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Stock index to serve as barometer: information technologies industry eyes growth.


Information Technologies Industry Eyes Growth

EDITOR'S NOTE: We reported on the Utah Information Technologies Association (UITA) in the March 1991 issue. Beginning this issue, UITA will keep Utah Business readers informed about developments, issues, and people in Utah's information technologies industry in a regular, monthly column. This month, UITA president Peter R. Genereaux introduces the UITA stock index, which will appear in every issue of UB and feature an analysis by Jeff Cardon, senior research analyst and partner with Wasatch Advisors.

Move over Dow Jones. There's a new stock index making financial news: a quantitative indicator of the vitality of one of Utah's most important economic sectors.

It's called the Utah Information Technologies Association (UITA) stock index, a financial snapshot of how the 12 publicly-traded information technologies companies in the state are performing.

The index was conceived as an opportunity to make the financial and investment community--both inside and outside the state--aware of the role the computer and telecommunications-related industry plays in the financial health of Utah and its citizens.

The concept for the index came from the first meeting of the Association's committee chairs and is an outgrowth of UITA's mission: To develop and strengthen Utah's information technologies industry and association members by providing a forum for interested organizations and individuals to serve the industry, to network, to learn and to gain consensus for action.

One of Utah's more than 800 information technologies companies (and an early UITA member) is EQUIS International, a leading developer of investment analysis software for both professional and individual investors. UITA asked EQUIS to develop the method for gathering the quotes on Utah's publicly traded information technologies companies, to analyze and index the data, then to distribute the index to Utah's print, broadcast, and electronic news outlets. In addition, the UITA stock index would be distributed on a regular basis to trade publications outside the state and to key members of the financial and industry community nationwide.

To determine which Utah-headquartered information technologies companies were publicly traded, EQUIS Technical Support Manager John Slauson turned to Standard & Poor's in New York. Slauson determined that each company's stock must be regularly traded on the over-the-counter market or one of the major stock exchanges to be included in the UITA stock index. That narrowed the list to 12 companies. Those companies are:

* ALPNET--provider of computer-assisted translation services to multinational companies. * EFI Electronics--computer power-conditioning products. * Evans & Southerland--interactive computing systems for pilot training, general engineering, and scientific applications. * Globesat Holding Co.--image compression and telecommunications for domestic and international markets. * IOMEGA--high-capacity, high-performance, reusable, mass-storage products for desktop computers. * Larson-Davis Laboratories--computer software for information retrieval and measuring instruments for acoustics and vibration. * Novell--software that integrates desktop computers, servers, and microcomputer and mainframe hosts for information sharing. * Prime Telecommunications Corp.--long-distance telecommunications services. * TEL Electronics--microprocessor-based computer systems for the telecommunications industry. * Tenet Information Services--networked mini computer systems for hospitals. * Wasatch Education Systems--provider of networked education delivery software and curriculum. * Wicat Systems--computer-based education and training products for schools and industry.

To prevent any one of the included companies from dominating the index, a composite of the daily rate-of-exchange of the closing price of each stock was issued to make up the daily UITA stock index. It is calculated as follows:

1. On a daily basis, the percentage change in the stock price from the previous day is calculated for each of the companies. 2. The percentage changes are added up and divided by 12 (the number of companies calculated into the index) to obtain an average percent change for the day. 3. The result of step 2 plus 1.00 is multiplied by the previous day's index value to obtain the current day's index value.

Each month, a trend chart containing the UITA stock index will be published in Utah Business. The chart will also include, for the same period, a Standard & Poor's 500 index to show trends in all publicly traded U.S. companies, along with an index of national computer and telecommunications-related issues provided by Computer World magazine. Together, these three indices will provide UB readers with a graphic view of how our information technologies companies are performing relative to the industry and to the nation.

Every issue of Utah Business will feature an analysis by Jeff Cardon, senior research analyst and partner with Wasatch Advisors, a Salt Lake City-based investment management firm. Wasatch Advisors also operates Wasatch Advisor Funds, the only locally based family of mutual funds.

Base period for the index is 8/1/90, and the starting index value on that date was 100. Like the Dow Jones industrials index, the UITA stock index will be one number that will indicate the performance, over time, of a number of stocks. Unlike the Dow, the UITA stock index provides an excellent way for industry members and the Utah community to monitor this barometer of how our computer and telecommunications-related industry is performing.

PHOTO : The traditional summer slowdown in technology stocks negatively affected the Computerworld Index. By contrast, the UITA Index has done better. The UITA Index was aided by a rise in Novell, which advanced 33%. Novell's stock advance was fueled by their recent announcement of a 53% rise in earnings.

Peter R. Genereaux is president of UITA, the trade organization for Utah's computer and telecommunications-related industry.
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Title Annotation:Utah Information Technologies Association stock index
Author:Genereaux, Peter R.
Publication:Utah Business
Date:Oct 1, 1991
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