Best Canadian business blogs ... and mine

Just wanted to thank Andrew Willis of The Globe & Mail for including this blog as one of his five picks for Canada's best business blogs. Most of my favourite blogs aren't even on the list -- I think the Wellington Financial blog is the only other one I often read (also a Willis pick) and many of the others are ones I've never heard of. I'll have to take a look to see what I'm missing.

There's a poll where readers can choose their favourites among the ones nominated by the Globe's writers. I don't imagine too many Globe readers will be voting for a site that focuses on Waterloo tech news -- and I doubt that I can clear my cookies fast enough or log on to enough proxy servers to have much impact. :-) But it was nice to be mentioned when so many deserving others weren't.

UPDATE: Now that I read things more carefully, it says "finance and investment" blogs -- which mine isn't. That explains the e-mail I got from someone wanting to interview me about my investment philosophy (That would make a gripping story: "Um, well, actually I don't invest in any of the companies I write about.")

Ontario's innovation agenda shows progress

The Ontario government released its innovation agenda last week -- outlining directions and priorities for achieving a "high and sustainable level of prosperity" for residents of the province. For the most part, these kind of documents are views from 50,000 feet and aren't particularly contentious -- not many people are going to oppose easier access to capital, building business skills, and streamlined government processes, for example.

But I was pleased to see that there's been a lot of progress made over the last couple of years. I wrote a blog post in December 2005 taking issue with the language of government "commercialization" policy at that time, and all of my key complaints were addressed in last week's document.

It shows an awareness of the primary role of markets and products -- something almost unheard of in 2005. There's no mention of "receptor capacity" or any of the other artifacts of innovation theories generated by wonks and academics that had little connection to what actually happens in business. It even recognizes graduates as a part of "knowledge transfer" from universities -- it's by far the most important part, and the government doesn't quite go so far as to say that, but it's good to see them acknowledge that universities contribute much more than intellectual property to the province's innovation system.

At the very least, the rhetoric coming from the government has improved significantly over the last two or three years. That may not sound like much, but I see it as big step.

Having said that, I'm still opposed to the government's proposal to offer income tax exemptions to companies commercializing university-created IP -- but not to other companies commercializing innovation. This may be the final relic of old school innovation theories -- that innovation is something that primarily happens in universities and labs and that university-generated innovation should be given special treatment over other innovations, regardless of the potential economic impact that each offers.

Great ideas with the potential for significant economic benefits to the province can come from anywhere. With any luck, it won't take another two or three years to overthrow the view that innovations generated outside universities and labs are less deserving of support.

Waterloo Tech Digest - May 6, 2008

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

1. Well.ca receives funding
2. Sandvine sales cut in half
3. Arise to raise $45M through share offering
4. Virtek ends the year in the black
5. RDM still forecasting big end to 2008 after weak Q2
6. Dalsa sets sales record, looks for digital cinema partner
7. Open Text piles up the cash
8. STOCK REPORT: Another rough month for Sandvine shares
9. Miscellaneous tidbits from RapidMind, Tungle, AideRSS, ParkVu, LiveHive, MKS, CTT, eSolutions, RIM, Maplesoft

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

IT SEARCH AND PLACEMENT SERVICES
Procom is currently ranked as the 4th largest IT professional services firm in Canada. (Branham 300, Financial Post, April 2007). Recently awarded one of Canada's 50 Best Managed Companies, Procom is a proud, Canadian-owned, privately-held company. Our local KW office provides IT, development and technology personnel on either a contract or permanent basis. We are the largest provider of IT staffing and recruiting services in Canada. Phone: 519.885.4331

RISK FREE LEAD GENERATION
From sales opportunity development to increasing attendance for events, Virtual Causeway accelerates your sales process! With a focus on selling and marketing complex services and technology, we guarantee a consistent and reliable flow of quality leads - assuring that your pipeline is constantly full. Contact us today to learn how we can help connect you with your next customer. Call 519-886-1600 ext. 405 or email marketing@v-causeway.com for details.

BERESKIN & PARR - INTELLECTUAL PROPERTY LAW
Bereskin & Parr is a leading Canadian intellectual property law firm on your doorstep. Our Waterloo region office brings a wealth of experience to serve the growing high technology and manufacturing communities in Canada's Technology Triangle and surrounding areas. Bereskin & Parr's practice encompasses all areas of intellectual property from patents to trade marks and related litigation. Please contact us at 519-783-3210, Tim Sinnott (tsinnott@bereskinparr.com) for more information.

ENHANCE YOUR COMPETITIVE ADVANTAGE
INO can deliver competitive advantage to fuel company growth. As described in this video, INO's optical recognition technology helped Optosecurity raise $20 million in financing and create a world-class team. You'll find further information on INO's optical recognition technology here. Please contact Glenn Smith in Waterloo at 519-502-1305 to explore how INO might deliver competitive advantage to your organization.

