SOTA A Leader in NT Financial Applications Software Message Board

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Technology Stocks : SOTA A Leader in NT Financial Applications Software

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To: Alan A. Hicks who wrote (5)	7/13/1997 12:02:00 PM
From: Alan A. Hicks	of 21

Yes, we have a breakout in SOTA. SOTA broke two important chart resistance levels today. SOTA broke its one year downtrend line dating back to last June. SOTA also broke through its 200-day moving average. Breaking through the 200-day average line is considered a long-term trend change according to classical technical chart analysis. Price support should now be at the break out point around $11 3/4 - $12 1/4 per share. There was no news to trigger the buying. There was steady buying all day finishing with a flurry of buying right at the close. The final bid finished at $13 1/8 even though the last trade was at 12 7/8. This suggests some market makers ended the day short stock with the others running for cover. It is also noteworthy that there is a significant short position in SOTA of 351,000 shares. Average daily volume is about 45,000 although the last several weeks has been twice that. SOTA's volume patterns suggest the stock has been under accumulation for several weeks. Actually, SOTA has been under accumulation for some time by one of the sharpest small cap money managers on Wall Street. The most recent proxy shows that Nevis Capital Management now owns over one million shares. They did not any a year ago. Nevis has gained a reputation for doing extremely thorough research and taking large positions for long-term investment. Some of their holdings such as Clear Channel Communications have gone up 35 times from their original position. It bodes well that Nevis has become the largest shareholder over the last 12 months. SOTA is a completely changed company from 18 months ago when its products were DOS based running on Novell LANs. CEO David Hanna has done a truly superb job of positioning the new products, and over the last 12 months, bringing in a very talented and highly motivated management team. With the recent strong video endorsement from Microsoft for Acuity, its success could really start picking up momentum. It should also provide them some leverage to go international more quickly. The last 18 months have been a transition period. With all the new products now out the comparisons going forward are going to look good. The next four quarters are expected to show 40 percent revenue growth. Margins should strengthen allowing earnings to grow over 100 percent this year and another 60 percent next year. With Wall Street still valuing SOTA as if it were still a DOS/Novell LAN software company, there is plenty of room for multiple expansion. A valuation similar to Great Plains (GPSI) would give SOTA a $40 value 18 months out. What Wall Street has yet to appreciate is that NT has created a whole new market segment that SOTA is extremely well positioned for. NT client/server for the mid-range will be many times larger than the traditional LAN market and it is a wide open market. I will keep on saying to anyone who will listen that NT/SQL Server applications software will become a hot investment theme over the next several years. Even the year 2000 plays into this market. Meta Group has estimated that over 80 percent of companies will want to upgrade their financail applications before the year 2000. Friday's share price move has the earmarks of a real breakout. Shareholders of SOTA should get ready for a good ride.

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