Monday, November 09, 2009

Waterloo Tech Digest - November 9, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. Sandvine sales up 22%, led by Asia-Pacific
  2. Dalsa breaks even on flat sales
  3. Open Text restructuring bites into bottom line
  4. Arise expects lower losses, plans new German tech centre
  5. STOCK REPORT: Good bounce for Com Dev in quiet month
  6. Startup notes from Allerta, Poptiq, Aeryon, Igloo, Enflick, 2G Robotics, PostRank, Hippopost, Terepac
  7. Miscellaneous tidbits from Open Text, RDM, ATS, Desire2Learn, exactEarth, RIM
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S P O N S O R S

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EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.


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[1]---------------------------------------------------------------
Sandvine sales up 22%, led by Asia-Pacific
October 8, 2009

A slightly better quarter for Sandvine, which lost $4.4 million on sales of $16.0 million in the quarter ended August 31 (Q3 09). Sales were up 5.4% from Q2, and the bottom line was a $1.2 million improvement from the previous quarter. Year-over-year sales improved by 22%.

No significant revenue from Comcast, but a new customer -- or at least one that didn't buy anything over the first half of the fiscal year or in last year's Q3 -- accounted for $3.4 million or 21.3% of revenue in Q3.

For the second quarter in a row, sales to customers using Sandvine products in wireless applications outpaced sales to cable and DSL uses -- and the segment expanded its lead over the other two in Q3, accounting for 42% of sales. Sales in the Asia-Pacific area were particularly strong.

Sandvine received orders from 11 new customers in the quarter, up from 10 in Q2.

The company ended Q3 with $87.5 million in cash, down $2.6 million from the start of the period.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS TECHNOLOGY WHITEBOARDS
Our legal professionals discuss a range of issues affecting technology companies, including tips for start-ups, protecting your IP, outsourcing, technology agreements and more.
Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to clients ranging from start-ups to public companies. 40 professionals serving Waterloo Region/Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

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

[2]---------------------------------------------------------------
Dalsa breaks even on flat sales
October 29, 2009

Dalsa earned $48,000 on sales of $41.0 million in the quarter ended September 30 (Q3 09). Sales were up slightly from the previous quarter, but down 22% from a year ago. The company reiterated what it said at after Q2: that it is seeing signs of improvement in its business outlook, particularly in the Asia-Pacific region for its digital imaging business.

Income from operations of $254,000 was up from an operating loss of $326,000 in Q2. Continuing operations generated a profit of $113,000, all of which came from the digital imaging business. Dalsa's discontinued digital cinema business took $65,000 off the bottom line in the period. Dalsa sold some of its remaining digital cinema assets for about $500,000 in Q3 and is trying to sell the remainder of those assets.

Order backlog fell $11.0 million to $88.7 million, which is still the second highest in company history. The drop was partly due to the rise in the Canadian dollar, which lowers the value of U.S. dollar contracts.

Continuing operations generated $3.8 million in cash, and the company used $912,000 to pay dividends to shareholders and spent $1.5 million on capital assets. It ended the quarter with $11.4 million in cash, up $1.5 million from the end of Q2.

[3]---------------------------------------------------------------
Open Text restructuring bites into bottom line
October 27, 2009

Open Text earnings fell to just US$1.7 million on sales of US$211.4 million in the quarter ended September 30 (Q1 10). The big drop -- down from US$19.5 million in the previous quarter -- was caused by the company's latest round of restructuring, which it says will result in charges of US$32-40 million. There were US$14.6 million in charges in Q1, along with US$2.5 million from Open Text's 2009 restructuring and an additional US$1.4 million in acquisition-related charges.

Sales were up 4% from the previous quarter, with all gains coming through the acquisition of Vignette, which closed three weeks into the quarter. Vignette contributed US$25.9 million in revenue in Q1. Without the acquisition, Open Text sales would have been down 9% sequentially. Sales were up 16% from a year ago, with the Vignette acquisition again accounting for most of that increase. While Vignette helped the top line, it wasn't as beneficial at the bottom, contributing a net loss of US$4.3 million.

Operations generated US$4.5 million in cash and Open Text spent US$90.6 million in cash as part of the Vignette deal. It ended the quarter with US$212.2 million in cash.

[4]---------------------------------------------------------------
Arise expects lower losses, plans new German tech centre
November 2, 2009

A bunch of notes from Arise this month, including a preview of its forthcoming Q3 results (to be announced on Wednesday). The company sold 3.5MW of PV cells in the quarter, compared to 2.9MW in Q2. With prices for PV cells continuing to fall, revenue is expected to show a slight sequential decline. Net loss for the quarter is expected to be about $5.4 million. Arise is forecasting shipments of 7MW in the current quarter (Q4), with 2.3MW shipped in October. Based on preliminary numbers, it says its German plant had a positive EBITDA in October.

Some Arise customers had yield problems with cells produced late in Q3, but the cells were replaced and are back in inventory, where they are expected to be used in Arise systems next year. The company says the production problem has been resolved.

Arise also announced plans to build a technology centre in Gelsenkirchen, Germany and will lease what had been Scheuten Solar's PV cell manufacturing plant in that city. Arise has purchased the assets in the plant (which it plans to pay for through discounted sales of PV cells to Scheuten), and Scheuten has the option to sell the building to Arise in 2012. All 55 of the people who currently work at the plant will now be employed by Arise, with the German government picking up the tab for all employment costs while the plant is in transition.

The company says it expects some unspecified company insiders will sell Arise shares they currently own to raise money to purchase units in a planned $1 million share-warrant offering. Each unit in the offering would include a common share and a warrant for one additional share, with pricing to be "determined in the context of current market pricing." It hasn't appeared on SEDAR yet, but Arise says it filed a supplementary prospectus last Monday.

Arise received a $250,000 bridge loan for its Canadian operations on October 29. The loan bears annual interest of 20% and matures in 60 days.

The company also announced that founder Ian MacLellan is once again CTO, in addition to running the systems business. MacLellan held the CTO title for about nine months in 2008, giving it up about a year ago when he became president of the systems division.

[5]---------------------------------------------------------------
STOCK REPORT: Good bounce for Com Dev in quiet month
October 2009

Not much of note from the stock market during the month -- Com Dev shares showed the biggest gain and are up another 17% so far in November, taking them back up to where they were at the end of May.

Dalsa shares ended a four-month run of successive gains, during which time they went up 32%. With Dalsa stock still trading above $7, the only company on this list that has seen its share price fall in 2009 is Arise. Shares of TurboSonic (+81%), Sandvine (+68%), Descartes (+58%), and MKS (+58%) are all having strong years so far.

For the month of October:

Com Dev [TSX: CDV] +10%
ATS [TSX: ATA] +9%
RDM [TSX: RC] +8%
Arise [TSX: APV] +3%
Biorem [TSXV: BRM] +2%
MKS [TSX: MKX] +2%
--S&P TSX VENTURE INDEX +1%
Open Text [TSX: OTC] +1%
===============================
Sandvine [TSX: SVC] -3%
--S&P TSX COMPOSITE INDEX -4%
Descartes [TSX: DSG] -5%
TurboSonic [OTCBB: TSTA] -6%
Dalsa [TSX: DSA] -7%
RIM [TSX: RIM] -12%

RIM has joined the long list of companies with a share repurchase program. Its board authorized the company to spend up to US$1.2 billion over the next year to purchase shares through Nasdaq. RIM shares finished October at their lowest month-end price since December.

Companies with core operations outside the area:

Acorn Energy [Nasdaq: ACFN] +28%
Agfa-Gevaert [Brussels: AGFA] +9%
Ansys [Nasdaq: ANSS] +8%
Google [Nasdaq: GOOG] +8%
Sybase [NYSE: SY] +2%
Oracle [Nasdaq: ORCL] +1%
===================================
Blue Coat [Nasdaq: BCSI] -1%
Intel [Nasdaq: INTC] -2%
Electronic Arts [Nasdaq: ERTS] -4%
McAfee [NYSE: MFE] -4%
ON Semiconductor [Nasdaq: ONNN] -19%
NCR [NYSE: NCR] -27%

[6]---------------------------------------------------------------
Startup Notes
  • Allerta formally unveiled its inPulse Smartwatch, a Bluetooth watch that wirelessly connects to a BlackBerry and provides alerts of incoming e-mails and calls. Text messages, e-mail headers, and the caller-ID of incoming calls are automatically pushed to the watch's display screen. Allerta was founded by Eric Migicovsky, the then-VeloCity resident who won the pitch competition at last year's LaunchPad kickoff event. The company was named a runner up at LaunchPad in May and has received financial support from OCE. Allerta expects to start shipping devices in February.

  • Poptiq sent out word that the Gone Anime mobile video service -- which it created -- won the top award in the mobile interactive applications category at the 2009 ITV Awards in Cannes. The awards are presented by AFDESI, the Association for the Development of Enhanced TV Services and Interactivity.

  • Aeryon Labs was selected as one of the OnDC 100 list of top private companies by AlwaysOn, the media and events company founded by Tony Perkins (previously a founder of Upside and Red Herring). Aeryon was a runner-up in the government & security services category.

  • Igloo was one of 10 companies profiled in the IDC research report "Innovative Application Software Companies Under $100 Million to Watch," published in October.

  • Derek Ting -- one of two UW students who founded Enflick, along with Jon Lerner (see previous issue) -- wrote to say that the iTunes reviews of the company's Unlimited SMS service are much stronger on the U.S. store than in Canada, with an average four-out-of-five star rating. The service has difficulties with Rogers which has led to mixed reviews in Canada but is not a problem in the U.S.

  • Projects led by 2G Robotics and PostRank were among the 14 selected for funding from Ottawa-based Precarn. Precarn funding averages $150,000 per project. The PostRank project is to develop the PostRank Pro-Media Registry, a database of online publishers and the topics they cover with real-time social engagement rankings of the content they produce. 2G Robotics is developing a next-generation underwater laser scanner. A third project, which lists UW as a partner, is led by Toronto's Dreamcube Technologies, which is headed by Paul Vice, an MBET grad who was previously part of OCE's Waterloo office.

  • The Globe and Mail and the Record both profiled Hippopost, based in Kitchener and run by former RIM employees Donal Byrne (CEO) and Bob Millar (COO). According to the Globe, there are a half-dozen former RIMers at Hippopost. The company lets users send free advertiser-supported postcards (as in, real, delivered-by-the-post-office postcards) through its website, Facebook or BlackBerry app.

  • Terepac announced it is working with IMEC -- which bills itself as Europe's largest independent research center in nano-electronics and nano-technology -- and will have its technology tested in a wireless ECG patch being developed in the Netherlands. The first results are expected by the middle of next year.
[7]---------------------------------------------------------------
Miscellaneous Tidbits
  • Tom Jenkins, executive chairman, chief strategy officer, and former CEO of Open Text, and Ian McPhee, a founder and president of Watcom (which evolved into the Waterloo office of Sybase) and the current chair of the Accelerator Centre, were among this year's inductees into the Waterloo Region Entrepreneur Hall of Fame. Also inducted were Frank Rovers, co-founder and former president of engineering firm Conestoga-Rovers & Associates, along with Oscar Kuntz, founder of Kuntz Electroplating, and Harold Seegmiller of construction firm Seegmiller E&E Ltd.

  • Jenkins was also the recipient of the 2009 Ontario Ernst & Young Entrepreneur of the Year Award. The director of the awards credited Jenkins with "radically chang[ing] the way we use the internet in business."

  • RDM received the Excellence in Technology Award at the 2009 Waterloo Region Business Achievement Awards. Enermodal Engineering was named business of the year.

  • ATS and its Photowatt subsidiary announced that they're getting in on the Ontario feed-in tariff (FIT) program and will be developing solar projects in the province and building Photowatt modules at its Cambridge plant, as well as through an unnamed Ontario-based partner. ATS says it will create a "green wing" in Cambridge and invite companies that would like to partner with ATS to co-locate there.

  • The Desire2Learn 2GO BlackBerry app is being used by Laurier's MBA students this year, enabling them to view course information, get their grades, and communicate with classmates through their BlackBerrys. Desire2Learn also announced the launch of an analytics product that will enable educational institutions to extract information from terabytes of data from learning management systems and other sources to help them understand student activities and performance.

  • The U.S. appeals court that ruled in favour of Desire2Learn in its patent dispute with Blackboard (see July digest), has denied Blackboard's request for a rehearing. Blackboard says it will try to take its case to the U.S. Supreme Court, but acknowledged that the chances of the court agreeing to hear the appeal are pretty slim.