ARE YOU CONSISTENTLY MAKING YOUR NUMBERS?
The painful truth: Research proves that 50% of salespeople will always be underachievers. The costs inflicted by sub-par sales performers are huge and vastly underestimated by most companies. For information you can use to build winning sales teams, download our free whitepaper. Peak Sales Recruiting focuses on finding top performing salespeople for technology companies.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Well.ca receives funding
April 17, 2008

Well.ca, already Canada's largest online retailer for non-prescription drug store products, has received funding from Jim Estill and Toronto's Maple Leaf Angels. The size of the round was not disclosed.

The deal was several months in the making and is the first external funding for Well. Joining the company's board of directors is Colin Webster, CFO of Toronto's First Coverage and the founder 10 years ago of an online marketplace for used computers that evolved into the e-commerce firm Truition.

[2]---------------------------------------------------------------
Sandvine sales cut in half
April 9, 2008

Sandvine announced the full results for its quarter ended February 29 (Q1 08), following its warning a month earlier that the numbers would be well below expectations (see previous digest). The company lost $7.0 million on sales of $8.3 million, with revenue plummeting 52% from the previous quarter and 46% from last year.

"Customer A" -- historically Sandvine's largest customer and the one commonly believed to be Comcast, although Sandvine has never said so -- was only good for $2.0 million in revenue in the quarter, down from $9.7 million last year and an average of $9.1 million per quarter over the previous four quarters. Sales to Comcast pushed Sandvine to a market value close to a billion dollars last year, but Comcast really hasn't done the company any favours over the last few months. It could have come out and said "Yes, we use Sandvine technology, here's why, and here's the service improvements we provide with Sandvine that we couldn't do otherwise." But, instead, it went into denials and then decided to play word games instead of being forthright, while avoiding any acknowledgment of Sandvine as a supplier.

And if Sandvine's financial results weren't disappointing enough, there was Kevin Martin -- not the curler, but the chairman of the FCC -- telling the U.S. Senate Commerce Committee in April that "Comcast appears to have utilized Internet equipment from Sandvine or something similar that is widely known to be a relatively inexpensive, blunt means to reduce peer-to-peer traffic by blocking certain traffic completely. In contrast, more modern equipment can be finely tuned to slow traffic to certain speeds based on various levels of congestion." Ouch. Comcast let Sandvine take the hit and just said that it would be switching to a new technology by the end of the year.

In Q1, sales to North America accounted for 86.5% of Sandvine revenue. Sales to Europe, Middle East & Africa (EMEA), which has been growing quickly in recent quarters, fell to $570,000 or 6.9% of revenue. Sandvine also disclosed that it has been approved for up to $625,000 in non-repayable Canadian government assistance, with $126,000 received in Q1. The company ended the quarter with $106.6 million in cash and securities, with operations using $5.1 million in cash in the quarter.

Sandvine's information circular for its AGM showed that sales SVP Angelo Compagnoni was again the company's highest paid officer in fiscal 2007, with salary and bonuses of $715,635, more than double the amount paid to any other executive.

Sandvine also announced that Atria CEO Steve McCartney has joined its board of directors.

[3]---------------------------------------------------------------
Arise to raise $45M through share offering
May 5, 2008

Arise is raising $45.1 million through a bought-deal share offering of 20.5 million shares at $2.20 each. As part of the offering, company founder Ian MacLellan is selling an additional 500,000 shares from his own holdings and will receive gross proceeds of $1.1 million. MacLellan currently holds 5.6 million Arise shares. Underwriters are led by Canaccord Adams and Clarus Securities.

The final amounts will almost certainly be higher, as the underwriters have a 15% overallotment option, which would bump the total amount raised to over $50 million. The offering is expected to close around May 20.

Arise announced that it will supply Germany's Aleo Solar with 90 megawatts of PV cells over a five year period. Arise's new German facility began manufacturing PV cells in April.

[4]---------------------------------------------------------------
Virtek ends the year in the black
April 15, 2008

A profitable end to a rough year for Virtek, which reported earnings of $1.3 million on sales of $13.2 million in the quarter ended January 31 (Q4 08). Sales were down 12% from the previous quarter and 15% from last year, but income from operations of $1.0 million was a $2 million improvement from Q3 and just slightly below the number a year ago.

Imaging and templating sales were up sharply from the previous quarter, while sales fell in Virtek's other business segment, marking and engraving. Operations generated $1.3 million in cash and Virtek ended the year with $7.3 million in cash.

For the year, the company reported earnings of $2.2 million (all coming from discontinued operations) on sales of $53.3 million. Sales were down 10% from fiscal 2007.

Under new CEO Stephen Sirocky, the company is again emphasizing margin improvements and profitability growth over sales growth ... which is exactly the message former CEO Bob Sandness gave when he took the reins. According to Virtek's AGM circular, Sandness was entitled to 18 months' salary ($390,000) following termination without cause. He was replaced as CEO in December. Sandness was also paid $30,000 for consulting services through the transition period.

Virtek also announced that Randy Fowlie will be added to its board of directors at the AGM in June. Fowlie spent eight years with Inscriber and its successors and is also a director of Open Text. He succeeds company co-founder Mohamed Kamel, who is leaving Virtek's board and becoming chair of the company's new technology advisory group. Brian Harrison will take over as chairman from Bob Nally, who will remain on the board. Harrison has been a Virtek director since 2006.

