Selected excerpts from IDC’s recently filed 10-K:

“Our Active Trader Services segment targets active traders, individual investors and investment community professionals. We consider investors who typically make their own investment decisions, trade frequently and may earn a substantial portion of their income from trading to be active traders. [ed. How about those who lose a substantial portion of their income to trading?]

In the Active Trader Services segment, we have one business, eSignal, which was supplemented by the March 2006 acquisition of the net assets of Quote.com and certain other related assets.

Our eSignal business provides active traders, individual investors and investment community professionals with real-time financial market information and access to decision-support tools to assist in their analysis of securities traded on all major markets worldwide. eSignal also operates financial websites that provide investors with free financial information and news about global equities, options, futures and other securities. This business accounted for $88.4 million, or 12.8%, of our revenue in 2007. [ed. So the “Active Trader” segment is just a tiny (though very profitable) part of their business.]

On March 6, 2006, we acquired the net assets of Quote.com and certain other related assets from Lycos, Inc. These assets are managed as part of the eSignal business and include subscription-based active trader services, QCharts and LiveCharts, and the financial websites, Quote.com and RagingBull.com. The aggregate cash consideration paid for the net assets was $30,000,000 and was funded from the operating cash of the Company. In addition, the Company accrued acquisition costs of $350,000, consisting primarily of legal and accounting services. In connection with the acquisition, we recorded $22,530,000 of goodwill, which has been allocated to our Active Trader segment. Of that total amount, tax deductible goodwill resulting from the Quote.com acquisition is $22,500,000. As of December 31, 2007, all acquisition costs accrued have been paid. [ed. 75% of the purchase price to goodwill, is that unusual?]

eSignal subscribers receive access to decision-support tools including historical databases, technical charting, customizable analytics, back testing, portfolio tracking and news and commentary. As of the end of 2007, this business had 63,539 direct subscription terminals. [ed. $88.4 million divided by 63,539 subscribers is $1,391 a year or $115 a month… sounds about right. Be interesting to know how much their websites contribute to the $88.4 million — probably not a heck of a lot.]

eSignal’s information is delivered via a sophisticated network infrastructure with an advanced Internet protocol multicast backbone and multiple, geographically dispersed computer server farms. eSignal services include its financial websites, subscription services aimed at active traders, its eSignal-branded workstation and related market data platforms, and trading education services. [ed. “Multicast backbone” sounds impressive anyway!]

Each of the core Active Trader Services offerings, including online advertising on our financial websites, is marketed by sales and product support specialists within eSignal. These offerings are supported by eSignal through the conventional promotional campaigns discussed above as well as through third-party developer relationships which market eSignal’s Internet-delivered services to their customers. eSignal also invites third-party software developers to write trading system software that is compatible with eSignal’s systems and asks trading educators to consider use of eSignal services in their seminars. In addition to direct sales, distribution channel partners have been an important source of new subscribers in recent years.

Within the Active Trader Services segment of our business, eSignal competes against numerous competitors including CQG, Inc., DTN Market Access, Inc., Thomson Financial, TradeStation, Lehman Brothers via its 2006 acquisition of Townsend Analytics [ed. RealTick], and others. [ed. I’ve always considered CQG higher end… and what is the Thomson Financial product they’re talking about? Anyone have a guess?]

We believe that our other competitive advantages with respect to our Active Trader services include ease of use, compatibility with third-party software packages, and price.

eSignal’s growth has been driven by a combination of the expansion of its direct subscriber base and increased online advertising. Expansion of the eSignal business is partly dependent on the growth in online trading accounts managed by active traders. In addition, stock market volatility is another important trend that can influence active trader subscriptions. When the major stock markets are less volatile, active traders tend to trade less frequently and cancellations of eSignal’s services by active traders typically increase and new subscriptions slow. Other factors that may affect eSignal’s growth include the contribution of its redistribution partners who resell its data and analytics, and online advertising on its financial websites. [ed. By “less volatile” they mean “not going up.”]

We believe that eSignal’s future growth is dependent on a combination of expanding its direct subscriber base for real-time financial market information and decision-support tools, and attracting increased online advertising on eSignal’s financial websites. To address the evolving needs of active traders worldwide, eSignal continues to invest in adding new features to its various services, establishing strategic alliances, developing new offerings, and building traffic to and advertising on its financial websites.

Within the Active Trader Services segment, revenue grew by $6,376,000, or 7.8%, to $88,363,000 in 2007. Foreign exchange had a favorable impact on revenue of $590,000 in 2007. The Quote.com business, which was acquired in March 2006, contributed incremental revenue of $2,372,000 in 2007. [ed. So they paid $30,000,000 in cash for something that is contributing $2,372,000 in annual revenue — does that make sense? How does the “tax deductible goodwill” figure in here?] The increase in revenue within the Active Trader Services segment also reflects the deferral of revenue in the second quarter of 2006 associated with sales of software in multiple element arrangements which were subsequently recognized ratably over the term of the associated customer contracts. This is coupled with a higher number of core eSignal direct subscription terminals, which grew 2.9% to 63,539 in 2007, and higher average net subscription fees.” [ed. Be nice to see a ten year history of both their “direct subscription terminal” and “average net subscription fee” numbers.]