In the six months since Pasadena-based EarthLink Network Inc. held its initial public offering, the Internet service provider’s share price has shot up, tumbled down, and clawed its way back to roughly where it began, at about $12.

But no one at EarthLink, including CEO Charles Betty, seems too worried by the volatility.

“Actually, I don’t think it’s terribly unusual,” Betty said. “I think our stock is undervalued, but that’s not our primary focus.”

Betty says he takes some consolation in the track records of other Internet-based companies, including online bookseller Amazon.com Inc., that have likewise gone public this year and seen their share prices bounce around.

But he says his real comfort lies in the business plan he and EarthLink founder Sky Dayton hammered out more than a year ago, and which is now being praised by analysts as an indicator of where the industry is headed.

“What’s happened in this industry is that too many companies have tried to be everything to everyone,” said Abhishek Gami, an analyst with Nesbitt Burns Securities Inc.

Some Internet service providers, also known as ISPs, have invested heavily to build up the “backbone” of their network the computers, switchers and related equipment that connect an ISP to customers and to the Internet. At the same time, Gami said, the companies have tried to market themselves directly to customers.

That can work if you’re an America On Line Inc. that can spend millions or billions annually to both gobble up market share and personally maintain a wide network. But for nearly everyone else, focusing on one end of the equation or the other is emerging as the norm.

EarthLink’s secret is that it learned that lesson earlier than most, Gami and others say.

From its start in 1994, EarthLink’s strategy has been based on the notion that the Internet is made up of three layers: the actual cables and wires owned by telephone companies on which data is transmitted, network companies that route and deliver packets of data across the wires, and application companies like EarthLink that provide the communications software customers use to access the Internet.

For the first two layers, EarthLink buys access from other providers, namely UUNet Technologies Inc. and PSINet Inc. They provide the majority of EarthLink’s 690 so-called “points of presence,” or places around the continent where users can connect to the Internet with a local telephone call.

Such contracting saves EarthLink the expense of reinventing the wheel, said analyst David Takata of Gruntal & Co., and protects it from costly changes in hardware technology.

It also frees up resources for EarthLink to market its Total Access software, and to provide customer support to its 325,000-strong customer base. (Total Access walks newcomers through the process of connecting to the Internet and establishes for them an EarthLink account.)

Indeed, the company has been on a marketing frenzy for the last two years, co-branding itself with everything from ESPN to the Wall Street Journal to United Airlines.

When Warner Bros. released its “Batman & Robin” movie last month, EarthLink software was bundled on thousands of promotional CD-ROMs distributed as part of the film’s marketing. Deals with Snap! Online Inc. and the Playstation division of Sony Computer Entertainment America Inc. will similarly see tens of millions of CD-ROMs distributed with EarthLink’s program onboard.

“EarthLink’s really exceptional in its marketing,” analyst Takata said.

Betty said the company has more than 500 deals with 200 different partners. With millions of CD-ROMs expected to be in circulation by year’s end, it will take only a small percentage to result in actual subscriptions for EarthLink to break the crucial 500,000-mark, Betty said.

At 500,000 subscribers, Betty and founder Dayton reckon, the company will start operating in the black.

And that’s when the stock market will likely sit up and take notice, Betty said. For while the company’s subscriber base has grown steadily over the years, and revenue has climbed ever higher, EarthLink’s bottom line has remained, throughout its history, in the red.

In the first quarter of 1997, EarthLink saw $15.7 million in revenues, a 360 percent jump from the same quarter a year before. Its net losses, however, were equally impressive, climbing from $4.9 million in the first quarter of 1996 to $8.4 million for the like period in 1997.

Breaking the 500,000 mark, which Betty expects to occur within the next nine months, will not only make the company cash flow-positive, but will make it a target for eventual takeover, believes investor Robert London.

London, a Santa Barbara-based investment banker, owns roughly 4 percent of EarthLink’s shares and said he expects that within a few years a Baby Bell or similarly sized company will attempt to purchase EarthLink.

“They (EarthLink) are doing well,” London said. “All they need is to reach a critical mass, maybe a million members. Then someone who wants access to the Internet market will come along (and buy them). They’re going to be big winners.”