  • Space-based automatic identification and tracking systems developed by Com Dev subsidiary exactEarth have been used by Canadian Forces and the Department of Fisheries and Oceans to monitor illegal fishing activity in the northern Pacific.

  • The Record reported that RIM bought a 480,000 square-foot building near the Toyota plant in Cambridge. The company has not yet occupied the 193,000 square-foot former Spheral Solar building in Cambridge that it bought from ATS last year. According to the Record, RIM occupies 1.5 million square feet of space in 25 buildings in Waterloo.


Tuesday, October 06, 2009

Waterloo Tech Digest - October 6, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. Descartes share offering to gross $46M
  2. RIM earnings lowered by patent suit settlement
  3. Arise financing details, 7N silicon milestone
  4. Canadian Solar opens Kitchener headquarters
  5. STOCK REPORT: No news was good news for ATS shareholders
  6. Startup notes from Aeryon Labs, Bayalink, Energent, Strike Face, Mespere, ParkVu, Tribe, Ladybug, Tungle, Enflick, LoyaltyMatch
  7. Miscellaneous tidbits from Arise, Sandvine, RIM, Navtech, Desire2Learn, Com Dev, Innosphere, Vestec, IMS, MedShare
////////////////////////////////////////////////////////////
S P O N S O R S

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

EXCITING TIMES
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For over 30 years, Procom has been matching people with companies, for jobs that are a perfect fit - contract, full-time, or part-time. We partner with large and small companies across North America, including some of the world's best-known enterprises, to provide a range of services, training tools, and the ideal candidates to help them flourish. We've been named one of Canada's 50 Best Managed Companies and go beyond staffing to look strategically at the processes and people that will truly help a company succeed. Phone: 519.885.4331.

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

[1]---------------------------------------------------------------
Descartes share offering to gross $46M
September 29, 2009

Descartes will raise $46 million through a bought deal share offering that is expected to close later this month. It will sell 7.9 million shares at $5.85 each. That includes the underwriters' overallotment option, which Descartes has said was exercised in full.

Descartes will receive gross proceeds of $41.9 million from the sale of 7.1 million new shares, while unspecified company officers and directors will receive $4.1 million from the sale of 693,296 of their own shares.

Underwriters are led by GMP Securities and CIBC World Markets and include Thomas Weisel Partners, Versant Partners, and Paradigm Capital.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS TECHNOLOGY WHITEBOARDS
Our legal professionals discuss a range of issues affecting technology companies, including tips for start-ups, protecting your IP, outsourcing, technology agreements and more.
Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to clients ranging from start-ups to public companies. 40 professionals serving Waterloo Region/Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

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

[2]---------------------------------------------------------------
RIM earnings lowered by patent suit settlement
September 24, 2009

RIM earned US$475.6 million on sales of US$3.53 billion in the quarter ended August 29, 2009 (Q2 10). Sales were up 3% from the previous quarter and 37% from a year ago, and were within the company's forecasted range of US$3.45-3.70 billion.

It was during this quarter that RIM settled the patent infringement suit that Visto had filed against the company in 2006 (see August 10 digest). The settlement included a payment by RIM of US$267.5 million, of which US$163.8 million was expensed as a litigation cost in Q2. Without that charge, RIM's operating income for the quarter would have been US$815.8 million, compared to US$690.1 million in Q1.

There were a net 3.8 million new BlackBerry subscribers in the quarter -- same as the previous quarter and at the bottom end of the company's forecast. That brought the total number of BlackBerry users to 32 million.

Operations generated US$1.2 billion in cash, and RIM ended the quarter with US$2.5 billion in cash, up US$78.5 million from the end of Q1.

RIM is expecting sales of US$3.60-3.85 billion in the current quarter, which would be a sequential increase of 2-9% and about 30-38% above last year. It is expecting to add another 4.0-4.3 million new BlackBerry subscribers.

[3]---------------------------------------------------------------
Arise financing details, 7N silicon milestone
September 15 & 24, 2009

Arise provided details about the $10 million in funding that it can access over the next three years by selling new shares at a discount to market prices (see previous digest). Providing the funds is Haverstock Master Fund, based in Roslyn, New York. At any time it chooses, Arise can take up to $500,000 per drawdown and Haverstock will pay the average price per share over the previous five days minus a 6.5% discount. Arise is also paying Haverstock $275,000 in fees, which it may pay with common shares priced at $0.55 each.

According to documents filed with the SEC in November, Haverstock Master Fund is 75% owned by Corey Ribotsky's Haverstock Partners LLC and 25% by Calgary's Eagle Ridge Capital. Ribotsky has had some interesting media coverage over the years.

Arise also announced that, for the first time, it produced PV cells using its own 7N+ silicon (99.99999% purity). Arise launched a "mini pilot plant" for its silicon process nearly two years ago and plans to build a 60,000 square-foot plant in Kitchener when economic and financing conditions improve. Arise's silicon feedstock development project is being partially funded by Sustainable Development Technology Canada (SDTC).

The company is expecting a jump in demand for its systems business with the introduction of Ontario's feed-in-tariff (FIT) program. It has signed an agreement with a contracting firm to handle residential solar systems installations in the province.

[4]---------------------------------------------------------------
Canadian Solar opens Kitchener headquarters
September 25, 2009

Canadian Solar Inc., a Nasdaq-listed company founded in 2001 with a market value of US$570 million, has opened what it is calling its global headquarters in Kitchener. Company founder and CEO Shawn Qu previously worked at ATS for its Photowatt and Matrix Solar subsidiaries.

Canadian Solar reported earnings of US$17.7 million on sales of US$114.2 million in the quarter ended June 30 (Q2 09). It performs all its manufacturing in China and lists Shouzou, China as the location of its mailing address. According to the Record, the Kitchener office will have about 15 employees, one of whom is Milfred Hammerbacher, the former president of ATS' Spheral Solar business.

Canadian Solar's R&D investment levels are not significant. In its most recent quarter, it spent an amount equal to 2% of gross profits (less than one-half of 1% of sales) on R&D. Its R&D spending over the first half of the current fiscal year is about one-quarter of what Arise spent in the same period.

Like Arise, Canadian Solar, will be pursing solar system installation opportunities expected to be stimulated by Ontario's new feed-in-tariff program.

[5]---------------------------------------------------------------
STOCK REPORT: No news was good news for ATS shareholders
September 2009

ATS didn't have any announcements during the month, and the last time it did (in August), it announced lackluster quarterly results, but that didn't stop its shares from soaring in September to their highest levels in the last year.

Insider trading reports show heavy buying from New York's Mason Capital -- one of the investment firms that spearheaded the ouster of ATS' board and CEO two years ago. SEDI reports that Mason Capital has bought 2.2 million ATS shares on the public market since late August. It had already been the company's largest shareholder before those purchases, and now owns 14% of ATS.

For the month of September:

ATS [TSX: ATA] +30%
Descartes [TSX: DSG] +20%
Sandvine [TSX: SVC] +16%
Biorem [TSXV: BRM] +15%
Arise [TSX: APV] +10%
--S&P TSX VENTURE INDEX +9%
Dalsa [TSX: DSA] +6%
Com Dev [TSX: CDV] +6%
--S&P TSX COMPOSITE INDEX +5%
Open Text [TSX: OTC] +4%
===============================
MKS [TSX: MKX] -0%
TurboSonic [OTCBB: TSTA] -4%
RDM [TSX: RC] -6%
RIM [TSX: RIM] -10%

Descartes shares went as high as $6.25 during September, which is their highest point since April 2002. It will be hard to push that back much further, since the stock traded above $40 for a short period in 2001 (and well above that level in 2000).

RIM shares dropped 17% the day the company announced its quarterly results. Apparently, some investors are only adjusting now to the realization that the days of 70-100% year-over-year revenue growth are over. It's amazing they lasted as long as they did (as noted in the tidbits section, RIM has been ranked as one of Canada's fastest growing technology companies, as measured by four-year revenue growth, for the last 12 years in a row).

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +15%
Acorn Energy [Nasdaq: ACFN] +15%
Sybase [NYSE: SY] +12%
McAfee [NYSE: MFE] +10%
Google [Nasdaq: GOOG] +7%
Ansys [Nasdaq: ANSS] +6%
Electronic Arts [Nasdaq: ERTS] +5%
Agfa-Gevaert [Brussels: AGFA] +4%
NCR [NYSE: NCR] +4%
ON Semiconductor [Nasdaq: ONNN] +2%
===================================
Intel [Nasdaq: INTC] -4%
Oracle [Nasdaq: ORCL] -5%

Three quarters of the way through the year, here's the ranking of local tech companies by market capitalization:

Market capitalization at September 30
in millions, using outstanding shares
(Change since June 30 in parentheses):

1. RIM ----- $41,132 (-$5,778)
2. Open Text ----- 2,252 (+16)
3. ATS ----- 502 (+121)
4. Descartes ----- 313 (+77)
5. Com Dev ----- 212 (-6)
6. Sandvine ----- 176 (-4)
7. Dalsa ----- 137 (+22)
8. MKS ----- 91 (+12)
9. Arise ----- 43 (-5)
10. RDM ----- 21 (+1)
11. TurboSonic ----- 20 (-2)
12. Biorem ----- 6 (+2)

The only change in ranking over the last three months is RDM edging ahead of TurboSonic. According to globeinvestor.com, RIM is the fifth most valuable company on the TSX, behind three banks and an oil and gas company.

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S P O N S O R

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[6]---------------------------------------------------------------
Startup Notes
  • Aeryon Labs and Bayalink were among the 10 recipients of the 2009 Companies-To-Watch award -- part of the Deloitte Technology Fast 50 program. Aeryon Labs has developed what it describes as a "flying camera" -- a 2-pound hovering platform that captures high resolution video and photographs. Bayalink is one of the startups at the Accelerator Centre and has developed a USB stick that enables BlackBerry users to access e-mail and use their BlackBerry applications through the larger screen and keyboard of their laptop.

  • Aeryon was also one of the companies announced to be receiving money from Ontario's Investment Accelerator Fund. Other Waterloo-area companies that were just announced as recipients of IAF funding are Energent, which graduated from the Accelerator Centre last month (see previous digest) and Strike Face Technology, a company founded by Christian Kaufmann and two UW professors, Mike Worswick and Duane Cronin, that has developed ceramic armour technology for military applications. IAF was launched a couple of years ago and has been managed through Ontario Centres of Excellence, which is undergoing a major restructuring.

  • Mespere Lifesciences has received $122,618 through the National Research Council's IRAP program. Mespere has developed non-invasive technology to monitor central venous pressure -- the pressure of blood near the heart. It is located at the Accelerator Centre.

  • ParkVu has been selected as one of six presenters at CTIA Fund Fest this Friday, part of the CTIA Wireless IT & Entertainment conference in San Diego. Organizers say the Fund Fest will "spotlight the brightest, most innovative and promising companies in wireless." An investor panel will pick its favourite among the six, while attendees can vote for the "people's choice."

  • Joseph Fung (formerly of Lewis Media) and UW's Jesse Rodgers have launched Tribe. The company is developing HR management software targetted at companies with fewer than 200 employees.

  • Ladybug Teknologies has launched its BAQ Tracker Mobile application for the BlackBerry. It enables users to determine their blood alcohol concentration level through a simulation tool. The company says the $11 software is a less precise but far less expensive alternative to a breathalyzer -- one that is affordable for a wide range of users who wouldn't buy their own breathalyzer.

  • Tungle announced the availability of its Web-based cross-platform calendar sharing software for the iPhone. It made the announcement at DEMOfall in Boston.

  • Enflick formally announced the launch of its Unlimited SMS service that provides unlimited text messaging in the U.S. and Canada for the iPhone and iPod Touch. Unlimited SMS is sold through iTunes for $4.99. It first became available earlier this year. Reviews posted on iTunes have been mixed, averaging two stars out of five. Enflick was founded by UW student Derek Ting and is based at the Accelerator Centre.

  • LoyaltyMatch was one of the companies mentioned in a Toronto Star story about reward points.
[7]---------------------------------------------------------------
Miscellaneous Tidbits
  • The Canadian 2009 Technology Fast 50 list is out -- ranking tech companies by revenue growth from their 2004 and 2008 fiscal years (they call it "revenue growth over five years" but the first year is used as the base, so they're comparing revenue numbers that are four years apart). Local companies on the list are: Arise (#15), Sandvine (#17), RIM (#19), Navtech (#34), and Desire2Learn (#41). RIM has made the list in each of the 12 years the award has been presented. This was Arise's first appearance, while Desire2Learn (4th year), Sandvine (3rd year), and Navtech (2nd year) are all repeat winners. RIM also received the 2009 Technology Fast 50 Leadership award for telecom.