[5]---------------------------------------------------------------
RDM still forecasting big end to 2008 after weak Q2
May 2, 2008

It was another disappointing quarter for RDM in the period ended March 31 (Q2 08), but once again the company is forecasting huge year-over-year sales gains through the rest of the year.

Three months ago, the company forecast 10-15% annual sales growth and said it was a conservative estimate. But, following Q2, RDM now expects annual sales to be flat compared to 2007 -- cutting $3.5-5 million from its sales forecast for 2008. Still, just to achieve flat sales, RDM will need to record 40% year-over-year growth over the final two quarters of the fiscal year.

In Q2, RDM lost $269,000 on sales of $6.8 million. Sales were down 4% from the previous quarter and 13% from last year. At the halfway mark of the fiscal year, sales are running nearly 30% below last year, so even a flat year would be an achievement at this point.

RDM still has lots of cash -- $17.8 million -- with operations providing $460,000 in cash in the quarter.

[6]---------------------------------------------------------------
Dalsa sets sales record, looks for digital cinema partner
April 30, 2008

Dalsa got its new fiscal year off to a good start, with earnings of $3.8 million on sales of $54.6 million. It was the biggest top line in company history, with sales up 15% from the previous quarter and 21% from last year.

Dalsa's digital imaging and semiconductor businesses both showed strong quarter-over-quarter growth, and together they contributed $5.7 million of profits. The drag on earnings, again, was the digital cinema business, which reported a loss of $1.9 million, up slightly from both the previous quarter and last year. Digital cinema revenue was just $399,000, with most of that coming from sources other than Dalsa's digital movie camera.

After the end of the quarter, the company decided to look for "strategic partnership opportunities" for its digital cinema business. Dalsa is looking for a company with strong ties to the film industry that is prepared to make a significant financial investment. It has hired an investment bank to assist with identifying potential partners.

Operations generated $6.7 million in cash and Dalsa spent $2.0 million on property and equipment. It ended the quarter with $13.5 million in cash and securities.

[7]---------------------------------------------------------------
Open Text piles up the cash
April 29, 2008

Another big cash-generating quarter for Open Text, which reported earnings of US$7.3 million on sales of US$178.8 million in the period ended March 31 (Q3 08). Sales were down 2% from Q2 but up 15% from last year.

Revenue continued to be split almost evenly between Europe and North America. There were three licensing deals of $1 million or more and another four in the $500,000 to $1 million range.

Operations provided US$49.8 million in cash to the company, and -- because it reports in U.S. dollars -- its holding in non-U.S. cash provided added another US$9.9 million in exchange gains, leaving Open Text with US$215.8 million in cash at the end of the quarter, up US$56.1 million from the end of Q2.

[8]---------------------------------------------------------------
STOCK REPORT: Another rough month for Sandvine shares
April 2008

Even after issuing a warning about its quarterly results a month in advance, Sandvine shares still took another beating in April, finishing at the bottom of our list for the third straight month and the fourth time in the last five months. It still has a market capitalization of just under $200 million -- slightly less than Descartes, which overtook Sandvine in the market cap rankings in April. Sandvine shares are down 64% over the first four months of 2008 and 79% over the last seven months.

Virtek shares only went up seven cents in April, but that was good enough for a 19% gain, making them the top performer for the month.

For the month of April:

Virtek [TSX: VRK] +19%
Arise [TSX: APV] +17%
ATS [TSX: ATA] +15%
Open Text [TSX: OTC] +15%
Biorem [TSXV: BRM] +13%
RDM [TSX: RC] +9%
Descartes [TSX: DSG] +7%
RIM [TSX: RIM] +6%
--S&P TSX COMPOSITE INDEX +4%
Dalsa [TSX: DSA] +3%
===============================
MKS [TSX: MKX] -2%
--S&P TSX VENTURE INDEX -2%
TurboSonic [OTCBB: TSTA] -3%
Com Dev [TSX: CDV] -5%
Sandvine [TSX: SVC] -21%

Open Text ended the month with a $2 billion value. RIM's market cap jumped to $76 billion.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +32%
Google [Nasdaq: GOOG] +30%
Ansys [Nasdaq: ANSS] +17%
Sybase [NYSE: SY] +12%
NCR [NYSE: NCR] +8%
Oracle [Nasdaq: ORCL] +7%
Adobe [Nasdaq: ADBE] +5%
===================================
Blue Coat [Nasdaq: BCSI] -4%
Agfa-Gevaert [Brussels: AGFA] -5%
McAfee [NYSE: MFE] -7%

[9]---------------------------------------------------------------
Miscellaneous Tidbits

• RapidMind was named "start-up company with the best innovation" at the 2008 Premier's Catalyst Awards. The award comes with a $200,000 cash prize from the provincial government.
  
  
• Tungle has launched its first product: a free Outlook plugin that lets users share calendar information and coordinate meetings across organizations.
  
  
• AideRSS's PostRank technology has been integrated into NewsGator's online RSS reader.
  
  
• Jeff Fedor and Terry Goertz, both formerly with AideRSS and, before that, Primal Fusion, have founded a new company: ParkVu. Fedor previously founded Covarity and Ardesic.
  
