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At 9:04 PM -0400 10/12/00, Tom Chapa wrote:
>Since this is the omega list, I think it is not inappropriate at this time
>to ask the users of this list what they think the future of TS is going to
>be?
I think it is pretty clear what they think the future of TS is going
to be. Omega has told us. From some PR material dated April 20, 2000:
"The company plans to discontinue all marketing of its client software
products next month in preparation for the anticipated launch of
TradeStation.com."
Their recent 10Q report refers to the old products as "legacy client
software".
Their web site http://www.tradestation.com has only a sexy demo of
TradeStation Pro that says "Coming Soon". With Omega's record of
delivering a usable product on schedule, one wonders how soon
"Coming Soon" really will be.
Meanwhile, the merger with Online Trading has been delayed by the SEC:
"WASHINGTON -(Dow Jones)- Onlinetradinginc.com Corp.'s (LINE) pending
merger with Omega Research Inc. (OMGA) has been delayed because of the
Securities and Exchange Commission's review of a Form S-4 filed in
connection with the merger.
Onlinetradinginc.com said in its quarterly report filed Wednesday with
the SEC that the federal agency has advised Omega Research that it
disagrees with the timing of when Omega Research recognizes licensing
fee revenue from the sales of its legacy client software."
Their recent 10Q report shows them burning cash at a rapid rate, now
that they have stopped selling the old products:
"As of June 30, 2000, the Company had cash and cash equivalents of
approximately $4.0 million, with working capital of approximately
$15.1 million.
Cash provided by operating activities during the six months ended
June 30, 2000 totaled approximately $333,000, compared to cash used
in operating activities of approximately $839,000 in the comparable
period of 1999. The increase in net cash provided by operations in
2000 was primarily due to decreases in accounts receivable and
increases in accounts payable and accrued expenses offset by net
losses and increases in income tax assets during the six months
ended June 30, 2000."
The company has been planning on income tax refunds as a result of
net operating loss carryforwards:
"The Company recorded a benefit for income taxes of $4.3 million for
the six months ended June 30, 2000 as compared to a provision for
income taxes of $1.7 million for the comparable period of 1999,
computed using the effective annual income tax rate."
One wonders how the tax refunds might be affected by the SEC review
of revenue recognition.
The stock closed yesterday at a bit over $2 a share, a 21 month low.
The following was posted on a Yahoo message board on 10/2/00:
"While we're disappointed that this merger has taken an unexpectedly long
time to clear SEC approvals, the management of both companies remain
committed to the merger and are very positive on our prospects once the
merger is closed. Our last update on timing was in our 10Q where we stated
it was expected to close by the end of September.
We continue to anticipate that once our S4 is declared "effective" by the
SEC -- and the delays in this process are related to getting this final
approval from them -- the actual merging is expected to close ~20 days
later. We expect to announce promptly after the S4 is effective when the
actual merger will close.
Considering the many delays we've had thus far, we are hesitant to set any
new expectations until we have more information from the SEC. But given the
20 days it will take to go from being effective to closing, we won't be
closing this month.
On a positive note, the delay in merging hasn't impacted the two companies
working closely together toward the business model and supporting products
and technologies (including TradeStation) that we expect to implement
post-merger. If I can be of any further assistance, please feel free to
call.
-SMD
Sean M. Davis
VP, Investor & Media Relations
Omega Research, Inc. (Nasdaq: OMGA)
305-485-7005
The situation seems reminiscent of the "Osborne Effect" now taught in
most business schools. This refers to the time when Osborne Computer
announced it's new product far before they could ship it and when
customers stopped buying the old product, they went broke.
And one wonders why any company would want to switch from a business
model where they have a virtual monopoly to one where they have
thousands of well financed competitors. It should be interesting to
see how it develops.
Needless to say, we all hope that it all works out well and that we
will have a great new trading platform. But I suspect that there are
a lot of short fingernails in Miami nowadays...
Bob Fulks
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