Waterloo Tech Digest - October 10, 2006
Compiled and written by
Gary Will
gary@garywill.com
In this issue:
GBG to be acquired by 3M subsidiary
September 20, 2006
Global Beverage Group has bought nine different companies over the last four years, and now it's about to be acquired itself. Minnesota's HighJump Software has agreed to buy GBG in a deal expected to close next month. Financial details were not disclosed.
HighJump was founded in 1983 and was acquired by 3M in 2004. It is a developer of supply chain management software, but had a gap in retail delivery that it will fill with GBG. GBG CEO Tad Hastings will remain with HighJump following the acquisition.
GBG was spun off from Descartes in 2000 and was originally known as DSD Solutions. It went through a couple of name changes and became GBG in 2002. It has about 175 employees at six offices across North America.
[2]---------------------------------------------------------------
Com Dev reports record earnings, space sales
September 14, 2006
Com Dev continued on a roll, with record earnings of $6.4 million on sales of $41.2 million in the quarter ended July 31 (Q3 06). Sales were up 32% from last year and 8% from a strong Q2.
The high margins that have been achieved through the year were sustained for another quarter, dipping slightly to 29.3% from 30% over the previous two quarters. Operations generated $4.9 million in cash and $1.3 million was spent on capital expenses. Com Dev ended the quarter with $15.3 million in cash, up $4.3 million from the end of Q2.
Order backlog at the end of the quarter was $105 million, up slightly from $104 million at the start of the period.
With just one quarter left in the fiscal year and with sales up 19% so far from the same period last year, Com Dev raised its annual growth forecast to 20%+ from its previous forecast of 15%.
[3]---------------------------------------------------------------
Sandvine prepares for TSX listing
September 15, 2006
Sandvine has filed a preliminary prospectus for a stock offering that would see the company's shares listed on the Toronto Stock Exchange. Pricing and size of the offering have not yet been specified. Lead underwriters are Canaccord Capital and CIBC World Markets with RBC Dominion Securities, BMO Nesbitt Burns, and National Bank Financial also participating.
As was the case with Sandvine's initial offering in March, this round will include a mix of new and existing shares. We won't know the breakdown until the final prospectus is filed. Selling some of their shares through this offering are Sandvine's VC investors (Celtic House, VenGrowth, Tech Capital, and BDC), its founders, and other employees. CEO Dave Caputo and EVP Tom Donnelly are listed as selling shareholders in one part of the prospectus, but not in another.
In March, Sandvine raised net proceeds of $37.4 million and was listed on the AIM market of the London Stock Exchange. With that listing, for tax purposes, the company was structured as a mutual fund corporation with redemption rights attached to its common shares. With a TSX listing, Sandvine will seek shareholder approval to remove the redemption rights.
The prospectus shows that Sandvine sales in the quarter ended May 31 (Q2 06) were up about 7% from the previous quarter and were a little more than double sales in the same period last year.
Sandvine has about 150 full-time employees, nearly half of whom are in engineering.
[4]---------------------------------------------------------------
RIM forecasts soaring revenue through the end of the year
September 28, 2006
In the quarter ended September 2 (Q2 07), RIM earned US$140.8 million on sales of US$658.5 million, with revenue up 34% from a year ago and 7% from the previous quarter. The results surpassed RIM's forecast of US$620-650 million in revenue.
Those are good numbers, but the figures that really jumped out in RIM's announcement was its forecast for the current quarter. RIM is expecting sales to climb to US$780-820 million in Q3, which would mean sequential growth of 18-25%. In a release, co-CEO Jim Balsillie said the rest of this fiscal year "is promising to be one of the most interesting periods in [RIM's] history."
In Q2, operations provided US$250.6 million in cash and RIM spent US$204 million buying back its own shares. It also spent US$72.6 million on an acquisition (this was the quarter that RIM acquired SlipStream, but the financial details of the transaction haven't been disclosed) and US$68.6 million on capital assets. RIM ended the quarter with US$1.16 billion in cash.
Approximately 705,000 new BlackBerry subscribers were added in the quarter, bringing the total up to 6.2 million. RIM expects to hit the 7 million mark this quarter.