  
• Well.ca, Tungle, and AideRSS were among the startup companies at the "Tech Expo" component of the 2008 Tech Leadership Conference at Bingemans. Other exhibitors were Aeryon Labs, Client Outlook, FOSS Factory, Ghoti Studios, LoyaltyMatch, Semacode, Something On, Smartpatterns, and T-Ray Science.
  
  
• LiveHive worked with the Toronto Raptors to create a interactive online trivia/predictions/polling site during the Raptors' brief run in the NBA playoffs. The Raptors are owned by Maple Leaf Sports & Entertainment Ltd., which had used LiveHive's NanoGaming technology earlier this year with the Leafs. The NBA's Philadelphia 76ers had worked with LiveHive in March.
  
  
• After 16 years at MKS, Ellyn Winters-Robinson has left to become a principal of Ignition Design and Redline Promotions. She had been MKS' marketing VP for several years.
  
  
• John Tennant will be stepping down as CEO of Canada's Technology Triangle, the region's economic development organization. He has led CTT since 2002.
  
  
• Also changing organizations is Todd Letts, who is resigning as president of the chamber of commerce to join the management team at eSolutions Group, led by Karen Mayfield.
  
  
• UW computer science professor Alex Lopez-Ortiz has been hired as chief scientist by San Francisco's Discovery Engine Corp. It is developing a "next-generation" search engine, expected to be in public beta later this year.
  
  
• New Dundee's Andrew Sloss, a UW systems design engineering grad, was named "country manager" of eBay Canada and will oversee all eBay Canada operations. He had been in the role on an interim basis since September.
  
  
• BlackBerry placed 51st in the third annual BrandZ ranking of the world's "most powerful brands." It had a year-over-year "brand value change" of 390%, which blew away every other brand in the top 100 (Apple was second at 123%). Surprisingly, Canada's top brand -- according to this list -- is Royal Bank of Canada, which ranked 34th -- ahead of Mercedes, Honda and Dell. RBC and BlackBerry were both placed ahead of Amazon, Yahoo! and eBay.
  
  
• RIM has launched a BlackBerry certification program for IT service providers.
  
  
• Maplesoft, the former Waterloo Maple, celebrated the 20th anniversary of its incorporation in April.

Showing off our startups at TLC 2008

About 400 people are expected to attend the 2008 Technology Leadership Conference this Thursday at Bingemans in Kitchener. Along with being one of the top events of the year for the local tech community, the conference has become the place where you can see some of the top startup companies from the area as they present their companies at the Tech Expo in the main hall.

Exhibitors this year are AideRSS, LoyaltyMatch, Semacode, Tungle, Well.ca, Smartpatterns, Something On, Client Outlook, Aeryon Labs, Ghoti Studios, T-Ray Science, and FOSS Factory. ProductWiki, SuitedMedia, and Crez had tables at last year's event and are expected to be among the attendees this time, as are Primal Fusion and Metranome.

It's great to be able to show off our startups to the community and guests from out of town. Two years ago, I had trouble coming up with more than a handful of names but since then we've had no trouble filling all the available tables. With companies like Primal Fusion, Metranome, ParkVu and Avvasi expected to launch their first products in the coming months, next year's Tech Expo will be another one to look forward to.

Keynote speakers this year are Chris Anderson, editor of WIRED and author of The Long Tail, Chris Sacca, blogger and investor -- 1,800+ Twitter followers -- formerly with Google, and Jeff Taylor, founder and former CEO of Monster. Noted VC and blogger Rick Segal will also be speaking as part of a panel. Should be a great day.

Well.ca raises angel funding

Congratulations to online drugstore Well.ca, which announced today that it has closed a round of funding -- one that has been several months in the making. The size of the round wasn't disclosed, but the investors were Jim Estill and Toronto's Maple Leaf Angels. It's the first external funding for the company and also seems to be the first deal that Maple Leaf Angels has announced.

It's the latest in a string of angel-backed deals for local startups. As I mentioned before, we had six companies raise seven-figure seed rounds in 2007 and every one of them involved angels (although one -- AideRSS -- was led by VC firm Tech Capital Partners).

Through Communitech, I first talked to Well.ca founder Ali Asaria late in 2006, and the entire entrepreneur services team -- and I think just about everyone else at Communitech too -- has enjoyed working with Ali and his team ever since.

(See Ali's comments about the investment.)

Tungle launches

Tungle launched today. You can now download the beta version of the Tungle Outlook plug-in that lets you share calendars and availability across organizations.

The company is headed by Marc Gingras and Fang Yang, who have a long history as a team in Waterloo. I first met Marc eight years ago when he was heading the Kitchener-based development office of Entrade. Marc, Tungle's CEO, is now in Montreal, while Fang, the CTO, is based in Waterloo. Tungle raised $1.5 million last year from JLA Ventures and Desjardins Venture Capital, with additional funding from a U.S. based angel investor.

Marc blogged about the launch earlier today.

