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I listened to the conference call regarding Omega's Q2 earnings report which
is available on their website til tomorrow. Omega has terminated all
marketing of Tradestation and other standalone products effective 5/30/2000
to concentrate on Ts.com and the merger with Onlinetrading.com. Management
says they will target the "active trader and professional" who, according to
their research and polls, trades some 20-25 times per month. It was clear
to me that they believe thier main revenue source will be commissions from
online trades not from subscriptions to Ts.com. Omega now defines itself as
an online brokerage with direct access intelligent order routing and not a
software developer; in other words a CyberCorp type venture but with the
addition of Ts.com analysis software.
I wonder if a significant percentage of traders really trade 20-25 times a
month. I sure don't on a regular basis. Hyperactive trading is obvioulsy
good for the broker but I dont see how it could be good for the trader on a
long term basis. I have a feeling that the novice day traders who get
sucked into this hype loose all their money in a year and then go back to a
real job. I also have a feeling that when filling out questionairs or polls
traders say they trade more than they really do. If Omega is wrong about
this, the business plan may be faulty.
The situation does not look good to me. Since existing standalone products
do not produce continuing revenue Omega cannot afford to support or upgrade
them under the new business model. Since Ts.com will be totally proprietary
with data stored on Omega servers where it is subject to change and can only
be delivered via internet connections which are not yet fully reliable, I am
not signing up anytime soon. Moreover I am not too pleased that the
thousands I have already paid Omega for Ts2,3,4 and Ts2k were apparently
invested in a dead end product. Finally Onlinetrading.com's current price
is 24.95 per trade. CyberCorp only charges 14.95 and has a slick system
that really works. Why would anybody want to pay more for trades just
because the trading product is integrated with the analysis software.
Omega is about to launch an advertising campaign to induce existing
Tradestation users to switch to Ts.com. What rate of conversion is likely.
Bill Wood
-----Original Message-----
From: Bob Fulks [mailto:bfulks@xxxxxxxxxxxx]
Sent: Tuesday, July 25, 2000 1:40 PM
To: omega-list@xxxxxxxxxx
Subject: Omega Research 2nd Quarter Losses 16 Cents A Share Versus 1
Cent
================================================================
Headline: Omega Research 2nd Quarter Losses 16 Cents A Share Versus 1 Cent
================================================================
Omega Research Inc. - Miami
2nd Quar June 30:
2000 1999
Revenue $5,357,407 $11,624,035
Net income (3,944,274) (181,706)
Shr earns
Net income (.16) (.01)
6 Months:
Revenue 13,757,982 22,059,419
Net income (6,905,600) 468,395
Shr earns
Net income (.28) .02
Figures in parentheses are losses.
Omega Research Inc. (OMGA) said losses for the recent quarter are the
result of a planned switch in business and revenue models and are likely
to continue for the next few quarters.
Omega Research, a business software company, has plans to become a
direct-access online brokerage. As part of the change, the company now
records revenue as services delivered, rather than recognizing revenue
at the time of sale.
-Russ Watkins; Dow Jones Newswires; 201-938-5388
(This story was originally published by Dow Jones Newswires)
Copyright (c) 2000 Dow Jones & Company, Inc.
All Rights Reserved
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