PC Quote entered into a letter of intent with New York-based Track Data(TRAC).
PC Quotes' non-Internet business provides trading firms and banks with stock quotes and analysis, which comes form 40 different exchanges over data lines, satellite feeds, or land lines.
The letter of intent includes the sale of up to 750,000 shares of Track Data common stock, which--based on Thursday's close of 1-3/4--gives the deal a value of $1.3 million. The agreement also calls for Track Data to make cash payments of up to 50 percent of pre-tax earnings for PC Quote's non-Internet-related business over three years.
PC Quote chairman Lou Morgan said that the growing business could pull in $10 million annually, based on March sales projected over a 12-month period.
"We are getting rid of a business that is running below critical mass?It's a growing business, but it doesn't cover the costs to produce," said Morgan. He added that the service recently lost a couple of large customers.
Track, however, may find this part of PC Quote's business profitable. It already operates a similar structure and could achieve economies of scale, Morgan said. And the deal could give a boost to PC Quote's finances.
PC Quote posted a widening loss in its most recent quarter. In the fourth quarter, the company reported a net loss of $2.2 million for period ended Dec.31, 1996, compared to a net income of $358,404 a year ago.
Revenues for the quarter were $4.1 million, compared to $ 3.6 million reported for the year-ago period.
The company attributed net losses for the fourth quarter to increased infrastructure expenses and Internet product start-up costs, as well as higher communications expenses and increased equipment leasing costs.
The sale is slated as the first of several strategic moves PC Quote will undertake to further emphasize its Internet-based business and return to profitability. Morgan could not comment on other moves in the making, but stressed that the company is heading in full-force into the online world.
The company recently announced four initiatives to ramp up its online services: a subscription service on its high-end service, PC Quote 6.0; two "market-smart" services that are available in both real time and delay which are both advertising supported; a free site that offers delayed quotes which is advertising supported; and a business-to-business services where PC Quote sells its content to other Web sites.
The fine details of the deal are still being negotiated and Morgan would not comment on how soon the deal could be finalized.
The company traded at its 52-week high last May when it reached 14-1/8, but has since skidded to as low as 1-1/2.