To those in the know, there's a big difference between a
. But when any new fad hits the markets -- be it piercing or the Year 2000 crisis -- it's difficult for the uninitiated to tell the players from the pretenders.
(SEEC:Nasdaq) presents investors with just such a conundrum. For if a company were to look like pure hype, it would look like Seec: a recently launched IPO, a small market capitalization, negative earnings, a misunderstood Year 2000 "fix" and a sub-$10 stock price. But despite those yellow flags, Year 2000 pros believe Seec has a real chance to capitalize on the millennium conundrum.
Two years ago, Year 2000 (or Y2K) issues were hardly on investors' maps. But last summer a general awareness hit the popular press that a massive date-related software failure might cripple computers of all shapes at the dawn of the new millennium. That's because most computers -- and older data files or "legacy systems" -- only counted years in a two-digit, or "YY," format, rather than a "YYYY" format. In a short time, that news ignited publicly traded Y2K stocks.
Experts like Stephanie Moore of
Giga Information Group
say that the biggest problems -- though certainly not the only problems -- will be for companies with massive
mainframes running ancient programs written in the COBOL programming language. Many of these systems are likely to mistake the year 2000 for the year 1900, or simply blow a gasket trying to figure out what day it is.
Seec, a Pittsburgh-based software company, has been fixing Y2K problems since 1988. But until 1995, its main biz was maintaining and updating aging COBOL programs. When Seec realized that its expertise would give it a leg up over other Y2K players, it released a set of COBOL analysis tools that focused on Y2K. These tools -- programs that scan the files of mainframes looking for problem two-digit dates -- are the life bread of highflying Y2K companies, such as
Micro Focus Group's
Maintenance Workbench. But industry rags like
Enterprise Systems Journal
gave Seec's COBOL Analyst 2000 3.1 rave reviews. The product has been heartily embraced by Seec clients like
Mack Trucks, WHX Corp.
Foremost Insurance Co.
there are an estimated 100 billion lines of COBOL computer code in use today. And with Y2K fixes running in the range of $1.40 to $1.50 per line, Seec couldn't have stumbled upon a hotter market.
That fleeting opportunity is what prompted Seec to pursue an IPO in January. "The bulk of the proceeds are going towards building, hiring and training sales reps, establishing offices in different parts of country and possibly overseas, and hiring support staff locally," says Richard Goldbach, Seec's chief financial officer.
The most exciting news, however, is an as-yet-unnamed product that handles both Y2K analysis
conversion. Best of all, this product works on PCs operating Windows 95 and Windows NT, so companies don't have to hire hard-to-find mainframe gurus to operate it. William Ulrich, president of the
Tactical Strategy Group
, a Y2K consulting firm, says this product could prove to be the best Y2K solution yet. "There are a lot of tools that find the code, but there just aren't a lot of tools that change code," he says. "This Seec product does both and it looks very, very good. It's easy to use, point and click on the PC, and I think it really goes much further than any of its competitors." Ulrich has recommended use of the beta version to a number of his clients (though he would not disclose their names).
Seec's founder and CEO, Ravi Koka, would not discuss the product, beyond predicting a July release. Noting that he was restricted from saying much because of the recent IPO date, Koka says, "I
say that we continue to develop products and we do have upgrades and improvements in the pipeline."
For the third quarter ended Dec. 31, Seec reported revenue of $713,324, up from $294,752 one year earlier. Its net loss shrunk to $45,340, or 2 cents per share, from $82,711, or 3 cents a share, one year earlier.
As yet, no analysts cover the company other than those from the underwriting banks,
H.C. Wainwright & Co.
, so Seec continues to fly below the radar of most of Wall Street. But when this new product hits the market, Y2K consultants believe Seec may be hard to ignore.
CFO Goldbach says the company will see revenue from the PC product in the "early part" of fiscal 1998 (which begins April 1). "Over the next year or two we expect 80% to 90% of our revenue to come from the Year 2000 business," he says. "Year 2000 isn't exactly a frenzy yet -- but it's coming."
By Cory Johnson