competitive products in both the storage networking and metro-access market, ADVA AG Optical Networking (Neuer Markt: ADV) still has some hurdles to overcome as it attempts to revive its sagging stock price.

Though public since 1999, the Munich-based company trades on the German Neuer Markt (New Market), which pretty much guarantees anonymity among most U.S. investors. Now trading in the range of 5 to 6 euros (US$4.25-5.10) per share -- down from a high of 145 ($123.50) last fall -- analysts say ADVA could offer some upside, if the company can conquer its current cash crunch and execute well in an increasingly competitive market segment.

ADVA, which builds DWDM (dense wavelength-division multiplexing) gear for high-end enterprise customers, storage-networking providers, and metro-area carriers, has competitors both big and small, including Nortel Networks Corp. (NYSE/Toronto: NT) and ONI Systems Inc. (Nasdaq: ONIS), as well as startup LuxN Inc.. Historically, ADVA has concentrated on enterprise customers and European service providers but is now looking to expand its North American operations.

Douglas Smith, telecom equipment analyst for Credit Suisse First Boston, rates ADVA as a "buy," though without a target price. But at around €5 a share, Smith says, ADVA isn't much of a risk.

"They're currently trading at less than two times [projected] 2001 sales, which is not a very expensive multiple," Smith says. "They're a little underfunded, which is a concern, but they do have a large number of customers and a number of interesting products for storage and metro, markets with good long-term fundamentals."

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