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: S. A. Foster who wrote (7)	7/27/1997 12:09:00 PM
From: Alan A. Hicks	of 21

The IBM deal announced last week is another piece of good news for SOTA. Unfortunately the press release that SOTA put out never made it to Dow Jones news wire. (Dow Jones chooses what they will put on their news wire. Also technology companies often make sales alliances that do not amount to much.) But, I think this deal is more than just a recognition by IBM that MAS 90 is the market leader in the mid-range. SOTA does not have to rely on IBM sales force to make sales. IBM will provide leads to SOTA's VARs generated from IBM's three large telemarketing call centers. All leads that fall into the mid-range market will be referred to a local SOTA VAR where the customer is located. The VAR only has to sign up for the program and sell IBM hardware with that sale. IBM will provide financing not only for the hardware but also the software and all the VAR's service and implementation costs. Customers tend to buy more up front if it can be financed as a package. IBM is also planning a joint seminar series together with a marketing program that will use some sophisticated new data mining techniques that IBM has developed. VARs that have already been involved with IBM on other software products have said this program has worked very well providing good qualified leads for them. The program is part of a well thought out strategy by IBM that differentiates IBM from Dell, Compaq, Gateway etc that focuses on customer service. The problem for IBM in the mid-range market they can not easily service these relatively small accounts the way a local VAR can. With this program IBM expects to sell more hardware with a service focus in a way that the other hardware vendors can not. IBM wants to leverage their investment in call centers, advertising, and marketing to strengthen their position in the PC market. It makes sense for IBM and will strengthen SOTA's VAR channel. Meanwhile, SOTA shares have made a clear breakout from their 9 month downtrend, And, in classic fashion pulled back to its breakout point in the $11 3/4 to $12 1/4 range just above its 200 moving average. Volume patterns continue positive with higher volume on up days and lower volume on declining days. There apparently was a very sloppy seller on Thursday of about 10 to 15,000 shares which was thrown on the market without regard to what price they received. It traded down to $12 which quickly attracted new buying bringing it back to $13 1/4 on Friday. This tends to confirm the idea that $12 is the new support level. After some consolidation, a break above $14 should move the stock to the $15 -$16 level. Longer term, there are several positive underlying trends that have not been really recognized by the market. 1. The outlines of SOTA's vertical market strategy are just beginning to become visible which could make Acuity a huge success over the next year as vertical market partnerships are able to provide complete solutions based on Microsoft technology. 2. The year 2000 problem will impact the mid-range much more than most people realize over the next two years 3. SOTA is increasing its already aggressive new product and upgrade strategy 4. A new focus on services will provide 50% annual growth in service revenue over the next few years. 5. The VAR channel is in the heathiest position it has ever been and growing stronger relative to all of SOTA's competition. I will go into more detail on each one of these points over the coming weeks.

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