  • Navtech's been a private company for nearly two years, but based on its Tech Fast 50 ranking, it would have had US$44.3 million in revenue in its fiscal 2008 year. That would have been up about 6% from its run rate over the first nine months of FY07. At that time, the company was below the R&D spending requirements for the Tech Fast 50, so it must have beefed up its R&D spending over the next 15 months.

  • Com Dev has been named one of two recipients of the Desjardins Business Excellence Award for Large Business, part of the Ontario Business Achievement Awards from the Ontario Chamber of Commerce. The award will be presented at a gala at the Metro Toronto Convention Centre next month.

  • Guelph's Innosphere announced that sales in the fiscal year ended June 30 were up 23% from last year. The 15 year-old company performs outsourced software development and QA.

  • Vestec has partnered with Digium, developers of the Asterisk telephony software. Vestec will provide its speech recognition engine for use on the open source Asterisk platform. Vestec says it makes speech recognition capabilities affordable at a cost of $99 a port.

  • IMS' iLane is one of three nominees for best Bluetooth accessory at the CTIA Hot for the Holidays Awards. Winners will be announced later this week at the CTIA Wireless IT & Entertainment conference in San Diego.

  • MedShare has partnered with Montreal's Qualicode Software to create a bilingual version of its BlackBerry software for home healthcare workers.

  • A guest columnist at the Wall Street Journal's website listed Open Text as one of "five companies Google might buy next." Desire2Learn competitor Blackboard was also on the list.


Monday, September 14, 2009

Waterloo Tech Digest - September 14, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. RapidMind acquired by Intel
  2. T-Ray Science files for IPO
  3. MKS starts fiscal 2010 with a big quarter
  4. Com Dev reports continued strength in sales and profits
  5. Arise signs $10M term sheet as prices & revenues fall
  6. Open Text ends year with 8% growth, earnings of US$57M
  7. Descartes sales up 9%
  8. STOCK REPORT: Descartes shares near seven-year high
  9. Startup notes from Energent, Terapac, Primal Fusion, Xylotek, LiveHive
  10. Miscellaneous tidbits from eSentire, Dalsa, Arius, IMS, Biorem, RIM, Kaleidescape, Everus, Broadband Learning
////////////////////////////////////////////////////////////
S P O N S O R S

EXCITING TIMES
"People crowded around our booth at the WES BlackBerry Conference to watch our new iLane video. Check it out at www.ilane.com. Bell Canada has recently signed on to promote and distribute our product. Exciting times for IMS!" Tony and Ken, IMS
MFX Partners has a 25 year history of elevating B2B brands (including iLane and IMS), from concept to living breathing product. To see more visit our website.

EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

GO BEYOND STAFFING
For over 30 years, Procom has been matching people with companies, for jobs that are a perfect fit - contract, full-time, or part-time. We partner with large and small companies across North America, including some of the world's best-known enterprises, to provide a range of services, training tools, and the ideal candidates to help them flourish. We've been named one of Canada's 50 Best Managed Companies and go beyond staffing to look strategically at the processes and people that will truly help a company succeed. Phone: 519.885.4331.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

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

[1]---------------------------------------------------------------
RapidMind acquired by Intel
August 20, 2009

Intel has bought RapidMind for an undisclosed amount. It says it intends to keep nearly all of RapidMind's 20-or-so Waterloo employees.

RapidMind -- originally called Serious Hack -- was founded by UW professor (and former UW student in his undergrad years) Michael McCool and then-UW grad student Stefanus Du Toit. McCool and Du Toit were originally known for Sh, a system that simplified the programming of shading for computer graphics. RapidMind developed technology that made it easier for developers to make use of multi-core processors. Since the beginning of 2006 it has been led by CEO Ray DePaul, who had previously worked at Waterloo tech firms Kaleidescape, RIM, and Switchview.

In 2007, RapidMind raised $10 million in venture capital in a round led by Ventures West with EdgeStone and BDC participating. BDC had provided $500,000 in seed funding in 2006, and the company also received support from OCE. It also received $200,000 last year from the Ontario government as the winner of the 2008 Premier's Catalyst Award for start-up company with the best innovation.

Intel becomes the latest in a long list of multi-billion-dollar tech giants who have been brought to Waterloo through the acquisition of a locally-developed startup. It follows Electronic Arts, Google, Sybase, Agfa, Oracle, and several others over the years.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS RELEASES NEW TECHNOLOGY LAW HANDBOOK
Gowlings is pleased to announce the first edition of Technology Law Issues--15 articles on topics ranging from valuing patents to open source software. Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to a broad range of clients, from start-ups to public companies. 40 professionals serving Waterloo Region and Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

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

[2]---------------------------------------------------------------
T-Ray Science files for IPO
August 31, 2009

T-Ray Science has filed a preliminary prospectus for a $1-1.5 million IPO. It plans to list its shares on the TSX Venture Exchange. The offering values T-Ray at $5.6 million (pre-money).

The company has an office at the Accelerator Centre and its CTO is Daryoosh Saeedkia, who received his doctorate from UW in electrical and computer engineering in 2005. Jake Thiessen, director of UW's School of Pharmacy (formerly director of Health Sciences) is on T-Ray's board of directors. Most of the company's other directors, and its CEO and CFO, are based in Vancouver. CEO and largest shareholder Thomas Braun -- a practicing securities lawyer until last year -- splits his time between T-Ray and LGC Skyrota Wind Energy Corp., which just went public itself last month.

T-Ray is developing products that use terahertz radiation, an alternative to X-rays and other imaging technologies such as ultrasound, MRI, and NIR. It says it hopes to "revolutionize the way skin cancer is diagnosed and cured" by creating portable scanning devices that are compact enough to be used in doctors' offices, clinics, and other non-hospital locations.

It says it has exclusive licenses for technologies developed at MIT and Germany's RWTH Aachen University. T-Ray lists its main collaborators as UW, OCE, NSERC and NRC. It has received $200,000 in NRC-IRAP grants and entered a two-year collaboration agreement with OCE in 2007 under which OCE contributed an estimated $306,000. It has also received funding from DFAIT for a research program in Armenia under a former visiting scientist at UW's Microwave and Terahertz Photonics Integrated System Lab. T-Ray has filed five provisional applications for patents.

The company raised about $500,000-670,000 earlier this year through private placements. At March 31, T-Ray was pre-revenue and reported R&D expenses of $464,000 over the prior 15-month period (with G&A expenses of $649,000). It sold its first products in April and June for revenue of about US$3,325. At March 31, the company had an accumulated deficit of $1.6 million with working capital of $61,275. It subsequently closed a private placement on July 31.

Under the IPO, T-Ray will offer 5-7.5 million new shares at $0.20 each for gross proceeds of $1-1.5 million. It currently has 27.9 million shares fully diluted. The agent is Research Capital, which tried to raise money with ARISE five years ago. Research Capital will receive 10% of the gross plus agent's warrants equal to 10% of the shares sold, along with a $25,000 fee.

[3]---------------------------------------------------------------
MKS starts fiscal 2010 with a big quarter
September 9, 2009

Following a couple of disappointing quarters, sales at MKS jumped back up to the levels they were at six and nine months ago -- with stronger earnings this time around. MKS reported earnings of US$1.4 million on sales of US$15.7 million in the quarter ended July 31 (Q1 10). Sales were up 16% from the previous quarter and 2% from a year ago.

Other than its record-breaking Q4 2008, this was probably MKS' best quarter in years. Operating income of US$2.3 million was well above the US$627,000 reported in Q4 and the US$1.1 million from a year ago. ALM sales in the quarter accounted for 91% of revenue, compared to 87% a year ago. The company had one licensing deal worth more than US$2 million.

Operations provided US$3.6 million in cash, with US$1.3 million returned to shareholders as quarterly dividends. MKS ended the quarter with US$19.7 million in cash.

[4]---------------------------------------------------------------
Com Dev reports continued strength in sales and profits
September 3, 2009

A strong bottom line for Com Dev in the quarter ended July 31 (Q3 09), as the company reported earnings of $5.2 million on sales of $61.5 million. Sales were up 19% from a year ago and down 4% from the record levels of Q2, but improvement in margins led to a small sequential increase in gross profits.

With one quarter remaining in the fiscal year, Com Dev sales are up 21% in 2009, so it should easily meet its forecast of at least 15% growth for the year.

The company booked $45 million in new orders in Q3 and its backlog at quarter-end was $156 million, down from $173 million at the start of the quarter. Com Dev says it expects to win work on 10 of the 11 satellite programs announced in the quarter (and on all four of the programs announced in Q1, with three already signed).

Operations used $6.2 million in cash and Com Dev ended the period with $19.8 million in cash, down $12.1 million from the end of Q2.

[5]---------------------------------------------------------------
Arise signs $10M term sheet as prices & revenues fall
August 12, 2009

Arise lost $13.6 million on sales of $6.6 million in the quarter ended June 30 (Q2 09). Revenue was down 8.2% from the previous quarter, although the company's shipments of PV cells increased from 2.3MW to 2.9MW over the same period. Prices for PV cells continue to decline and the company says it expects they will go lower still. PV sales accounted for nearly all of Arise's revenue in the quarter, as its home installation PV systems business generated only $33,000 in sales.

The loss included a $6.3 million inventory writedown, bringing the total writedowns over the last three quarters to $24.1 million. Excluding the writedown, Arise still had gross margins of -27.7%, a big drop from levels in the last three quarters.

Operating expenses went up 13% from Q1, but that was because of a reversal of $872,000 in government R&D funding that had been recorded in the last two quarters. The funding was tied to Arise's planned Kitchener PV silicon plant, which has been put on hold.

Operations used $843,000 in cash and the company was down to $3.0 million in cash (including restricted cash) at the end of the quarter, a drop from $7.2 million at the beginning of the period. The company says it has signed a term sheet with an unidentified fund that will provide it with up to $10 million in cash as needed. Arise would receive the money in return for common shares sold to the fund at a discount to market rates. Arise filed a preliminary prospectus which would cover up to $50 million raised over a 25-month period through various equity and debt offerings. At June 30, Arise had a working capital deficiency of $27.1 million, or $18.2 million excluding deferred revenue.

Arise also disclosed that one of its minor silicon suppliers, LDK Solar Hitech, has filed a statement of claim against the company, seeking about $940,000. Arise says it found the quality of wafers the company was supplying to be inadequate.

[6]---------------------------------------------------------------
Open Text ends year with 8% growth, earnings of US$57M
August 20, 2009

Open Text ended its 2009 fiscal year with Q4 sales of US$203.4 million in the period ended June 30, up slightly from a year ago and 6% from the previous quarter. Earnings of US$19.5 million were down from US$22.0 million in Q3. Operations generated US$38.6 million in cash in the period.

For the year, earned US$56.9 million on sales of US$785.7 million, which were up 8% from 2008.

The company ended the year with US$275.8 million in cash.

[7]---------------------------------------------------------------
Descartes sales up 9%
September 10, 2009

Descartes earned US$812,000 on sales of US$18.6 million in the quarter ended July 31 (Q2 10). Sales were up 7% from the previous quarter and 9% from a year ago.

Income from operations was US$2.7 million, up from US$1.7 million in Q1, but income tax expenses erased 71% of that, and the bottom line was below the US$2.2 million recorded in the previous quarter. Descartes expects that income tax expenses for the year will be 50-55% of operating income.

Operations generated US$4.3 million in cash, about the same as in Q1. Descartes ended the quarter with US$51.2 million in cash -- more than enough to continue to look for other acquisition opportunities.

[8]---------------------------------------------------------------
STOCK REPORT: Descartes shares near seven-year high
August 2009

Biorem shares climbed to their highest month-end price since February after the company announced strong sales growth in its most recent quarter as well as a seven-figure government investment (see tidbits below).

Descartes shares, after an 11% gain in August and the same percentage again so far in September, are now trading at their highest levels in nearly seven years. MKS shares also followed a strong August with an equally strong September, and are now at their highest point in two-and-a-half years.

