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)	8/10/1997 2:32:00 PM
From: Alan A. Hicks	of 21

SOTA gave a good account of itself during the market sell-off Friday. There was some initial selling early on volume of about 10,000 shares when the DJIA was off over 100 points early. An additional 13,000 traded between 12 and 12 1/2 as the market rebounded. With the DJIA falling over 200 points mid-day, SOTA's bid dropped to 11 3/4 but only 200 shares traded there. At the close another 22,000 shares traded all hitting the ask to move it back to 12 3/4 at the close up 9/32 for the day. SOTA continues to exhibit steady accumulation into the hands of patient investors. As SOTA begins to hit on all cylinders in the fourth quarter, expect SOTA to trade more in line with other stocks in its group. A similar valuation to PSQL or GPSI (on revenues to capitalization) would put SOTA between $25 and $30 per share. The current quarter should show strong revenue growth of about 40 percent but earnings are expected to be limited ($0.09) by additional R&D spending on version 2.0 of Acuity to be released in September. This release will fill out a suite of modules for Acuity. In particular, the additional spending will integrate Proamic's project accounting software in a deal announced last month. The Proamics integration will move Acuity beyond being a product with appeal to early adopters of leading edge technology. Acuity 2.0 will offer complete solutions for a variety of service oriented companies. Proamics is the leading job accounting software. Proamics' market includes advertising, engineering, software development, entertainment, and financial services among others. Typical customers include Burston Marsteller (advertising), NBC (film production), and Xerox (software development). The Proamics deal is expected to be the first of many vertical market product integrations. On the last conference call Lockheed was also mentioned. A subsidiary of Lockheed has a substantial customer base for warehouse management software. Lockheed will integrate and sell their product with Acuity. Other deals mentioned included medical clinic software and hospital management software. What will become more apparent over time is that Acuity is positioned to offer the ease of integration into these third party vertical applications by vendors that want to be able to quickly offer a full NT/SQL Server solution. All the competitors' products were built with proprietary tools and thus cannot offer this ease of integration and the fast time to market that Acuity can with their standard Microsoft technology. So we should expect to see many more of these deals over the coming months. What is really significant is that each of these deals will bring with them substantial new market opportunities and also bring significantly larger new distribution channels than SOTA has with their current Acuity VAR channel. As these deals come onstream, Lookout 1998! This is not the company SOTA was two years ago!

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