OMKT included in InformationWeek 100 stock index:
January 04, 1999, Issue: 715
Face-Lift For The Index
William Schaff
At the end of each year, we like to look at the InformationWeek 100 Stock Index and figure out what changes, if any, need to be made. The index-created on March 1, 1995, to provide an effective way to measure the health of the IT sector-includes a broad mix of high-tech companies from the software, hardware, networking, consulting, services, communications, and Internet sectors.
Unlike most technology indexes, the InformationWeek 100 doesn't include any biotechnology, medical, consumer electronics, or consumer software companies. Instead, it focuses on companies whose products and services help businesses cut costs, boost productivity, increase competitiveness, and create new products and services.
Most financial indexes are weighted according to company size, as measured by market capitalization (the share price times the number of shares). The problem is that when a handful of big companies move, they take the entire index with them. All companies in the InformationWeek 100 are equally weighted, so even if Microsoft, Intel, Lucent, and Dell go up, the index may go down.
The index is rebalanced after the close on the third Friday of December each year. On rebalancing day, I sit down with this magazine's editors and review which companies are still appropriate for the index. To be included initially, the company's equity market capitalization must be $250 million or more. The common shares must trade on a recognized national securities exchange. The company should be a leader in its industry subsector. Its share price must be above $10, and it must generate a majority of its revenue from IT products, services, or related enterprises for business customers.
If a company is acquired or merges with another company whose technology doesn't make up a substantial portion of its revenue and earnings, it's dropped from the index. We also remove companies when their equity market capitalization falls below $150 million, they get delisted from a national securities exchange, their share price falls below $5, they declare bankruptcy, or they are otherwise deemed unsuitable for inclusion.
When the index reappears next week, it will include the following changes:
- Advanced Micro Devices (AMD- NYSE), Intel's biggest competitor in the PC microprocessor market, will replace HBO & Co., which is being bought by McKesson.
- Amazon.com (AMZN-Nasdaq), a leading Internet brand name, will replace Netscape, which is being acquired by America Online.
- Aspect Development (ASDV-Nasdaq), a leading vendor of component and supplier-management applications, will replace Manugistics Group.
- Axent Technologies (AXNT-Nasdaq), which has become a leader in enterprise security through its acquisitions of Raptor Systems and AssureNet Pathways, will replace Versant Object Technologies.
- Bell Atlantic (BEL-NYSE) plans to merge with GTE, which would make it a dominant force in telecommunications services. It will replace GTE in the index.
- Inacom (ICO-NYSE), a growing network integrator and technology distributor, is acquiring Vanstar and will take Vanstar's place in the index.
- Open Market (OMKT-Nasdaq), an Internet-based E-commerce and content publishing software provider, will replace CyberCash.
- Platinum Software (PSQL-Nasdaq) recently acquired Data Works, making it one of the largest middle-market applications companies in the United States. It will replace Gartner Group.
- Saga Software (AGS-NYSE), formerly known as Software AG Americas, is a leading middleware solutions vendor. It will replace Vantive.
- Whittman Hart (WHIT-Nasdaq), a leading IT consulting and implementation services company that targets middle-market businesses, will replace Forte Software.
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