For the month of August:

Biorem [TSXV: BRM] +24%
Descartes [TSX: DSG] +11%
MKS [TSX: MKX] +9%
TurboSonic [OTCBB: TSTA] +8%
Dalsa [TSX: DSA] +4%
--S&P TSX COMPOSITE INDEX +1%
RDM [TSX: RC] 0%
===============================
--S&P TSX VENTURE INDEX -0%
RIM [TSX: RIM] -2%
Sandvine [TSX: SVC] -5%
Arise [TSX: APV] -21%
ATS [TSX: ATA] -5%
Open Text [TSX: OTC] -6%
Com Dev [TSX: CDV] -15%

August had been the best-month end price for Dalsa shares since September of last year, and the stock is up another 10% so far this month. Sandvine shares didn't have a good August, but are up 16% in September. For no real reason that I can see, Com Dev shares had their lowest month-end price in three-and-a-half years. They're rebounded a little this month following the announcement of the quarterly results.

Companies with core operations outside the area:

Agfa-Gevaert [Brussels: AGFA] +66%
Acorn Energy [Nasdaq: ACFN] +13%
Ansys [Nasdaq: ANSS] +12%
ON Semiconductor [Nasdaq: ONNN] +11%
Intel [Nasdaq: INTC] +6%
Blue Coat [Nasdaq: BCSI] +5%
Google [Nasdaq: GOOG] +4%
NCR [NYSE: NCR] +3%
===================================
Oracle [Nasdaq: ORCL] -1%
Sybase [NYSE: SY] -3%
McAfee [NYSE: MFE] -11%
Electronic Arts [Nasdaq: ERTS] -15%

////////////////////////////////////////////////////////////
S P O N S O R

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[9]---------------------------------------------------------------
Startup Notes
  • Energent has become the third official graduate of the Accelerator Centre, following Primal Fusion and Miovision. The company develops software to help companies monitor and manage their energy consumption. Its largest customer is GM Canada. The company is a participant in the OCE-sponsored, UW-led Energy Hub Management System program, announced early in 2008.

  • Terepac, which itself is sort-of an Accelerator Centre graduate, announced it has launched pilot-scale production of its Microscale Circuit Cluster products and has started shipping samples to customers. The company says its technology will lead to wireless sensing and two-way communication systems "inexpensive and unobtrusive enough to be placed on virtually all ordinary objects."

  • Primal Fusion has published a tagged directory of sites that have been created by its alpha testers on a wide range of topics.

  • Kitchener-based IT consulting firm Xylotek Solutions has made the Profit Hot 50 list of "Canada's hottest startups" for the second year in a row. The company reported 123% revenue growth between 2006 and 2008, ending with $1.9 million in sales (slightly above its 2007 sales of $1.8 million). This was Xylotek's final year of eligibility for the listing.

  • LiveHive has introduced its Social Engagement Index, which it says ranks TV shows (at least 60 of them) by how active their viewers are in various online activities relating to the show while it's airing. Programs are ranked by their engagement levels per audience size, so a show with a small but highly engaged audience outranks one with a huge number of moderately engaged viewers. The low-rated One Tree Hill and 90210 top the LiveHive list by a wide margin. LiveHive's tvClickr Facebook app is one of the data sources and apparently Twitter is as well. Other sources haven't been specified. LiveHive says it will release "demographic trends of TV social engagement" this month.
[10]---------------------------------------------------------------
Miscellaneous Tidbits
  • Waterloo placed two companies in the top 15 on Fortune's list of the 100 fastest-growing companies in the world. RIM took top spot on the list, with Open Text ranking 15th. California-based chip maker Sigma Designs placed second, with Chinese search engine Sohu.com in third.

  • Cambridge's eSentire is getting $100,000 in IRAP funding for "two separate projects related to software security and network monitoring."

  • Dalsa is a founding partner of a new microelectronics innovation center in Bromont, Quebec, site of its semiconductor fab. The centre has received $178 million in grants from the governments of Quebec and Canada. Dalsa will assist in the design and operations of the centre, particularly its state-of-the-art 200mm MEMS and wafer-level packaging systems. IBM Canada is the other industrial partner.

  • Arius' OpenAdvantage account opening software is being used by Winnipeg investment firm Wellington West Capital. It says the software replaces what had been a five-day, manual paper-based process.

  • There was some kind of fundraising or restructuring at IMS in August, as the Ontario Securities Commission reported a $30 million transaction with one purchaser on August 24.

  • The Ontario government is investing $1.2 million in Biorem through its cleantech Innovation Demonstration Fund. The money will be used to fund two prototype demonstration projects, including one at the Preston Wastewater Treatment Plant in Cambridge. The company reported a $239,000 loss on sales of $5.7 million in the quarter ended June 30 (Q2 09). Sales were up 40% from the previous quarter and 130% from a year ago. The company ended the quarter with an $11.1 million order backlog, down from $14.6 million at the start of the period.

  • RIM has acquired Toronto's Torch Mobile, developers of the WebKit-based Iris Browser (which had been primarily focused on Windows Mobile devices).

  • Following a decision by a California appellate court, Kaleidescape is headed back to court to resolve the suit filed against the company by the DVD Copy Control Association. In 2007, Kaleidescape had successfully argued that a set of DVDCCA specifications were not part of its agreement and, therefore, it was not obliged to comply with them. But the appeals court found that Kaleidescape had promised to conform to specifications that would be provided by DVDCCA at some point in the future. With the specifications now considered to be part of the agreement, the matter goes back to the trial court to determine if there was a breach. DVDCCA says it will seek an injunction against the sale of Kaleidescape's products that do not comply with the agreement. Kaleidescape may seek to appeal the decision to the California Supreme Court.

  • Waterloo- and Holstein-based Everus Communications, which provides high-speed Internet access to rural Ontario communities, has gone into receivership. It is continuing to operate under the receiver's control while an investor is sought. The company is involved in projects in Grey County and Wellington County, among others. In 2008 it announced it had received $5 million in funding from Toronto's C.A. Bancorp, but Everus told the Owen Sound Times in August that its financial backer has decided to dispose of its holdings and would not fund the company's Grey County project, for which Everus had committed $2 million. The company used to be known as High-Speed FX.

  • From the where-aren't-they-now file: Broadband Learning Corp., which was at least nominally based in Waterloo when it went public in 2006 (it evolved out of Waterloo's AccessTNG, but most of its operations were based in Utah) has announced that it is ceasing operations. Most directors and executives have resigned and the company says its liabilities "far exceed" the value of its assets.


Monday, August 10, 2009

Waterloo Tech Digest - August 10, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. Desire2Learn wins appeal, Blackboard patent claims invalid
  2. Maplesoft to be acquired by its Japanese reseller for $35M
  3. Well.ca raises $1.1M from angels
  4. Dalsa sees recovery ahead; Chamberlain to leave management team
  5. Jim Estill leaves Nu Horizons
  6. RDM returns to profitability in Q3
  7. RIM criticizes Nortel asset auction; settles Visto suit
  8. STOCK REPORT: Brief slip for Sandvine in uneventful month
  9. Miscellaneous tidbits from EA, Tungle, Well.ca, Peer Group, Sandvine, Coreworx, PrinterOn, exactEarth, Open Text, Arise, Biomedical Photometrics
////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

GO BEYOND STAFFING
For over 30 years, Procom has been matching people with companies, for jobs that are a perfect fit - contract, full-time, or part-time. We partner with large and small companies across North America, including some of the world's best-known enterprises, to provide a range of services, training tools, and the ideal candidates to help them flourish. We've been named one of Canada's 50 Best Managed Companies and go beyond staffing to look strategically at the processes and people that will truly help a company succeed. Phone: 519.885.4331.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

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

[1]---------------------------------------------------------------
Desire2Learn wins appeal, Blackboard patent claims invalid
July 27, 2009

Desire2Learn has won its appeal of the February 2008 U.S. court judgment that had found the company infringed the patent of Washington, DC-based competitor Blackboard. The United States Court of Appeals for the Federal Circuit has overturned that judgment and invalidated the three patent claims used against Desire2Learn at the original trial.

The lower court had ruled that 35 of Blackboard's patent claims were invalid, but the three claims that remained were all Blackboard needed to win its case. The appeals court agreed that the first 35 claims were invalid, and found the remaining three to be invalid as well.

As a result of the original trial, Desire2Learn paid Blackboard US$3.3 million in June 2008 as compensation for lost profits and royalties. Following the decision of the appeals court, Blackboard recorded a US$3.5 million expense in the quarter ended June 30, but also made it clear that it was in no hurry to pay the money back (plus 6% interest per year) and would be waiting for a "final and non-appealable" decision. It plans to seek a review of the latest decision. Blackboard has also recorded a non-cash charge of US$7.5 million for impairment of capitalized patent costs.

Blackboard was issued a Canadian patent (#2378200) in March and filed suit the following month against Desire2Learn in Canada's Federal Court, accusing the company of infringing -- and inducing others to infringe -- Blackboard's Canadian patent.

[2]---------------------------------------------------------------
Maplesoft to be acquired by its Japanese reseller for $35M
July 30, 2009

Maplesoft will be acquired by Tokyo-based software distributor Cybernet Systems Co. Ltd. in a $35 million deal expected to close next month. Maplesoft will continue to operate as a standalone business. It has 122 employees.

Company co-founder Keith Geddes and CEO Jim Cooper own nearly 42% of the company between them, with Geddes holding a 22% stake and Cooper 19.8%. According to Cybernet, Maplesoft had sales of $14.6 million in the year ended March 31, 2009, down slightly from the previous year, but up about 12% from 2007. The company has been profitable in each of the last three years, with earnings around $360,000 in fiscal 2009. Operating income for 2009 was about $233,000.

Maplesoft -- the corporate name is still Waterloo Maple Inc. -- was incorporated in 1988, although the research that went into the product had started years earlier. The company was founded by Gaston Gonnet (president) and Keith Geddes (VP), both UW professors at the time and members of the computer science department's Symbolic Computation Group. Geddes remains at UW -- now emeritus -- while Gonnet has been based in Switzerland for several years.

Tim Bray, who would later join Open Text and go on to become well-known in computer circles, particularly for his work on XML, was company CEO in the late 1980s. Ron Neumann -- later of SlipStream and now Dejero Labs -- was CEO through a period of high growth in the early 1990s when Maple went from just a handful of staff to over 40 by 1993.

It was in this period that the company got caught up in a messy internal legal battle that went on for years. It filed suit against Gonnet, accusing him of breaching an agreement among all the creators of the Maple software to transfer IP ownership to the company. Maple claimed that instead of transferring ownership, Gonnet signed a restricted-use, royalty-bearing license for the technology -- an agreement the company said it didn't know about for almost two years. Maple asked for $8 million and ownership of the IP. In response, Gonnet said there never was any enforceable agreement of the kind Maple claimed. It wasn't until around 1999 that the two sides came to a settlement.

In the meantime, Neumann was let go and Dieter Hensler became president and CEO in 1994 after running the company's office in Germany. He resigned in 1998 and, following a period with a team of executives as acting CEO, Ian Suttie took the reins in March 1999. This was during the tech boom, and the company prepared to go public -- going so far as to release its quarterly financial results while still a private company. By now, Maple had grown to nearly 100 employees. But the boom went away, the IPO never happened, and Suttie left just a little more than a year after he started. He was succeeded in October 2000 by Jim Cooper, hired the previous year as R&D VP.

After all that turmoil, it's been pretty quiet ever since. Nearly nine years later, Cooper remains CEO and the company's software has expanded from an academic user base in the 1990s to a broader mix of business and academic users today. The automotive industry is apparently one of the largest markets for the company. Sales growth has been modest, expanding from $10 million in annual revenue a decade ago to nearly $15 million today.

Over the years, some of the notable members of the local community who have served on Maple's board include Wes Graham, Randall Howard, Ted Cross, Peter Schwartz and John Whitney (and probably others I never heard about).

Cybernet Systems is a distributor of computer-aided engineering (CAE) software, and distributes Maplesoft products in Japan, China and Taiwan. After being launched in 1985 as a spinoff from Control Data Corporation, the company was later acquired by Kobe Steel and then by Fujisoft in 1999. It has been listed on the Tokyo Stock Exchange since 2003 and Fujisoft remains majority owner.

Maplesoft will be its second acquisition of a North American software company. Just days before the Maplesoft announcement was made, Cybernet acquired Sigmetrix, a developer of mechanical engineering software in Dallas.

[3]---------------------------------------------------------------
Well.ca raises $1.1M from angels
July 30, 2009

Well.ca has closed a $1.1 million angel financing, led by Jordan Banks's Thunder Road Capital. It's the second round of funding for the company, which raised $425,000 in May 2008 from six investors, including Jim Estill. Banks will join Well.ca's board of directors.