The reported earnings are preliminary, pending a review of how the company has accounted for stock option grants. RIM says its audit committee has found errors that could result in restatements of its results over the last 10 fiscal years, but the company doesn't expect there will be any material changes to this year's results. It is expecting that the review will reduce historical earnings by a total of US$25-45 million.
[5]---------------------------------------------------------------
Virtek's bottom line sunk by cost overrun
September 13, 2006
Virtek's Q2, ended July 31, has been a weak spot for the company in recent years, and the trend continued in fiscal 2007, with a loss of $465,000 on sales of $14.3 million. Sales were down 12% from the previous quarter but up 13% from a disappointing Q2 last year.
The loss -- Virtek's second in its last four quarters -- was partly attributed to a $500,000 cost overrun in a project for Airbus from Virtek's new intelligent laser systems business unit. The company also invested in a new manufacturing facility in Waterloo for its marking business. The site is expected to ramp up before the end of the year.
Year-over-year, there was revenue growth in both of Virtek's business segments, with imaging & templating sales increasing by 16% and marking & engraving by 10.4%. Imaging & templating sales were down 25% from the previous quarter. Much of the work in that segment has been on components for the Boeing 787 passenger airliner and those projects are winding down. Marking & engraving sales have picked up in North America and Asia this year, but have declined in Europe. Virtek ended the quarter with an order backlog of $9.2 million, with marking & engraving accounting for nearly three-quarters of the total.
Operations consumed $2.1 million in cash, which Virtek had to borrow, increasing its bank indebtedness to $3.5 million with a net cash deficiency of $382,000.
The company says it is still on track to achieve its forecast of $55 million in sales in fiscal 2007 and profitablility for the year.
[6]---------------------------------------------------------------
Navtech sees increases in sales, expenses
September 11, 2006
Revenue and expenses both increased sequentially at Navtech in the quarter ended July 31 (Q3 06). The company reported earnings of US$131,000 on sales of US$9.8 million in the period. Sales were up 6% from the previous quarter.
An income tax recovery of US$246,000 pushed Navtech into the black, as it reported a pre-tax loss of US$115,000. An improvement in margins led to a 9% sequential increase in gross profit. R&D expenses were up 51% from Q2 to US$451,000. Income from operations was US$559,000, down from US$689,000 in the previous quarter.
Operations consumed US$981,000 in cash and net cash flow in the quarter was a negative US$1.7 million. Accounts payable were cut in half to US$1.9 million. Navtech ended the quarter with US$4.8 million in cash.
Navtech will initially pay about US$515,000 a year for its new 20,000 square-foot digs in the Accelerator Building at the UW Research & Technology Park. The term of the lease begins on November 1 and runs for 10 years, with options for two five-year extensions. It expects to pay CDN$6.0 million over the first 10 years.
[7]---------------------------------------------------------------
STOCK REPORT: RIM value jumps to over $22 billion
September 2006
RIM shares soared to their highest level since the end of 2004. Even after a US$200 million stock repurchase that was good enough to raise RIM's market capitalization to $22.5 billion as of Friday's close.
While RIM's results -- and forecasts -- were well-received, Virtek wasn't so fortunate. Its Q2 results weren't disastrous by any means, but investors had high expectations and Virtek shares had their worst month ever, losing nearly a third of their value and erasing six months of gains. Even so, the stock is still up more than 50% this year.
For the month of September:
RIM [TSX: RIM] +26%
TurboSonic [OTCBB: TSTA] +12%
Open Text [TSX: OTC] +11%
Navtech [OTCBB: NAVH] +10%
Com Dev [TSX: CDV] +10%
ATS [TSX: ATA] +6%
Descartes [TSX: DSG] +4%
RDM [TSX: RC] +3%
Biorem [TSXV: BRM] 0%
Dalsa [TSX: DSA] 0%
===============================
ARISE [TSXV: APV] -2%
--S&P TSX COMPOSITE INDEX -3%
MKS [TSX: MKX] -4%
--S&P TSX VENTURE INDEX -9%
Sandvine [AIM: SAND] -20%
Virtek [TSX: VRK] -30%
Com Dev shares are up 173% so far in 2006 and 216% in the last 10 months, giving the company a market value over $400 million. It started the year valued at $136 million. Open Text has crossed back above the billion-dollar valuation level.