Waterloo Tech Digest - April 8, 2008

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

1. Sandvine cuts revenue forecast, warns of low Q1 sales
2. Sirific to be acquired by UK firm
3. Software Innovation to become part of Nasdaq-listed company
4. MKS expects profitable finish to fiscal year
5. Arise reports $4M loss; new plant to open this month
6. Com Dev sales climb 14%
7. RIM ships 4M BlackBerrys in Q4, doubles sales
8. Descartes finishes third consecutive profitable year
9. STOCK REPORT: MKS shares jump on near-record volume
10. Miscellaneous tidbits from MedShare, AideRSS, We-Create, LoyaltyMatch, LaunchPad, Desire2Learn, Dalsa

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

ENHANCE YOUR COMPETITIVE ADVANTAGE
INO can deliver competitive advantage to fuel company growth. As described in this video, INO's optical recognition technology helped Optosecurity raise $20 million in financing and create a world-class team. You'll find further information on INO's optical recognition technology here. Please contact Glenn Smith in Waterloo at 519-502-1305 to explore how INO might deliver competitive advantage to your organization.

ARE YOU CONSISTENTLY MAKING YOUR NUMBERS?
The painful truth: Research proves that 50% of salespeople will always be underachievers. The costs inflicted by sub-par sales performers are huge and vastly underestimated by most companies. For information you can use to build winning sales teams, download our free whitepaper. Peak Sales Recruiting focuses on finding top performing salespeople for technology companies.

BERESKIN & PARR - INTELLECTUAL PROPERTY LAW
Bereskin & Parr is a leading Canadian intellectual property law firm on your doorstep. Our Waterloo region office brings a wealth of experience to serve the growing high technology and manufacturing communities in Canada's Technology Triangle and surrounding areas. Bereskin & Parr's practice encompasses all areas of intellectual property from patents to trade marks and related litigation. Please contact us at 519-783-3210, Tim Sinnott (tsinnott@bereskinparr.com) for more information.

RISK FREE LEAD GENERATION
From sales opportunity development to increasing attendance for events, Virtual Causeway accelerates your sales process! With a focus on selling and marketing complex services and technology, we guarantee a consistent and reliable flow of quality leads - assuring that your pipeline is constantly full. Contact us today to learn how we can help connect you with your next customer. Call 519-886-1600 ext. 405 or email marketing@v-causeway.com for details.

IT SEARCH AND PLACEMENT SERVICES
Procom is currently ranked as the 4th largest IT professional services firm in Canada. (Branham 300, Financial Post, April 2007). Recently awarded one of Canada's 50 Best Managed Companies, Procom is a proud, Canadian-owned, privately-held company. Our local KW office provides IT, development and technology personnel on either a contract or permanent basis. We are the largest provider of IT staffing and recruiting services in Canada. Phone: 519.885.4331

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Sandvine cuts revenue forecast, warns of low Q1 sales
March 6, 2008

Shares in Sandvine took a huge hit after the company warned that it would have sales of only about $8.2 million in the quarter ended February 29 and that it was cutting its annual sales forecast by $20-25 million.

That quarterly revenue would be just a little better than half of what Sandvine reported a year ago, and a little less than half of its sales in the previous quarter.

Sandvine did not discuss earnings in its warning, and the full financial results are scheduled to be released tomorrow.

Shares in Sandvine had already lost 56% of their value over the previous five months and were down another 65% following this announcement -- falling to $1.03 at their lowest, before bouncing back a little to finish March at $1.75. Sandvine shares have now lost 74% of their value since the beginning of October.

[2]---------------------------------------------------------------
Sirific to be acquired by UK firm
April 7, 2008

Sirific Wireless is being acquired by UK-based Icera in an all-stock deal. The acquisition has been approved by the boards of both companies and is expected to close before the end of June. Financial details were not disclosed.

Icera says it will keep Sirific's offices in Waterloo and Richardson, Texas. The company designs software-defined chips for wireless modems and will now add Sirific's chipsets for multi-mode wireless devices to its product line. Icera is a privately-held venture-backed company that just raised $40 million in its fourth round of funding and has raised over $140 million since it was founded in 2002 (Icera included its new Waterloo and Richardson offices in its news release announcing the new funding, which went out a day before the Sirific announcement). The Daily Telegraph called it "Europe's best-backed semiconductor company." Icera is based in Bristol, with additional design offices in Cambridge, UK and at the Sophia Antipolis tech park in Southern France. It plans to raise another round of funding later this year and expects to go public within two years.

Sirific was founded in 2000 by Taj Manku, who was then associate professor of electrical engineering at UW. It received support from OCE and raised seed funding from Tech Capital Partners and Richard Boyer, who served as the company's initial CEO. Celtic House led a $10 million round of funding later that year. The company hired Texas Instruments veteran Mike Hogan as its CEO in 2002 and soon after closed an $18 million round of funding led by BDC Venture Capital. Agilent Ventures made an investment the following year and in 2004, Sirific raised another $23 million in a round led by TD Capital Ventures which also included Intel. In this period, the company started referring to itself as being Texas-based. It raised another $19 million last year, which added Dallas' Hunt Ventures to its list of investors. Hogan left the company and was succeeded as CEO by Russ Johnsen, who had been on Sirific's board of directors for three years. That was last announcement the company made. Manku has remained CTO through Sirific's eight-year history.