Banks was CEO of Toronto's JumpTV for about seven months starting in November 2007, essentially replacing Kaleil Isaza Tuzman, who was a familiar face in the Waterloo area. Banks was CEO when the company merged with New York-based NeuLion. Before that, he had been managing director of eBay Canada.

Other investors in the round include Andrew Sloss, the UW grad who became eBay Canada's "country manager" in 2007 and is GM of Kijiji Canada (an eBay company), David Ceolin, founder of marketing services company Digital Cement, acquired by Pitney Bowes in 2007 for $40 million, and pharmacist Hilton Silberg, founder of Hamilton's DayNight Pharmacy chain, sold last year to the company behind Rexall Pharma Plus.

After some strong years for startups in the region, this deal was the first major round of funding to be announced in 2009 by a local company less than seven years old.

According to Well.ca, its monthly sales in June were four times what they were a year earlier and its web traffic was up 135% over that period. It says it has now shipped nearly 250,000 items since it launched.

[4]---------------------------------------------------------------
Dalsa sees recovery ahead; Chamberlain to leave management team
July 29 & August 5, 2009

Not a good quarter for Dalsa in the period ended June 30 (Q2 09), but the company sees indications of a recovery in its markets, particularly in the Asia/Pacific region.

For the period, Dalsa earned $142,000 on sales of $40.3 million. Sales were down 24% from a year ago, but up 6% from a weak Q1. Dalsa had a $326,000 operating loss in the quarter -- down from operating income of $698,000 last quarter -- partly caused by the appreciation of the Canadian dollar in the quarter, which created a $1.1 million foreign exchange loss. A $491,000 income tax recovery -- also related to foreign exchange -- kept the bottom line in the black. Revenue in both of the company's business segments was up from the previous quarter and down from a year ago.

Operations generated $2.5 million in cash, and the company spent $3.1 million on property and equipment and another $0.9 million was distributed to shareholders as dividends. Dalsa ended the quarter with $9.9 million in cash, down $1.6 million from the end of Q1. Some digital cinema assets were sold in the quarter for $0.7 million.

It ended the quarter with a record order backlog of $99.7 million.

The company also announced that founder and chairman Savvas Chamberlain will be leaving the management team and stepping down as CTO in October. He will remain chairman. Chamberlain became CTO two years ago when he passed the CEO reins to Brian Doody.

[5]---------------------------------------------------------------
Jim Estill leaves Nu Horizons
August 3, 2009

Jim Estill has already parted ways with Nu Horizons Electronics, the Nasdaq-listed New York company that attracted him to the U.S. He was CEO for just two months. The announcement of his departure didn't give any explanation, but obviously the fit wasn't what had been expected -- even though the two sides had talked for months before Estill started the job on June 1.

Estill had signed a four-year employment agreement on May 8. Two of the company's three founders, who had run the business for over 25 years, were executive chairman and COO, with Estill in the middle as CEO. The three executives formed a management committee and any major business matter on which the three did not unanimously agree would be brought to the board of directors.

Estill was to receive a base salary of US$350,000 plus bonuses up to additional US$525,000 with a US$262,500 target. If the company ever lost money for three consecutive quarters, his salary would have fallen to US$30,000 until the next profitable quarter was announced.

He will receive a US$175,000 severance payment and the company would also pay his moving expenses to return to Canada, although Estill told Long Island's Newsday that he planned to remain in the area for now.

[6]---------------------------------------------------------------
RDM returns to profitability in Q3
July 30, 2009

After five consecutive money-losing quarters, RDM earned $175,000 on sales of $5.9 million in the quarter ended June 30 (Q3 09). Sales were up 3% from the previous quarter and 13% from a poor Q3 last year.

Digital imaging accounted for half of all revenue, with sales up 21% from Q2. RDM shipped 5,250 scanner units in the quarter. Sales from RDM's payment processing services business were down 4% sequentially, which the company attributed to a rising Canadian dollar. ITMS transaction volumes were up 4% from Q2 and 38% from last year.

As the company had warned, revenue from its electronic payments solutions (EPS) business took a steep tumble following a reduction in RDM's contract work for the U.S. government. EPS revenue was down more than 65% both quarter-over-quarter and year-over-year.

Foreign exchange losses had taken a huge bite out of the company's bottom line in its previous two quarters, but that was completely turned around in Q3 and RDM reported a $692,000 foreign exchange gain.

The company ended the quarter with $16.9 million in cash.

RDM has started beta tests of its Simply Deposit Mobile software for BlackBerrys and iPhones and the product is expected to be launched soon.

[7]---------------------------------------------------------------
RIM criticizes Nortel asset auction; settles Visto suit
July 20 & August 7, 2009

RIM has complained about the way Nortel's CDMA and LTE access businesses were auctioned off. Sweden's Ericsson won the auction, which was held as part of Nortel's bankruptcy proceedings. RIM says it was "effectively prevented" from bidding because it would only be recognized as a qualified bidder if it agreed not to bid on other Nortel assets over the next year. RIM was interested in buying the businesses along with complementary Nortel assets, including the underlying patents for the LTE business, but the auction was set up so that it could only bid on one or the other, at least within the next year. It chose not to make a bid.

RIM has been playing the maple leaf card, saying that it would keep the Nortel technology in Canadian hands, and went so far as to suggest that there are national security reasons for the technology to stay Canadian. Mike Lazaridis appeared before a parliamentary committee last Friday, asking the federal government to use its influence to arrange a meeting between RIM, Nortel, and Ericsson executives and to review the deal to make sure it is in Canada's best interests. Nortel and Ericsson have argued that the deal isn't subject to review because -- even though Ericsson agreed to pay $1.13 billion -- the assets only have a book value of about $150 million, which is well below the threshold for a review under the Investment Canada Act.

Lazaridis said RIM thought it had an agreement with Nortel to buy some of the company's assets before it filed for bankruptcy and that it felt "snookered." He evoked the Avro Arrow and said the government needed to protect "a national treasure." Among those supporting the calls for a government review is former Mulroney finance minister Don Mazankowski.

In other news from RIM, the company will pay Visto US$267.5 million to settle the patent infringement suit the California-based company had filed in 2006. Earlier this year, Visto acquired Good Technology (which, over the years, had been sued for patent infringement by both RIM and Visto) from Motorola and is now using the Good Technology name in place of Visto. During the NTP-RIM patent dispute, NTP became shareholders in Visto and the two signed a licensing agreement that NTP trumpeted as proof its patent claims were valid.

[8]---------------------------------------------------------------
STOCK REPORT: Brief slip for Sandvine in uneventful month
July 2009

Not a particularly noteworthy month on the stock market for local tech companies -- only one company saw a double-digit shift in its stock price (compared to an average of eight companies each month this year). Sandvine shares fell 11% in July, but have already recovered most of those losses so far in August.

While I'm on the topic of Sandvine shares, I realized right after I sent out last month's digest (e-mail version only) with the market capitalization ranking that I hadn't updated the Sandvine number. The company currently has a market value of $172 million, up from $110 million at the end of 2008.

For the month of July:

RDM [TSX: RC] +8%
--S&P TSX VENTURE INDEX +8%
Dalsa [TSX: DSA] +8%
Com Dev [TSX: CDV] +8%
ATS [TSX: ATA] +6%
MKS [TSX: MKX] +5%
--S&P TSX COMPOSITE INDEX +4%
Arise [TSX: APV] +3%
===============================
Descartes [TSX: DSG] -0%
RIM [TSX: RIM] -1%
Biorem [TSXV: BRM] -3%
Open Text [TSX: OTC] -4%
TurboSonic [OTCBB: TSTA] -5%
Sandvine [TSX: SVC] -11%

MKS shares had a 1-for-5 reverse split during the month, leaving the company with just over 10 million outstanding shares -- the smallest number of all companies listed here. MKS said the consolidation would result in a trading price "that better reflects its maturity, profitability and dividend yield."

Dalsa shares have gone up in four of the last five months and are up another 6% so far in August. In July, they had their best month-end price since September.

Companies with core operations outside the area:

Acorn Energy [Nasdaq: ACFN] +44%
Sybase [NYSE: SY] +14%
Blue Coat [Nasdaq: BCSI] +13%
NCR [NYSE: NCR] +9%
Agfa-Gevaert [Brussels: AGFA] +7%
ON Semiconductor [Nasdaq: ONNN] +6%
McAfee [NYSE: MFE] +6%
Google [Nasdaq: GOOG] +5%
Oracle [Nasdaq: ORCL] +4%
Ansys [Nasdaq: ANSS] +0%
===================================
Electronic Arts [Nasdaq: ERTS] -1%

[9]---------------------------------------------------------------
Miscellaneous Tidbits
  • EA acknowledged its acquisition of J2Play (see last month's digest) in a things-we-did-this-quarter list in the news release announcing its latest financial results.

  • Tungle (#9) and Well.ca (#15) both made Backbone magazine's PICK 20 list of Canada's leading Web 2.0 companies.

  • The Peer Group has acquired the connectivity software business of California's Asyst Technologies for US$2 million. The Asyst products are used by many of the world's largest semiconductor equipment manufacturers. The business became available after Asyst filed for bankruptcy protection in April. The Peer Group had been a reseller for the software.

  • Local MP Peter Braid, on behalf of the federal government, announced that Sandvine received a $1 million IRAP contribution. The company was also recognized for its R&D achievements with the National Research Council's Canadian Innovation Leader certificate.

  • Coreworx had sales of about US$1.1 million in the quarter ended June 30 (Q2 09), according to parent company Acorn Energy.

  • PrinterOn announced a partnership with Ricoh under which the Japanese company receives exclusive rights to embed PrinterOn software in its line of Wi-Fi hotspot printers. The announcement was made at a Williams Coffee Pub with federal cabinet minister Gary Goodyear in attendance.

  • David Martin, long-time product management VP at MKS, is now in a similar role at exactEarth, the new Com Dev subsidiary.

  • Open Text completed its US$321 million acquisition of Vignette (see May digest).

  • Arise has negotiated a one-year deferral on payments towards its $19.3 million (€12.55 million) in long-term debt raised to construct its manufacturing plant in Germany. Arise was scheduled to make quarterly payments of $963,000. It also negotiated an extension of a $15 million (€10 million) credit facility with a German bank to the end of this year.

  • Biomedical Photometrics has a new gallery of fluorescence pathology images, which includes what it believes may be the largest pathology image ever (61.3 gigapixels or 184GB).


Monday, July 13, 2009

Waterloo Tech Digest - July 13, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. EA comes to town; no announcement of J2Play acquisition
  2. Com Dev creates exactEarth
  3. Com Dev raises growth targets after another strong quarter
  4. Sandvine reports disappointing quarter
  5. RIM set to pass 30 million BlackBerry users this quarter
  6. STOCK REPORT: Com Dev shares fall despite good quarter
  7. Miscellaneous tidbits from Dalsa, Atria, Netsweeper, Navtech, PostRank, Arise, Maplesoft, TurboSonic, Biorem, Logisense
////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything from start-ups to global brands. Let¹s get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

GO BEYOND STAFFING
For over 30 years, Procom has been matching people with companies, for jobs that are a perfect fit - contract, full-time, or part-time. We partner with large and small companies across North America, including some of the world's best-known enterprises, to provide a range of services, training tools, and the ideal candidates to help them flourish. We've been named one of Canada's 50 Best Managed Companies and go beyond staffing to look strategically at the processes and people that will truly help a company succeed. Phone: 519.885.4331.

BERESKIN & PARR LLP - 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 Tim Sinnott (tsinnott@bereskinparr.com) or Jason Hynes (jhynes@bereskinparr.com), at (519) 783-3210 for more information.

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

[1]---------------------------------------------------------------
EA comes to town; no announcement of J2Play acquisition
June 10, 2009

California-based game developer and publisher Electronic Arts (EA) has disclosed that it now has an office in the Waterloo area, although it has not yet publicly confirmed that it has acquired Kitchener's J2Play. Stories of the J2Play deal began circulating through the area just over a month ago.

EA was founded in 1982 and is listed on Nasdaq with a market value of US$6.8 billion. It reported sales of US$4.2 billion in the year ended March 31. Over the years, it has made acquisitions in Burnaby (1991) and Vancouver (2002), and opened a Montreal office five years ago.

J2Play spun out of J2X Technologies in 2006 under founder Rob Balahura. A year ago, it received $250,000 from Facebook's fbFund. It had previously received funding from Toronto's Extreme Venture Partners.