There wasn't a lot of movement in RDM stock -- it's been in a stable trading range since March -- but it was enough to take it to its highest month-end price since January 2001.
Sandvine shares traded at their lowest point since being listed on AIM in March, but are still above the offer price. MKS shares were trading at their lowest level this year.
Companies with core operations outside the area:
Adobe [Nasdaq: ADBE] +15%
NCR [NYSE: NCR] +13%
Oracle [Nasdaq: ORCL] +13%
Google [Nasdaq: GOOG] +6%
McAfee [NYSE: MFE] +7%
Blue Coat [Nasdaq: BCSI] +6%
Sybase [NYSE: SY] +5%
AMIS [Nasdaq: AMIS] +4%
Agfa-Gevaert [Brussels: AGFA] +2%
LSI Logic [NYSE: LSI] +2%
===================================
Ansys [Nasdaq: ANSS] -5%
Automated Benefits [TSXV: AUT] -17%
Senesco [Amex: SNT] -25%
[8]--------------------------------------------------------------
Miscellaneous Tidbits
Gary Will
gary@garywill.com
In this issue:
- GBG to be acquired by 3M subsidiary
- Com Dev reports record earnings, space sales
- Sandvine prepares for TSX listing
- RIM forecasts soaring revenue through the end of the year
- Virtek's bottom line sunk by cost overrun
- Navtech sees increases in sales, expenses
- STOCK REPORT: RIM value jumps to over $22 billion
- Miscellaneous Tidbits from Open Text, Desire2Learn, Symbility, Kaleidescape
GBG to be acquired by 3M subsidiary
September 20, 2006
Global Beverage Group has bought nine different companies over the last four years, and now it's about to be acquired itself. Minnesota's HighJump Software has agreed to buy GBG in a deal expected to close next month. Financial details were not disclosed.
HighJump was founded in 1983 and was acquired by 3M in 2004. It is a developer of supply chain management software, but had a gap in retail delivery that it will fill with GBG. GBG CEO Tad Hastings will remain with HighJump following the acquisition.
GBG was spun off from Descartes in 2000 and was originally known as DSD Solutions. It went through a couple of name changes and became GBG in 2002. It has about 175 employees at six offices across North America.
[2]---------------------------------------------------------------
Com Dev reports record earnings, space sales
September 14, 2006
Com Dev continued on a roll, with record earnings of $6.4 million on sales of $41.2 million in the quarter ended July 31 (Q3 06). Sales were up 32% from last year and 8% from a strong Q2.
The high margins that have been achieved through the year were sustained for another quarter, dipping slightly to 29.3% from 30% over the previous two quarters. Operations generated $4.9 million in cash and $1.3 million was spent on capital expenses. Com Dev ended the quarter with $15.3 million in cash, up $4.3 million from the end of Q2.
Order backlog at the end of the quarter was $105 million, up slightly from $104 million at the start of the period.
With just one quarter left in the fiscal year and with sales up 19% so far from the same period last year, Com Dev raised its annual growth forecast to 20%+ from its previous forecast of 15%.
[3]---------------------------------------------------------------
Sandvine prepares for TSX listing
September 15, 2006
Sandvine has filed a preliminary prospectus for a stock offering that would see the company's shares listed on the Toronto Stock Exchange. Pricing and size of the offering have not yet been specified. Lead underwriters are Canaccord Capital and CIBC World Markets with RBC Dominion Securities, BMO Nesbitt Burns, and National Bank Financial also participating.
As was the case with Sandvine's initial offering in March, this round will include a mix of new and existing shares. We won't know the breakdown until the final prospectus is filed. Selling some of their shares through this offering are Sandvine's VC investors (Celtic House, VenGrowth, Tech Capital, and BDC), its founders, and other employees. CEO Dave Caputo and EVP Tom Donnelly are listed as selling shareholders in one part of the prospectus, but not in another.