[3]---------------------------------------------------------------
Software Innovation to become part of Nasdaq-listed company
March 31, 2008

Acorn Energy will acquire Software Innovation -- which is in the process of renaming itself Coreworx, after its main product. Terms of the deal were not disclosed, and the transaction still requires final due diligence from Acorn.

Acorn is based in Delaware and trades on Nasdaq with a market capitalization of just under US$50 million. It had sales of US$5.7 million in 2007 but most of its assets were in shares of Comverge, a company it spun out through an IPO a year ago and which was worth several hundred million when Acorn decided to sell its stake (Comverge has since plummeted in value over the last couple of months.)

Coreworx is led by Ray Simonson and develops software used by engineering and construction firms to manage large capital projects. Simonson was originally an investor in the company through Verdexus, an investment firm founded by Randall Howard. Howard invested in Software Innovation in 2004 and served as CEO. Simonson joined the company as CTO in 2004 and became CEO when Howard stepped down from the management team. The current team includes Stephen Grinyer and Mike Davis, who both worked with Simonson at BlueGill/CheckFree, Steve Traplin, former CEO of Waterloo's Ardesic, and Kevin Thomson, who previously led NCR's Waterloo engineering office.

Along with Verdexus, Coreworx investors include Tech Capital Partners, BDC Venture Capital, Covington Capital, and RoyNat Capital.

[4]---------------------------------------------------------------
MKS expects profitable finish to fiscal year
March 4, 2008

MKS lost US$754,000 on sales of US$12.8 million in the quarter ended January 31 (Q3 08). Sales were up 11% from a year ago but down 6% from the previous quarter.

A drop in gross margins, which would have been impacted by the rise of the Canadian dollar, led to a 9% sequential decline in gross profit.

License revenue was light in the quarter, but the company says it will do much better in Q4. It still expects to be profitable for the year, which would require Q4 earnings of at least US$900,000. To achieve that, MKS will likely need to report its best quarterly operating income in over two years.

MKS ended the quarter with US$10.6 million in cash, up from US$9.9 million at the end of Q2.

The company also disclosed that RIM will be expanding its use of MKS Integrity for requirements management. It expects all of RIM's software engineers performing requirements management will be using MKS software by the end of the year.

[5]---------------------------------------------------------------
Arise reports $4M loss; new plant to open this month
March 18, 2008

Just weeks away from the opening of its new manufacturing facility in Germany, Arise reported results from what it hopes will be its second-last pre-revenue quarter. In the period ended December 31 (Q4 07), Arise lost $4.1 million on sales of $315,000. All that revenue went in the front door and out the back, as the company actually reported a slightly negative gross profit.

Arise closed a $34.5 million share offering in the quarter (see October digest) and finished Q4 with $37.9 million in cash.

For 2007, Arise lost $11.5 million on sales of $1.2 million. Accumulated deficit climbed to $23.1 million at year-end.

[6]---------------------------------------------------------------
Com Dev sales climb 14%
March 6, 2008

Com Dev earned $1.3 million on sales of $44.9 million in the quarter ended January 31 (Q1 08). Sales were up 14% from a strong Q1 last year and up 3% from the previous quarter. With the rise in the Canadian dollar, gross margins were still well below last year's levels but were double what they were in Q4.

The company received $32.7 million in new orders in the quarter, a bit below recent levels, but enough to give Com Dev an order backlog of $133 million.

R&D spending was much lower in Q4 than it had been in the previous three quarters, but the company says it expects its R&D costs will be going back up to the levels seen through most of 2007. SG&A costs in the quarter included $800,000 for the company's review of its previous stock option granting practices. A special committee of the board determined in January that no material adjustments to Com Dev's financial statements will be required. Recommendations made by that committee are expected to be announced this week.

After piling up the cash in the previous quarter, Com Dev used $13.2 million on operations in Q1 with an additional $3.5 million spent on capital assets. It ended the quarter with $14.3 million in cash. This was before the acquisition of the ETI passive microwave devices business, announced in February.

Com Dev's board has awarded CEO John Keating a $125,000 bonus to be paid each quarter for four years to be used -- after taxes -- to buy shares in the company. He received $376,000 in stock purchase bonuses in fiscal 2007. According to insider trading reports, Keating paid $196,304 for 38,200 shares in Com Dev over the year. No additional purchases have been reported over the last six months. Keating's total compensation for the year was $807,060, down from $842,196 and 400,000 options in 2006.

[7]---------------------------------------------------------------
RIM ships 4M BlackBerrys in Q4, doubles sales
April 2, 2008

RIM continues to double its sales year-over-year, reporting revenue of US$1.9 billion in the quarter ended March 1 (Q4 08) -- up 102% from the previous year and 13% from Q3. Earnings for the quarter were US$412.5 million, up from US$370.5 million in the previous quarter.