Although the Waterloo area is known for software development, its record with games has so far been less than impressive. The most significant game developed in Waterloo was Unreal, over a decade ago. It was a blockbuster hit, but the company that created it -- Digital Extremes, led by UW grad James Schmalz -- found it didn't get much value from its just-off-UW-campus address (in what is now a RIM building, of course). Within about a year of Unreal's launch, the company chose to leave town and move down the 401 to London, where it remains to this day. Before Unreal, and while still in Waterloo, Schmalz created Extreme Pinball, which was distributed by EA.

[2]---------------------------------------------------------------
Com Dev creates exactEarth
June 10, 2009

Com Dev has created a new subsidiary, called exactEarth Ltd. It will be built around the space-based automatic identification system (AIS) technology that Com Dev has been developing for the last five years. Com Dev publicly unveiled the technology about two years ago.

The launch of exactEarth was announced at the Nor Shipping Conference in Oslo. The new company will be launching three AIS microsatellites, which are now under construction. Applications include search and rescue, environmental monitoring, vessel traffic management and maritime security.

exactEarth is based in Cambridge and is led by president Peter Mabson, who has been with Com Dev in various roles since 1981. The company will be moving into a 30,000 square-foot building that Com Dev recently agreed to purchase. The building will also be home to Com Dev's mission development group.

[3]---------------------------------------------------------------
Com Dev raises growth targets after another strong quarter
June 11, 2009

Another good quarter for Com Dev, which reported earnings of $4.9 million on sales of $64.1 million in the period ended April 30 (Q2 09). Sales were up 13% from the previous quarter and 18% from a year ago.

With sales over the first half of the fiscal year now up 22% from last year, Com Dev has raised its annual revenue forecast to at least 15% growth, up from the 10% it had stated up to now.

It booked $50 million in new business in the quarter and it ended Q2 with an order backlog of $173 million, down from $189 million at the end of Q1.

Gross R&D expenses were up 44% from Q1 to $5.5 million, or 9% of revenue.

Operations generated $7.2 million in cash and the company raised $21.6 million through a share offering. It ended Q2 with $31.9 million in cash, up $22.7 million from the end of Q1.

[4]---------------------------------------------------------------
Sandvine reports disappointing quarter
July 9, 2009

Comcast was back to being Sandvine's top customer in the quarter ended May 31 (Q2 09), although it was more by default as no other company provided the $2 million in revenue that Comcast accounted for in the period. That worked out to be 13% of Sandvine's total sales of $15.2 million -- down 18% from a good Q1 and up 37% from a weak period last year. Net loss in Q2 was $5.7 million, compared to $5.0 million in the previous quarter. The company described the results as "disappointing."

Sandvine won nine new customers in the quarter, with eight coming through resellers and one through a distribution partnership with Nokia Siemens Network. Of the nine new customers, six were mobile data operators and eight were from outside North America. Four customers -- including Comcast and the reseller who had been Sandvine's top customer in Q1 -- accounted for 47% of all sales.

R&D spending was slightly down from the previous quarter, but was still $6.9 million, or 45% of revenue. Operations consumed $1.5 million in cash and Sandvine ended the quarter with $90.0 million in cash, down $2.6 million from the start of the quarter.

[5]---------------------------------------------------------------
RIM set to pass 30 million BlackBerry users this quarter
June 18, 2009

A rarity for RIM -- I can't think when it last would have happened -- as the company reported a slight sequential decline in sales in the quarter ended May 30 (Q1 10). Revenue of US$3.42 billion fell 1% below that of the previous quarter (which had included the busy Christmas buying season). Sales were still up 53% from a year ago, and RIM's gross profit was up 8% from the previous quarter, thanks to stronger margins.

RIM's Q1 sales in the past two years had gone up 19% and 16% sequentially, but BlackBerry sales in this year's holiday buying period were particularly strong. Revenue fell within the company's forecast of US$3.3-3.5 billion. Net income for the quarter was US$643.0 million, up from US$518.3 million in Q4 and above the company's forecast.

There were 3.8 million new BlackBerry subscribers in Q1, just slightly down from 3.9 million in Q1. RIM will cross the 30 million subscriber mark in the current quarter.

RIM ended the quarter with US$2.4 billion in cash, up US$180.4 million from the end of Q4. Operations generated US$614.6 million in cash in the period.

RIM is forecasting sales of US$3.45-3.70 billion in Q2, with earnings of about US$575 million. It expects to add another 3.8-4.1 million BlackBerry subscribers in the quarter.

[6]---------------------------------------------------------------
STOCK REPORT: Com Dev shares fall despite good quarter
June 2009

When you see that a company 1) has released quarterly results in the month and 2) is at the bottom of the stock market performers for that month, the two are usually related. Not this time, though. Com Dev stock showed the biggest decline in the month -- down 19% -- but the drop wasn't triggered by the quarterly results (which were good) or of the new subsidiary.

The drop was partly caused by a one-day jump in the stock's closing price on the last day of trading in May. And then the stock did lose value later in the month, but that happened days after the company had made its major announcements. I don't know what caused the drop, but it was the second-worst month for Com Dev shares in the last year.

For the month of June:

TurboSonic [OTCBB: TSTA] +22%
Dalsa [TSX: DSA] +11%
Open Text [TSX: OTC] +10%
Descartes [TSX: DSG] +3%
--S&P TSX COMPOSITE INDEX +0%
===============================
ATS [TSX: ATA] -1%
--S&P TSX VENTURE INDEX -3%
RIM [TSX: RIM] -4%
MKS [TSX: MKX] -6%
Arise [TSX: APV] -10%
Biorem [TSXV: BRM] -13%
RDM [TSX: RC] -14%
Sandvine [TSX: SVC] -18%
Com Dev [TSX: CDV] -19%

Over the first eight days of trading in July, the stocks with double-digit percentage changes are Sandvine (-22%), Arise (-14%), and Biorem (-12%).

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +17%
Acorn Energy [Nasdaq: ACFN] +10%
NCR [NYSE: NCR] +10%
Oracle [Nasdaq: ORCL] +9%
McAfee [NYSE: MFE] +8%
Ansys [Nasdaq: ANSS] +4%
Google [Nasdaq: GOOG] +1%
ON Semiconductor [Nasdaq: ONNN] +1%
===================================
Sybase [NYSE: SY] -4%
Agfa-Gevaert [Brussels: AGFA] -6%

We've reached the half-way point of 2009, and here's how the shares of local companies have fared so far this year:

TurboSonic [OTCBB: TSTA] +182%
RIM [TSX: RIM] +67%
Sandvine [TSX: SVC] +64%
MKS [TSX: MKX] +44%
--S&P TSX VENTURE INDEX +37%
Descartes [TSX: DSG] +25%
RDM [TSX: RC] +15%
--S&P TSX COMPOSITE INDEX +15%
Open Text [TSX: OTC] +15%
===============================
Dalsa [TSX: DSA] -9%
Com Dev [TSX: CDV] -9%
ATS [TSX: ATA] -13%
Biorem [TSXV: BRM] -24%
Arise [TSX: APV] -28%

Market capitalization at June 30
in millions, using outstanding shares
(Year-to-date change in parentheses):

1. RIM ----- $46,910 (+$18,893)
2. Open Text ----- 2,236 (+318)
3. ATS ----- 381 (-5)
4. Descartes ----- 236 (+47)
5. Com Dev ----- 218 (+3)
6. Sandvine ----- 180 (+70)
7. Dalsa ----- 115 (-14)
8. MKS ----- 79 (+23)
9. Arise ----- 48 (-19)
10. TurboSonic ----- 22 (+14)
11. RDM ----- 20 (+2)
12. Biorem ----- 4 (-1)

Descartes jumped ahead of Com Dev in June, while TurboSonic edged in front of RDM.

[7]---------------------------------------------------------------
Miscellaneous Tidbits
  • Dalsa founder, chairman, and CTO Savvas Chamberlain was one of 59 appointees to the Order of Canada announced on Canada Day. Chamberlain was made a Member of the Order of Canada in recognition of "his contributions to Canada's reputation as a global leader in high-performance imaging and semiconductors."

  • Steve McCartney has left Atria Networks, where he had been president and CEO for six years, going back to the days when it was FibreTech Telecommunications and was owned by the hydro companies in Waterloo Region. (McCartney's predecessor at FibreTech, Bill Crosbie, briefly served as acting CEO of Amtrak last fall.)

  • Andrew Graydon is the new COO of Guelph's Netsweeper. He was previously CTO of Mississauga's BorderWare and before that was a VP at Toronto-based Wysdom.

  • UW grad Mike Neudoerffer has been promoted to COO of Navtech. He had been CTO for the last two years and joined the company as software development VP in 2006. It has also hired Lee Granger as product marketing VP. She was most recently a travel business consultant and previously spent 12 years with the American Automobile Association (AAA). The company -- which uses Toronto in the dateline of its news releases -- announced deals with three companies in Africa and the Middle East.

  • AideRSS/PostRank has partnered with Colorado-based Gnip and will provide the company with real-time and archived RSS content and metrics.

  • Arise got a three month extension on a €7.0 million ($11.4 million) line of credit that it uses at its German manufacturing plant.

  • Maplesoft, along with Toyota, are the industry sponsors of a new research chair at UW. The NSERC-Toyota-Maplesoft Industrial Research Chair in Mathematics-Based Modeling and Design has been granted to Prof. John McPhee, who had been executive director of WatCAR (Waterloo Centre for Automotive Research) at UW.

  • Maplesoft was also the recipient of the 2009 Omond Solandt Award from the Canadian Operational Research Society, recognizing the company's contributions to operational research in Canada.

  • Also from Maplesoft: the company reported that it has sold nearly 500 licenses of its MapleSim modeling and simulation software since the product was released in December.

  • TurboSonic received a $4 million order to design and install a catalytic gas treatment system at a plant in North Carolina.

  • Biorem announced that it has received two industrial air pollution treatment contracts in China worth $800,000 -- one from a repeat customer in Shanghai.

  • LogiSense's EngageIP billing and CRM software is being used by Omaha-based wireless broadband company KeyOn Communications.


Tuesday, June 09, 2009

Waterloo Tech Digest - June 9, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. Covarity closes $3M round
  2. Open Text reports solid profits and cash flow
  3. Open Text to acquire Vignette
  4. MKS ends profitable year
  5. Dalsa sued by ex-digital cinema GM
  6. Descartes sales up 7%
  7. STOCK REPORT: Another big month for TurboSonic, Sandvine shares
  8. Miscellaneous tidbits from Aeryon Labs, Bayalink, Bioinformatics Solutions, Unitron, Biorem, RIM, TurboSonic, Desire2Learn, Atria
////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

BERESKIN & PARR LLP - 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 Tim Sinnott (tsinnott@bereskinparr.com) or Jason Hynes (jhynes@bereskinparr.com), at (519) 783-3210 for more information.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything from start-ups to global brands. Let¹s get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

GO BEYOND STAFFING
For over 30 years, Procom has been matching people with companies, for jobs that are a perfect fit - contract, full-time, or part-time. We partner with large and small companies across North America, including some of the world's best-known enterprises, to provide a range of services, training tools, and the ideal candidates to help them flourish. We've been named one of Canada's 50 Best Managed Companies and go beyond staffing to look strategically at the processes and people that will truly help a company succeed. 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.

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

[1]---------------------------------------------------------------
Covarity closes $3M round
May 6, 2009

Covarity has raised another round of financing, receiving $3 million from Tech Capital Partners, BDC, GrowthWorks and VentureLink -- all of which were existing investors in the company.

Covarity raised $2.5 million in 2007 and $3.2 million in 2006, on top of other rounds since it was founded in 2001.

[2]---------------------------------------------------------------
Open Text reports solid profits and cash flow
May 6, 2009

Open Text had earnings of US$22.0 million on sales of US$192.0 million in the quarter ended March 31 (Q3 09). Sales were down 8% from the previous quarter but up 7% from a year ago. This was the first quarterly report to include a full three months of results from Captaris, which was acquired at the end of October. Operating income of US$21.0 million was within the range of the previous two quarters.

Operations provided US$72.9 million in cash and the company ended the quarter with US$237.0 million in cash, up US$64.2 million from the end of Q2.

Open Text also announced that it received a 10-year contract with the Government of Ontario to be the exclusive vendor of record of enterprise information management solutions. Along with managing information across all ministries, Open Text says its products will help the government to deploy wikis, blogs, forums and other social media applications.

[3]---------------------------------------------------------------
Open Text to acquire Vignette
May 6, 2009

Open Text will acquire Austin, Texas-based Vignette in a cash and stock deal valued at about US$310 million. Vignette will operate as a wholly-owned subsidiary of Open Text. The deal must still be approved by Vignette shareholders, and is expected to close later this year.