In March, Sandvine raised net proceeds of $37.4 million and was listed on the AIM market of the London Stock Exchange. With that listing, for tax purposes, the company was structured as a mutual fund corporation with redemption rights attached to its common shares. With a TSX listing, Sandvine will seek shareholder approval to remove the redemption rights.
The prospectus shows that Sandvine sales in the quarter ended May 31 (Q2 06) were up about 7% from the previous quarter and were a little more than double sales in the same period last year.
Sandvine has about 150 full-time employees, nearly half of whom are in engineering.
[4]---------------------------------------------------------------
RIM forecasts soaring revenue through the end of the year
September 28, 2006
In the quarter ended September 2 (Q2 07), RIM earned US$140.8 million on sales of US$658.5 million, with revenue up 34% from a year ago and 7% from the previous quarter. The results surpassed RIM's forecast of US$620-650 million in revenue.
Those are good numbers, but the figures that really jumped out in RIM's announcement was its forecast for the current quarter. RIM is expecting sales to climb to US$780-820 million in Q3, which would mean sequential growth of 18-25%. In a release, co-CEO Jim Balsillie said the rest of this fiscal year "is promising to be one of the most interesting periods in [RIM's] history."
In Q2, operations provided US$250.6 million in cash and RIM spent US$204 million buying back its own shares. It also spent US$72.6 million on an acquisition (this was the quarter that RIM acquired SlipStream, but the financial details of the transaction haven't been disclosed) and US$68.6 million on capital assets. RIM ended the quarter with US$1.16 billion in cash.
Approximately 705,000 new BlackBerry subscribers were added in the quarter, bringing the total up to 6.2 million. RIM expects to hit the 7 million mark this quarter.
The reported earnings are preliminary, pending a review of how the company has accounted for stock option grants. RIM says its audit committee has found errors that could result in restatements of its results over the last 10 fiscal years, but the company doesn't expect there will be any material changes to this year's results. It is expecting that the review will reduce historical earnings by a total of US$25-45 million.
[5]---------------------------------------------------------------
Virtek's bottom line sunk by cost overrun
September 13, 2006
Virtek's Q2, ended July 31, has been a weak spot for the company in recent years, and the trend continued in fiscal 2007, with a loss of $465,000 on sales of $14.3 million. Sales were down 12% from the previous quarter but up 13% from a disappointing Q2 last year.
The loss -- Virtek's second in its last four quarters -- was partly attributed to a $500,000 cost overrun in a project for Airbus from Virtek's new intelligent laser systems business unit. The company also invested in a new manufacturing facility in Waterloo for its marking business. The site is expected to ramp up before the end of the year.
Year-over-year, there was revenue growth in both of Virtek's business segments, with imaging & templating sales increasing by 16% and marking & engraving by 10.4%. Imaging & templating sales were down 25% from the previous quarter. Much of the work in that segment has been on components for the Boeing 787 passenger airliner and those projects are winding down. Marking & engraving sales have picked up in North America and Asia this year, but have declined in Europe. Virtek ended the quarter with an order backlog of $9.2 million, with marking & engraving accounting for nearly three-quarters of the total.
Operations consumed $2.1 million in cash, which Virtek had to borrow, increasing its bank indebtedness to $3.5 million with a net cash deficiency of $382,000.
The company says it is still on track to achieve its forecast of $55 million in sales in fiscal 2007 and profitablility for the year.
[6]---------------------------------------------------------------
Navtech sees increases in sales, expenses
September 11, 2006
Revenue and expenses both increased sequentially at Navtech in the quarter ended July 31 (Q3 06). The company reported earnings of US$131,000 on sales of US$9.8 million in the period. Sales were up 6% from the previous quarter.
An income tax recovery of US$246,000 pushed Navtech into the black, as it reported a pre-tax loss of US$115,000. An improvement in margins led to a 9% sequential increase in gross profit. R&D expenses were up 51% from Q2 to US$451,000. Income from operations was US$559,000, down from US$689,000 in the previous quarter.
Operations consumed US$981,000 in cash and net cash flow in the quarter was a negative US$1.7 million. Accounts payable were cut in half to US$1.9 million. Navtech ended the quarter with US$4.8 million in cash.
