- The Washington Times - Monday, October 16, 2000

OTG Software Inc. has been executing its business plan as promised, keeping its investors happy since it went public seven months ago.

The Bethesda company provides on-line storage management by enabling companies to store, track and retrieve data such as files or e-mails.

"As the Internet and e-commerce grow, there is going to be an increased storage management need," said Alan Adler, an analyst with Arlington-based Friedman, Billing, Ramsey. "And I think people are impressed with the company's ability to execute."

IDC, a Framingham, Mass.-based research firm, estimates that by 2003 the on-line storage industry will hit $14 billion a year. That's good news for OTG, because it's one of the leaders in the space, analysts say.

"OTG is seen as playing in a sweet spot where there aren't many competitors right now," said Mr. Adler, adding that the company's few competitors are also not as large as OTG.

Company officials declined to comment.

When OTG went public in March, it raised $95 million. It then had only its core product, DiskXtender, which allows companies to store and access data quicker and more efficiently than through normal backup systems.

OTG told investors it would release three other products by the end of the year, and it has.

First came Email Xtender, which provides fast access to stored e-mails and automatically stores incoming messages. It was released in April, after OTG bought a small local company that had a similar product.

Shortly after one of Japan's largest trading companies, Mitsui & Co., Ltd., made an undisclosed investment in OTG. The Tokyo company distributes the Japanese version of OTG's core product overseas.

In the summer OTG came out with OnlineStor.com a Web-based version of its storage programs. And it recently released SAN Xtender, a storage software that provides automated and centralized storage thought networks.

Some 7,000 organizations worldwide use OTG's software. Its latest clients include electronics giant JVC, German technology provider BDT, and Web-hosting company Information Manufacturing Corp.

"They've continued to sign up new customers as well as cross-sell their products to existing customers," Mr. Adler said. "And we are increasingly seeing their average deal size increase."

At the time of its IPO, shares of OTG were offered at $13. That same month the stock hit its 52-week high of $61.44.

After the market for IPOs cooled down in early April, shares of OTG fell along with the rest of Internet stocks. But the stock has gotten a steady boost as investors rewarded OTG for the timely execution of its business plan.

The company's shares closed at $39 on Nasdaq Friday.

In a recent report, analysts from Credit Suisse First Boston Corp. said OTG is on track to meet or beat financial estimatexs for its third quarter, which ended Sept. 30 but isn't yet publicly available. They rated the stock a buy.

OTG reported for its second quarter ended June 30 revenues jumped 73 percent to $9.6 million from $5.6 million for the same time last year. It had profits of $1.2 million (.04 cents per diluted share) compared to its loss of $934,000 (.06 cents) in its second quarter of 1999.

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