Vignette shareholders will receive US$8 in cash and 0.1447 Open Text common shares for each Vignette share. As of Friday's close, that would be a total of just under US$13 a share. At the time the announcement was made, Vignette shares were trading for US$9 and had been below US$6 as recently as March. Vignette shares last traded at a price above the Open Text offer last summer.

Vignette develops web content management software and has 700 employees worldwide. It reported a loss of US$1.8 million on sales of US$33.9 million in the quarter ended March 31 and has been reporting declining sales in recent quarters. Vignette was a high-flyer in the dot-com boom, with its shares peaking at a price around US$800, adjusting for a split and a reverse split along the way.

[4]---------------------------------------------------------------
MKS ends profitable year
June 2, 2009

MKS closed its 2009 fiscal year with earnings of US$2.0 million on sales of US$13.6 million in the quarter ended April 30 (Q4 09). Sales were up 3% from the previous quarter but down 36% from a very strong Q4 last year. MKS said its ALM licensing revenue fell below expectations, but that it had won several promising customers it hopes will lead to strong follow-on sales down the road.

Most of the Q4 earnings came from an income tax recovery of US$1.4 million. Operating income of US$627,000 was an improvement on Q3, but three-quarters of the company's operating income for the year came in the first two quarters.

For the year, MKS reported earnings of US$4.3 million on sales of US$58.4 million. Sales were down 4.5% from 2008 but operating income was up 19% year-over-year. ALM sales accounted for 87% of total revenue, just slightly less than a year ago, as the mature IO business -- projected to show a sales decline -- managed to maintain its 2008 sales levels.

Year-end cash balance was US$17.1 million, up from US$12.9 million at the start of the year. MKS is raising its quarterly dividend by 25%, or about an extra US$1 million over the year, assuming the higher dividend is maintained in future quarters.

MKS ended the year with 309 employees worldwide.

[5]---------------------------------------------------------------
Dalsa sued by ex-digital cinema GM
June 5, 2009

Dalsa is being sued by the founder of the California company it acquired in 2004 as part of its failed digital cinema initiative. Bob DaSilva has filed a statement of claim in Ontario seeking more than $22 million.

In October 2004, Dalsa announced that it was buying the assets of DaSilva's Broadcast Plus business in Woodland Hills, Calif. for US$250,000 in cash plus up to 7.5% of the voting shares of a new subsidiary called Dalsa Digital Cinema Inc. DaSilva then became GM of the Dalsa Digital Cinema Center. At the time, DaSilva looked like an odd choice, since his business and background seemed to be focused on the television industry, while Dalsa was targetting filmmakers for its digital movie camera. Two years later, Dalsa hired someone else to run its California digital cinema office.

According to Dalsa, DaSilva had the option to have his stake in Dalsa Digital Cinema Inc. repurchased upon the termination of his employment. Dalsa says it had applied to the court to appoint a valuator for the business, but there was apparently a disagreement with DaSilva around the process to set a valuation. Dalsa says it will defend the claim and file a counterclaim.

[6]---------------------------------------------------------------
Descartes sales up 7%
May 28, 2009

Descartes reported earnings of US$2.2 million on sales of US$17.4 million in the quarter ended April 30 (Q1 10). Sales were up 7% from a year ago and 11% from the previous quarter, aided by two more acquisitions in Q1.

The bottom line was boosted by an income tax recovery of US$0.7 million. Expenses were also up across the board, with R&D spending jumping 24% from the previous quarter to US$3.4 million, or 19% of revenue. Operating income was US$1.7 million, down from US$2.4 million in the last two quarters, but up from a year ago.

Descartes spent US$14.8 million on acquisitions in the quarter, but still ended Q1 with US$46.9 million in cash. Operations generated US$4.4 million in cash.

[7]---------------------------------------------------------------
STOCK REPORT: Another big month for TurboSonic, Sandvine shares
May 2009

TurboSonic shares had another strong month after the company reported impressive top- and bottom-lines in its latest quarterly results. The shares are up 149% in the last two months and finished the month above US$1 for the first time since October 2007.

And it was the same story with Sandvine shares, which have jumped 117% in the last two months. They closed May at their highest month-end price since March of last year.

For the month of May:

TurboSonic [OTCBB: TSTA] +70%
Sandvine [TSX: SVC] +24%
Biorem [TSXV: BRM] +22%
MKS [TSX: MKX] +16%
RDM [TSX: RC] +15%
--S&P TSX VENTURE INDEX +11%
--S&P TSX COMPOSITE INDEX +11%
Descartes [TSX: DSG] +11%
ATS [TSX: ATA] +8%
RIM [TSX: RIM] +4%
===============================
Open Text [TSX: OTC] -2%
Dalsa [TSX: DSA] -5%
Arise [TSX: APV] -7%
Com Dev [TSX: CDV] -9%

Descartes shares had their highest month-end price since September 2007, while RDM shares finished the month above a dollar for the first time since September.

There hasn't been any bad news from Com Dev, but along with having the biggest decline in May, the company's shares were down another 10% in June as of yesterday's close. The stock had some big gains in March and April and is now back to about where it was at the beginning of the year.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +26%
Agfa-Gevaert [Brussels: AGFA] +26%
Ansys [Nasdaq: ANSS] +8%
Blue Coat [Nasdaq: BCSI] +7%
Acorn Energy [Nasdaq: ACFN] +6%
NCR [NYSE: NCR] +6%
Google [Nasdaq: GOOG] +5%
McAfee [NYSE: MFE] +5%
Oracle [Nasdaq: ORCL] +1%
===================================
Sybase [NYSE: SY] -4%

[8]---------------------------------------------------------------
Miscellaneous Tidbits
  • Aeryon Labs and Bayalink were two of the companies selected to receive the Canadian Angel Capital Top Five Award at the 2009 Canadian Co-Investment Summit in Toronto. Recipients were selected through an investor vote from the 15 companies that made presentations. Aeryon and Bayalink were the only two Waterloo area companies to present at the conference.

  • Lots of Waterloo-area winners at the 2009 Premier's Innovation Awards. Ming Li, co-founder of Bioinformatics Solutions (BSI) and UW professor, won the $250,000 Discovery Award for Innovation Leadership. At the same time, his BSI and UW colleague, Bin Ma, won the $200,000 Catalyst Award for Best Young Innovator. Two-thirds of this year's Premier's Catalyst Awards went to Waterloo Region recipients, with Navid Zargari named Innovator of the Year for a technology he developed for Rockwell Automation, Unitron Hearing named Company with the Best Innovation, and UW professor and Certicom co-founder Scott Vanstone presented the Lifetime Leadership in Innovation award. Each of those prizes also came with a $200,000 award.

  • Biorem announced a $700,000 sale of a biotrickling filtration system to a buyer in Florida and two other biofiltration orders in the "midwest and western coast of the United States" for a combined $1.3 million. The company lost $425,000 on sales of $4.0 million in the quarter ended March 31 (Q1 09). Sales were up 27% from a year ago. Order backlog at the end of the quarter stood at $12.8 million.

  • Jim Estill's new corporate home is Nu Horizons Electronics, a components distributor based in Melville, New York on Long Island. He became president and CEO of the company on June 1 and has also been appointed to the board of directors. Nu Horizons is listed on Nasdaq with a market value just under US$70 million.

  • RIM has acquired Sunnyvale, Calif.-based Dash Networks for an undisclosed amount. In fact, the entire acquisition was more discovered than disclosed. Dash developed a GPS-based device that provided drivers with traffic information. At one point, it was thought to be a promising startup, attracting investments from Kleiner Perkins and Sequoia, among others. But the company had fallen on hard times and laid off most of its staff in the fall. It then shifted from being a device company to a software provider, selling applications that could run on various devices.

  • TurboSonic earned US$604,000 on sales of US$7.0 million in the quarter ended March 31 (Q3 09). Sales were up 216% from the same quarter last year, and sales over the first three quarters of the fiscal year are double what they were a year ago.

  • According to Bloomberg News, the U.S. International Trade Commission has agreed to review Blackboard's request to block the sale of Desire2Learn software in the U.S. Blackboard acquired another major competitor in May, and Desire2Learn has said that the U.S. Department of Justice is investigating the deal (this was subsequently confirmed by Blackboard). Desire2Learn is also preparing for another patent infringement suit from Backboard -- this time in Canada. In April, the U.S. Patent and Trademark Office issued a preliminary ruling rejecting all 57 claims in the original Blackboard patent. Unfortunately for Desire2Learn, even if that were to be the ultimate ruling, it would probably take years to get to that point.

  • Michael Stephens is the new marketing and product development VP at Atria Networks. Stephens -- a UW engineering grad -- will work out of the company's Markham office.

Tuesday, May 05, 2009

The book Howard Burton believes contributed to his removal from Perimeter Institute

I'd been looking forward to reading Howard Burton's book for over two years -- ever since people who knew him told me he had written it ... and that it wasn't going over well with Perimeter Institute bigwigs. Burton was the institute's first executive director -- the man picked by PI founder and principal benefactor Mike Lazaridis to turn his vision of a physics institute into reality.

It wasn't long after I heard about the book -- maybe a couple of months, I don't really remember -- that PI announced that Burton, to borrow an expression from another field, had been future endeavored* and was "seeking new challenges."

Now the book has been published and we can read the words that apparently caused so much agitation. First Principles: The Crazy Business of Doing Serious Science was released by Key Porter Books a few weeks ago. Although it's only discussed briefly in a six-page epilogue, Burton always felt the book was a significant factor in his departure from PI, an outcome he makes clear was the institute's idea and not his, and which he still finds "mystifying."

On the one hand, there's not much here that could reasonably become any kind of cause célèbre, but I know firsthand how irrationally hyper-reactive some folks can become -- particularly control freaks or people used to being big fish (often in tiny ponds) -- when something is written that doesn't match what they think should be said. So, it's possible that this book really did create an uproar in some circles, even if it mostly consists of reasonable observations about the importance of basic research, the role of universities, and the pressure for "commercialization," along with the central story of how Burton went about putting the institute together.

There are some anecdotes that show the eccentric side of Lazaridis, but not many and nothing mean. The funniest is probably the tale of a meeting at Lazaridis's house with UW president David Johnston. Burton says the three of them went to look at the home theatre in the basement and Lazaridis played the DVD of Armageddon, the Bruce Willis movie. "I glanced at my watch and wondered how much more of this I would have to endure," Burton writes. "After half an hour or so, it began to dawn on me that, much to my horror, we were going to watch the entire movie. To this day, I'm not entirely sure why we did this." Funny lines -- and Armageddon was a silly movie (I loved The Island, though, which only got slightly better reviews) -- but I have some doubts that Burton would have included the story if Lazaridis had screened La Dolce Vita.

Burton cleans up the story of his one public rift with Lazaridis: the incident in the waning days of the 2006 federal election campaign when then-Prime Minister Paul Martin -- looking like he was imminently to become ex-Prime Minister -- announced funding for Perimeter Institute and UW's Institute for Quantum Computing, along with two other research centres. Burton saw it as a cynical election ploy and, even worse, one that would be hitching PI's horses to the losing wagon -- something that would probably be remembered by the new government when forming its first budget.

"I was amazed to discover that surrounding university officials and representatives were ecstatic to make the lemming-like drive off the cliff to wed their fortunes with those of the desperate Martinites," Burton writes ... not mentioning that one of those university officials was UW chancellor Lazaridis, who, along with Johnston, happily drove to Markham to be photographed with Martin and praise the announcement. "I couldn't even stomach the thought of showing up," Burton wrote at the time -- a sentiment he echoes in the book.

Burton says he always realized that if PI got off the ground that he "would be its Achilles heel" --  the guy with no reputation in the physics world, or in any world, really, who got hired because he wrote a letter to the right person at the right time and made a good impression. He says he was initially treated with suspicion by some members of Lazaridis's inner circle who were concerned that he was some leech intent on sucking away on the Lazaridis fortune.

In the end, he says that it's "hard to feel that there isn't at least some grain of truth" to stories that he and Lazaridis both wanted to take credit for creating PI, leading to a "clash of egos." Two years after Burton's departure, the PI website still mentions Burton in the first paragraph of its "About PI" section, and says he was "instrumental" in shaping the institute, so whatever clash there may have been didn't extend to erasing Burton from the history books or understating his contribution.

Burton's views on basic research and commercialization are similar to mine, and when he writes that "university presidents will flexibly adopt whatever raison d'etre for their institutions they feel maximizes the momentary liklihood of procuring additional government resources for their cause," I can add that it's not just university presidents who behave that way.