Navtech will initially pay about US$515,000 a year for its new 20,000 square-foot digs in the Accelerator Building at the UW Research & Technology Park. The term of the lease begins on November 1 and runs for 10 years, with options for two five-year extensions. It expects to pay CDN$6.0 million over the first 10 years.
[7]---------------------------------------------------------------
STOCK REPORT: RIM value jumps to over $22 billion
September 2006
RIM shares soared to their highest level since the end of 2004. Even after a US$200 million stock repurchase that was good enough to raise RIM's market capitalization to $22.5 billion as of Friday's close.
While RIM's results -- and forecasts -- were well-received, Virtek wasn't so fortunate. Its Q2 results weren't disastrous by any means, but investors had high expectations and Virtek shares had their worst month ever, losing nearly a third of their value and erasing six months of gains. Even so, the stock is still up more than 50% this year.
For the month of September:
RIM [TSX: RIM] +26%
TurboSonic [OTCBB: TSTA] +12%
Open Text [TSX: OTC] +11%
Navtech [OTCBB: NAVH] +10%
Com Dev [TSX: CDV] +10%
ATS [TSX: ATA] +6%
Descartes [TSX: DSG] +4%
RDM [TSX: RC] +3%
Biorem [TSXV: BRM] 0%
Dalsa [TSX: DSA] 0%
===============================
ARISE [TSXV: APV] -2%
--S&P TSX COMPOSITE INDEX -3%
MKS [TSX: MKX] -4%
--S&P TSX VENTURE INDEX -9%
Sandvine [AIM: SAND] -20%
Virtek [TSX: VRK] -30%
Com Dev shares are up 173% so far in 2006 and 216% in the last 10 months, giving the company a market value over $400 million. It started the year valued at $136 million. Open Text has crossed back above the billion-dollar valuation level.
There wasn't a lot of movement in RDM stock -- it's been in a stable trading range since March -- but it was enough to take it to its highest month-end price since January 2001.
Sandvine shares traded at their lowest point since being listed on AIM in March, but are still above the offer price. MKS shares were trading at their lowest level this year.
Companies with core operations outside the area:
Adobe [Nasdaq: ADBE] +15%
NCR [NYSE: NCR] +13%
Oracle [Nasdaq: ORCL] +13%
Google [Nasdaq: GOOG] +6%
McAfee [NYSE: MFE] +7%
Blue Coat [Nasdaq: BCSI] +6%
Sybase [NYSE: SY] +5%
AMIS [Nasdaq: AMIS] +4%
Agfa-Gevaert [Brussels: AGFA] +2%
LSI Logic [NYSE: LSI] +2%
===================================
Ansys [Nasdaq: ANSS] -5%
Automated Benefits [TSXV: AUT] -17%
Senesco [Amex: SNT] -25%
[8]--------------------------------------------------------------
Miscellaneous Tidbits
- Open Text closed its $550 million acquisition of Hummingbird following shareholder and court approval. Nearly all of Hummingbird's shareholders approved the transaction. Hummingbird co-founders Fred Sorkin and Barry Litwin have both left the company.
- Desire2Learn has filed a defence and counterclaim against Blackboard (see previous digest). Desire2Learn is claiming that the Blackboard patent is invalid and that Blackboard chose not to disclose to the U.S. patent office earlier inventions similar to those covered in its patent application and other information that Desire2Learn says was material and known to Blackboard. Desire2Learn is asking that the Blackboard patent be declared invalid and unenforceable.
- Boris Znebel is the new president of Symbility Solutions, succeeding Jim Crocker. Crocker will now be advising Symbility's sister company, Edmonton-based Autoben. Znebel spent 12 years at Epicor, including a stint as Canadian regional director in Oakville. Symbility says it now has 3,500 users at 600 companies for its mobile claims processing system.
- Kaleidescape -- which lets you play your DVDs anywhere in your house through a central server -- has unveiled its next generation of products, including an "entry-level" low-storage system that will retail for $10,000. It has also introduced a music-only system.
posted by Gary Will at 12:00 AM
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