There were 2.2 million BlackBerry subscribers added in the quarter, well above the company's forecast of 1.8 million. It said that the majority of new subscribers were from the consumer market and was excited to point out that over one million users had installed the Facebook for BlackBerry application. RIM shipped 4.4 million devices in Q4. There are now more than 14 million BlackBerry users, and RIM expects to add another 2.2 million this quarter.

RIM is forecasting sales of US$2.23-2.3 billion in the current quarter. It ended Q4 with US$2.3 billion in cash, up US$210.7 million over the quarter.

For the year, RIM earned US$1.3 billion on sales of US$6.0 billion. Revenue was up 98% from 2007.

[8]---------------------------------------------------------------
Descartes finishes third consecutive profitable year
March 6, 2008

Descartes reported revenue of US$16.0 million in the quarter ended January 31 (Q4 08), up 3.5% from the previous quarter. The company made three acquisitions in the period, all in the second half of the quarter. Revenue climbed 18% from last year.

Net income was US$17.9 million, but that included a US$16.0 million non-cash deferred income tax recovery that will be expensed in future quarters. Excluding that, Descartes had net income of US$1.9 million, which was still good enough to set an all-time record for the company. Operating income was US$1.6 million, up from $1.3 million in Q3.

For the year, Descartes reported sales of US$59.0 million, up 14% from 2007. Earnings were US$22.4 million or US$6.4 million excluding the Q4 tax recovery. Over the year, Descartes acquired six businesses and saw its stock price decline by 18%.

It finished the year with US$44.1 million in cash, down US$4.2 million from the end of Q3.

[9]---------------------------------------------------------------
STOCK REPORT: MKS shares jump on near-record volume
March 2008

MKS shares climbed 33% in March -- their best month-end price since May and their strongest one-month performance since a 41% jump in May 2003. It wasn't the quarterly results that triggered the spike. If anything, the numbers were weaker than those of the previous quarter and the jump in the share price came more than two weeks after the results were announced.

The stock first jumped on March 24 and three days later the volume went through the roof, with 1.4 million shares traded on March 27. That made it the second most active trading day in MKS history, falling just short of the 1.5 million shares traded on February 12, 2003. CEO Phil Deck bought 100,000 shares on the open market, with COO Michael Harris buying 65,000 shares and Deck's investment partner Gerald Hurlow buying 80,000 shares.

For the month of March:

MKS [TSX: MKX] +33%
Arise [TSX: APV] +19%
Dalsa [TSX: DSA] +15%
RIM [TSX: RIM] +13%
Com Dev [TSX: CDV] +11%
TurboSonic [OTCBB: TSTA] +7%
Open Text [TSX: OTC] +2%
Descartes [TSX: DSG] +1%
===============================
--S&P TSX COMPOSITE INDEX -2%
Virtek [TSX: VRK] -5%
ATS [TSX: ATA] -7%
--S&P TSX VENTURE INDEX -10%
RDM [TSX: RC] -25%
Biorem [TSXV: BRM] -38%
Sandvine [TSX: SVC] -40%

Dalsa shares also had their best month-end since May and are now up 76% over the first three months of 2008. Open Text shares were pretty quiet in the month but still rose to their highest month-end price since July 2004.

We covered Sandvine above, and things haven't been much better at RDM, where the company's stock has fallen 64% over the last five months.

Despite what looks like a big drop, Biorem shares have actually been in the same trading range for the last three months. It finished February at the high end of the range and was listed here with a huge gain and then it ended March at the low end and shows a big decline, but there's been almost no change in its range this year.

As of Friday's close, RIM had a market capitalization of $68 billion. Arise has climbed back ahead of Descartes for seventh place on the market cap list with a value of $230 million.

Companies with core operations outside the area:

Adobe [Nasdaq: ADBE] +6%
Oracle [Nasdaq: ORCL] +4%
NCR [NYSE: NCR] +3%
===================================
McAfee [NYSE: MFE] -1%
Sybase [NYSE: SY] -1%
ON Semiconductor [Nasdaq: ONNN] -5%
Blue Coat [Nasdaq: BCSI] -6%
Google [Nasdaq: GOOG] -7%
Ansys [Nasdaq: ANSS] -8%
Agfa-Gevaert [Brussels: AGFA] -23%

ON Semiconductor -- newly added to this list with the close of its acquisition of AMI Semiconductor -- has seen its shares climb 20% so far in April.

[10]---------------------------------------------------------------
Miscellaneous Tidbits

• J. Paul Haynes and MedShare have split, with MedShare founder and president Barry Billings adding the CEO title he gave up last year when Haynes joined the company. Over the period that Haynes was CEO, MedShare raised millions of dollars from investors and saw its revenue grow by more than 600%, according to Haynes.
  
  
• Also parting ways are Kevin Thomason and AideRSS. Thomason co-founded the company last year with Ilya Grigorik and helped lead AideRSS through its launch last summer and to a seven-figure round of funding in December.
  
  
• One more: Bill Waters is no longer CEO of We-Create, the Web software company he led for more than eight years. He is now working as an independent communications and leadership consultant.
  
  
• LoyaltyMatch is in Boston to participate in the AlwaysOn/Vator.tv Venture Summit East 2008 competition. It received the most votes among 27 companies that submitted pitches to the competition's website. LoyaltyMatch launched its website in February, which helps users convert unused loyalty program points into cash. It is based in Kitchener and Ottawa.
  