According to the book, he now lives in France. He didn't think much of Waterloo. Like Burton, I also came to Waterloo from Toronto and had a big-city chip on my shoulder, but my nose never reached the altitute that his did. He thought Toronto was beneath his worldly tastes, but coming to Waterloo made it seem exciting in comparison. He makes a point of discussing the 2004 Lisa Rochon Globe & Mail story where she called Waterloo "a city of surpassing ugliness" and a "dystopia," making it clear that it was all he could do to restrain himself from shouting "hear, hear" when asked to comment on the article. The forword to the book even has Roger Penrose calling Waterloo "a seemingly unremarkable town."

For those of us who have become accustomed to histories of UW published by UW and the history of the City of Waterloo published by the City of Waterloo, Burton's book is a welcome alternative. While it's hardly a tell-all, the book at least gives the reader something outside the party line. And, in a small community like Waterloo, that can be enough to create controversy.

----
* When companies announce that someone has left the organization, the last line is often "we wish him well in his future endeavors" or something similar. That phrasing was so popular with WWE that now, when someone gets released or their contract isn't renewed, it's become an in-joke within wrestling to say the person was "future endeavored." The actual line in the PI announcement was "I wish Howard well in his future activities," which could have been written by WWE. On top of being a useful expression, I just enjoy making a pro wrestling reference in a post about someone with highbrow pretentions.

Waterloo Tech Digest - May 5, 2009

Compiled and written by
Gary Will
gary@garywill.com

In this issue:
  1. Sandvine shows it doesn't need Comcast for strong top line
  2. Dalsa starts 2009 with slow sales and weak profits
  3. Open Text acquires Toronto's Vizible
  4. Arise hopes for rebound later in the year; delays CEO search
  5. RDM reduces losses on weaker sales
  6. STOCK REPORT: Sandvine bounces back; great month for RIM stock
  7. Miscellaneous tidbits from LoyaltyMatch, Aeryon Labs, AideRSS, Tungle, ParkVu, RIM, Com Dev, Virtek, TurboSonic, Desire2Learn, Maplesoft
////////////////////////////////////////////////////////////
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[1]---------------------------------------------------------------
Sandvine shows it doesn't need Comcast for strong top line
April 9, 2009

Sandvine proved it could have an impressive top line even without significant revenue from Comcast in the quarter ended February 28 (Q1 09). It reported sales of $18.6 million in the period -- the same as the previous quarter and up 124% from a rough period last year when Comcast sales went south and nothing else stepped in to make up the difference.

Net loss was $4.8 million, which included a $2.4 million non-cash goodwill impairment charge. Excluding that charge, the operating loss of $2.6 million was just slightly more than the $2.5 million reported in the previous quarter.

The biggest difference between the two quarters was that Sandvine wasn't dependent on just a couple of customers for the bulk of its revenue, as had been the case in Q4 and in many of the company's previous periods. In this quarter, the largest three customers provided 45% of revenue, compared to Q4 when two customers -- including Comcast -- accounted for about three-quarters of sales. Q1 revenue from Comcast was down to $1.2 million, or 6.5% of sales.

There were other significant differences between this quarter and Q4, despite the similar top and not-quite-bottom lines. This time, DSL customers accounted for just 24% of sales ($4.4 million), down sharply from 41% ($7.7 million) in Q4. Direct sales were back up to nearly two-thirds of all revenue, after dropping to 54% in Q4.

Sandvine had $92.6 million in cash at the end of the quarter, essentially unchanged over the period. Operations provided $2.8 million in cash.

[2]---------------------------------------------------------------
Dalsa starts 2009 with slow sales and weak profits
April 30, 2009

Even without digital cinema to drag down its earnings, Dalsa had a disappointing quarter in the period ended March 31 (Q1 09). The company reported earnings of $1.3 million on sales of $37.9 million, but nearly all of the profits came from a gain on a sale of land. Operating income was just $698,000, down from $5.5 million in the previous quarter and $8.7 million a year ago.

Sales were down 18% from Q4 and 30% from last year. Weaker margins pushed the sequential decline in gross profit to 24%. The digital imaging and semiconductor businesses both reported significant year-over-year and quarter-over-quarter sales declines. One bright spot in the quarter was the $12.9 million increase in the order backlog for the semiconductor business.

Operations used $7.7 million in cash -- after contributing $6.5 million in Q4 and $6.7 million a year ago. Dalsa spent $301,000 in cash to repurchase shares in the company and distributed $921,000 in dividends. It ended the quarter with $11.5 million in cash. Dalsa added $8.5 million in long-term debt in the quarter.

[3]---------------------------------------------------------------
Open Text acquires Toronto's Vizible
April 8, 2009

Open Text has acquired Toronto's Vizible Corp., a developer of interactive, 3-D web interface technology. Financial details were not announced, but all indications are that the price tag was very low. Vizible had been working with AT&T on a Mozilla-based 3-D browser called Pogo, but the project never moved beyond a private beta stage and the company had a round of layoffs and cutbacks in the fall.

Vizible was founded by Anthony Gallo -- a UW architecture grad -- who is now VP of digital media experiences at Open Text. About 15 Vizible employees -- including some that had been laid off -- will join Open Text and work out of the company's Richmond Hill office. Vizible was privately held, but reported revenue of US$10 million in fiscal 2007.

The announcement from Open Text emphasized Vizible's strengths in rich-media widgets, multi-platform syndication, 3-D navigation, and user-customizable presentation of Web content. The company said it was unveiling a "breakthrough 3D interface" at the annual conference of the National Association of Broadcasters' NAB Show in Las Vegas.

[4]---------------------------------------------------------------
Arise hopes for solar rebound later in the year; delays CEO search
April 29, 2009

Arise has put off the search for a new CEO at least until later in the year, and will continue under hitherto-interim CEO Vern Heinrichs.

With the solar industry going through hard times, it was another rough quarter for Arise in the period ended March 31 (Q1 09). The company lost $14.8 million on sales of $7.2 million. Sales were down 62% from the previous quarter, which was itself a disappointment at the time.

The loss included a $2.9 million writedown of its inventory and a $6.0 million writedown of silicon wafer prepayments. Those were on top of the $9.0 million in writedowns in the previous quarter. Even without those charges, gross margins would still have been -19%, which was a step in the wrong direction from the -15% margins (also excluding the writedowns) in Q4. Arise's PV cell business, which accounted for 95% of sales in the quarter, recorded a $14.2 million operational loss, while the pre-revenue PV silicon business lost $1.5 million and the solar systems business lost $116,000.

Accumulated deficit now stands at $80.3 million.

Arise says the feedback it's receiving from customers is that demand for PV cells will pick up in the current quarter and even more so through the rest of the year.

The company ended the quarter with a working capital deficiency, but it believes it has enough cash on hand to fund operations until late this year. It says it is "in discussions on several options" to raise funds. It ended the period with $7.2 million in cash, down $15.4 million over the quarter. At April 28, it had $6.3 million in cash.

[5]---------------------------------------------------------------
RDM reduces losses on weaker sales
May 1, 2009

RDM lost $865,000 on sales of $5.8 million in the quarter ended March 31 (Q2 09). Sales were down 15% from a year ago and 18% from the previous quarter, although stronger margins reduced the sequential decline in gross profit to 13%. The net loss was an improvement from Q1, thanks to a smaller foreign exchange loss.

Average transaction volumes on RDM's ITMS system were up 9% from the previous quarter to 3.6 million items a week. End user locations for ITMS grew to 17,000 from 15,900 at the end of Q1. Overall, revenue from RDM's payment processing business declined 16% from Q1.

Scanner sales were weak in the quarter, with 4,200 units shipped -- down from 10,300 a year ago and 7,700 in the previous quarter. RDM's legacy quality assurance business was down to just $229,000 in sales in Q2, accounting for only 4% of revenue.

RDM had $16.9 million in cash at the end of the quarter. Operations provided $252,000 in cash and the company spent $173,000 repurchasing 254,000 RDM shares and an additional $458,000 on furniture and equipment.

[6]---------------------------------------------------------------
STOCK REPORT: Sandvine bounces back; great month for RIM stock
April 2009

Although Sandvine's quarterly results were nearly identical to what the company reported three months ago, there was a night-and-day difference in the reaction from investors. Where the results in April were met with indifference on the stock market, this time Sandvine shares had their best month ever, climbing 75% to their highest month-end price since June.

And RIM shares had their biggest month in eight years, adding more than $15 billion to the company's market value, while Com Dev shares finished April at their highest month-end price since October 2007.

For the month of April:

Sandvine [TSX: SVC] +75%
RIM [TSX: RIM] +51%
TurboSonic [OTCBB: TSTA] +46%
RDM [TSX: RC] +34%
Com Dev [TSX: CDV] +21%
ATS [TSX: ATA] +14%
Arise [TSX: APV] +14%
Dalsa [TSX: DSA] +9%
Descartes [TSX: DSG] +8%
--S&P TSX COMPOSITE INDEX +7%
--S&P TSX VENTURE INDEX +5%
MKS [TSX: MKX] +4%
Biorem [TSXV: BRM] 0%
===============================
Open Text [TSX: OTC] -10%

The gains in RDM shares all happened before the quarterly results were announced on May 1, and the stock hit $1 during the month for the first time since October. The company's market value has now climbed back above its cash holdings -- about $3 million above.

Dalsa shares gave back all their April gains in the first day of trading in May, after the company's quarterly results were announced.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +39%
Agfa-Gevaert [Brussels: AGFA] +35%
NCR [NYSE: NCR] +28%
Google [Nasdaq: GOOG] +14%
Sybase [NYSE: SY] +12%
McAfee [NYSE: MFE] +12%
Blue Coat [Nasdaq: BCSI] +10%
Ansys [Nasdaq: ANSS] +10%
Oracle [Nasdaq: ORCL] +7%
===================================
Acorn Energy [Nasdaq: ACFN] -2%

[7]---------------------------------------------------------------
Miscellaneous Tidbits
  • LoyaltyMatch has launched its OnDemand software-as-a-service platform that lets users develop web-based customer loyalty programs. The news release included a quote from Sherry Colbourne, CEO of Ladybug Teknologies, sponsor of the not-for-profit SipSmart, which has a program that rewards designated drivers.

  • Aeryon Labs -- developers of a flying vehicle that takes video and photographs for security and surveillance applications -- won the 2009 TiEQuest Business Venture Competition in Toronto on April 17. The prize money over the last couple of years has been $50,000 to the winner. KR Golf, which also has Waterloo connections, was another of the four finalists.

  • AideRSS' PostRank statistics are now being used by AdAge as the largest component of its Power150 ranking of top marketing blogs. PostRank account for 50 points of the 150 that each blog can earn -- as much as Yahoo, Google, and Technorati combined.

  • Tungle has formally launched what it calls the first calendar accelerator. The free software -- which has been in beta for several months -- makes it easy for users to share calendars and schedule meetings and works with a variety of calendar applications, including Outlook, Google Calendar, and iCal.

  • ParkVu's i2b BlackBerry-iTunes software (see previous digest) has been accepted by RIM for the BlackBerry App World online store, and is now available there.

  • RIM announced that its push API is out of beta and now available to developers of consumer apps who want to push content to BlackBerrys. Toronto's Polar Mobile (which has Waterloo ties) has been using the API in its software -- including apps it has written for The Hockey News and UW.

  • Keith Ainsworth has stepped down as chairman of Com Dev, a position he held for six years. He will remain on the board. Terry Reidel, who's been on Com Dev's board for the last year and a half, has been named the company's new chairman.

  • Virtek CFO Peter Monsberger is leaving the company this month. He's been with Virtek for the last seven years. Since its acquisition last year, Virtek continues to operate as a subsidiary of Gerber Technology. Hal Osthus -- a 25-year employee at Gerber -- is Virtek's president, while Waterloo-based Peter Richter oversees Virtek's imaging and templating business as VP. The company recently announced a five-year agreement to provide laser templating systems to Stork Fokker of The Netherlands and follow-on sales to Finland's Patria Aerostructures.

  • TurboSonic received a US$2.3 million order from a European oil refinery, which will use TurboSonic technology to manage its particulate emissions.

  • Desire2Learn was among the companies honored by the United States Distance Learning Association (USDLA) at that organization's annual conference in St. Louis.

  • Maplesoft has released the newest version of Maple -- the mathematics software that led to the creation of the company in the 1980s. Along with Maple 13, the company also released a new version of its MapleSim modelling and simulation software.