  
• The 2008 Nicol LaunchPad $50K winner is Atreo Medical, an Ottawa-based startup out of McMaster University developing a high-tech glove to be used for CPR instruction and delivery. Second place finisher was VSM Technologies out of Carleton University, which has developed a tiny chip for wireless monitoring of human vital signs. I guess I didn't have to worry about being too harsh a judge at the business plan stage, since those were the two plans I was assigned. Third place went to Digital Dash, which has created technology for a curved tactile display. It is also out of McMaster.
  
  
• Upon reexamination, the U.S. Patent & Trademark Office has preliminarily rejected the validity of the patent used by Blackboard to sue Desire2Learn. The decision is a long way from being final and comes too late to be of much help to Desire2Learn, which was found to have infringed on the dubious patent last month by a jury in Texas (see previous digest).
  
  
• Dalsa is selling most of what's left of its Colorado Springs operations to Colorado-based Echoserve (see August digest). Financial details have not yet been disclosed. The company also announced that a special effects sequence in the next James Bond movie, "Quantum of Solace," was shot with eight of Dalsa's 4K Origin cameras. The movie is scheduled for a fall release.

Is this the best way to meet potential investors?

The Canadian Innovation Exchange (CIX) is being held in Toronto at the end of this month. If selected, a company looking for early-stage funding pays $600 to give a presentation to an audience that includes several VC firms and other potential investors.

Even though there's a Communitech logo on the site (which I had nothing to do with -- I've had no contact with anyone organizing this event), and my colleague Ron Neumann is a scheduled presenter, I have mixed feelings about these kind of events.

For entrepreneurs, it certainly seems convenient to get your company in front of several investors with just one pitch. I'm sure some would say that the amount of time saved when compared to arranging individual meetings with each investor justifies the fee by itself. And there's no question that there are some good speakers scheduled for CIX.

On the other hand, these events reinforce the myth that companies need to pay intermediaries (in this case, the event organizers) to get in front of VCs, or at least that it's beneficial to do so. It's something I mostly associate with the leeches and hangers-on who try to charge startup entrepreneurs a fee for introducing them to VCs. There aren't as many today as there were back in the bubble era, thankfully, but it still goes on.

Here's a little secret: it's not difficult to get a Canadian VC to look at your business (getting them to invest is, but that's equally true for companies that present at VC events). They aren't hard to find and contact, and it won't cost you anything.

I know people at most Canadian VC firms (including almost all of the firms whose logos appear on the Canadian Innovation Exchange site) and can guarantee you that, if you have a good investment opportunity for them, almost all of them would be happy to come to Waterloo to hear more. You won't have to hope to be selected for some dog-and-pony show in Toronto and pay hundreds of dollars. Introductions certainly help, particularly coming from someone investors believe will filter out the junk, but you don't have to pay for them. If you have a VC-fundable business, every member of Communitech's entrepreneur services team can hook you up with VCs at no cost.

I agree with Alec Saunders, who last week compared the event to a beauty pageant and said he found a lot not to like in the model. If there had been more U.S. investors participating (there are some), I might have found it to be more valuable. There are so many of them, your degrees of separation will likely be greater than one -- which won't be the case for Canadian VCs -- and most will expect you to go to them, which starts getting expensive.

But to get in touch with most of the people scheduled to be at CIX, I can't say that signing up for a beauty pageant would be the way I'd go about it.

Don't all innovative startups deserve access to the same tax break?

One of the items included in the Ontario budget unveiled yesterday was "a 10-year Ontario income tax exemption for new corporations that commercialize intellectual property developed by qualifying Canadian universities, colleges or research institutes."

As with all budget announcements, this will be subject to refinements and revisions before it gets implemented ... if it ever does ... and an obvious first reaction would be that few tech startups are particularly concerned about paying income tax (and provincial income tax in particular). There's usually enough losses up-front to put off paying a significant amount of income tax for a long time.

What disappointed me, though, was the distinction this announcement made between university spinoffs and other tech startups. As presented in the budget, only spinoffs would qualify for the tax exemption.

We have several university spinoff companies in the Waterloo area, but most of our tech startups are not spinoffs -- certainly not in accordance with how Statistics Canada defines a spinoff. Neither are most of our largest tech companies. Some are, but most aren't.

I have an office at the Accelerator Centre at the UW Research & Technology Park, and on our floor we have spinoff companies and non-spinoff startups working side-by-side. If you weren't told which were which, you'd have a tough time separating one from the other in terms of the sophistication of the technology, market opportunity, or number of employees.

Under the budget proposal, however, we'd have the spinoff in one suite exempt from Ontario income tax and essentially being subsidized by its neighbouring startup that isn't a spinoff and doesn't qualify for the exemption. I can't see any justification for that distinction.

If the Ontario government wants to give a tax break to new companies commercializing innovative technology, let it extend that benefit to all tech startups regardless of their starting points. If the goal is to assist in the economic development of the province, it shouldn't matter whether companies that drive our economic success are university spinoffs or not.