Waterloo Tech Digest - November 14, 2006
Compiled and written by
Gary Will
gary@garywill.com
In this issue:
Sandvine raises $13M, trades on TSX
October 26, 2006
Sandvine's second public offering this year netted the company $13.2 million dollars after expenses, and its shares now trade on the Toronto Stock Exchange.
The total offering size was $40 million, of which Sandvine's VCs got $19.3 million, including $3.2 million for Tech Capital, four company founders each sold 10% of their shares and split $3.4 million (Marc Morin, the fifth founder, was deleted from the selling shareholder list between the preliminary and final prospectuses), underwriters got $2.4 million, and other Sandvine employees received about $1.0 million. The rest went to Sandvine, which had about $0.9 million in expenses.
The offering was priced at $1.90 a share -- about 19% above Sandvine's March offering, but 21% below where its shares were trading on AIM by the end of that month. They didn't leave much money on the table, as the shares ended October at $2 and even briefly traded below the offering price on opening day (which they haven't done since then). At the end of the month, Sandvine's market value was $245 million. It passed Dalsa in market capitalization earlier this month.
There is an over-allotment option for another $6 million in shares, but none of the proceeds would go to Sandvine.
[2]---------------------------------------------------------------
Sandvine sales double from last year
October 30, 2006
In its first quarterly report (AIM-listed companies only report semi-annually), Sandvine announced sales of $8.1 million and earnings of $183,000 in the quarter ended August 31 (Q3 06). Sales were up 99% from a year ago and about 9% from the previous quarter.
As in the first half, 93% of revenue came from the U.S., with a single customer -- an American cable company -- accounting for $6 million in sales.
Operational loss was $261,000. Sandvine ended the quarter with $47.2 million in cash and securities, and that was before the $13.2 raised through the stock offering in October. Operations consumed $1.8 million in cash in the quarter, and an additional $1.4 million was spent on capital assets.
Despite the reported profits, Sandvine reiterated that it is not focusing on profitability in the short term, and that it would have reported a net loss if it had been able to hire all the sales reps the company is looking to add.
In the conference call, the company estimated that its products are currently being used to manage the traffic of about 7-8 million Internet users. It added five new customer in Q3, bringing the total to 64.
[3]---------------------------------------------------------------
MKS warns quarterly results will be disappointing
November 2, 2006
MKS has pulled its revenue and profitability guidance for the year off the table after logging its second consecutive money-losing quarter. The company says it expects to report sales of US$11.3-11.6 million in the quarter ended October 31 (Q2 07) -- about the same as last year's numbers, 8-10% below the previous quarter, and well below expectations. Unlike last year, MKS expects to report a net loss in the quarter this time, with operating costs in the US$12.4-12.8 million range.
The company says it had US$14.7 million in cash on October 31 -- down about US$700,000 from the beginning of the quarter.
MKS blamed the shortfall on longer sales cycles, new sales reps working their way up the learning curve, and what sounds like less revenue than expected from ramped-up operations in Asia.
Over the first half of fiscal 2006, MKS will have revenue of about US$24 million. It had been forecasting sales of US$57-60 million for the full year.
[4]---------------------------------------------------------------
Dalsa sales and earnings dip slightly from prior quarter
October 26, 2006
A mixed bag of results for Dalsa in the quarter ended September 30 (Q3 06). The company earned $3.3 million ($0.18/share) on sales of $47.4 million. Revenue was up 8% from last year, but down 3% sequentially.
A decline in margins led to an 11% drop in gross profits from the previous quarter, which was partly offset by a reduction in operating expenses. Operations generated $8.6 million in cash, and Dalsa spent $3.2 million to pay back long- and short-term debt, and another $3.8 million on capital assets (expected to climb to $5 million in the current quarter). It ended the quarter with $4.0 million in cash, up $1.8 million from the end of Q2 (with net cash increasing by $2.4 million).
Digital imaging sales were flat quarter-over-quarter. The decline came from the semiconductor segment, which saw a 7% drop in revenue from Q2, but an 11% increase from last year.
Digital cinema continues to be a drain, with losses climbing to $1.7 million from $0.9 million last year. Segment sales of $391,000 were 7% below last year's numbers. Over half of Dalsa's capital asset expenses in the quarter were from its digital cinema segment.
The digital cinema business unit will now be run by Rob Hummel. He was most recently a SVP at Warner Bros. and had previously worked at DreamWorks, Sony, Disney, and Technicolor. In March, he was one of 22 recipients of the Digital Cinema Pioneer Award at ShoWest 2006 in Las Vegas.
Hummel will also oversee operations of Dalsa's rental facility in Woodland Hills, Calif., succeeding Bob DaSilva. DaSilva was the founder of Broadcast Plus, which rented equipment for TV productions when Dalsa acquired it two years ago. Dalsa converted the Broadcast Plus facility near Los Angeles into its digital cinema centre.
[5]---------------------------------------------------------------
LiveHive -- two-screen interactive solutions, not gaming
October 12, 2006
With the online gaming industry facing a shutdown in the U.S. and heavy regulation in many other countries, LiveHive Systems is quickly repositioning itself away from the gambling business.
It wasn't long ago that the company described its business as creating "real-time event wagering solutions for the online gaming industry." Now LiveHive says it creates "real-time event entertainment solutions" which it refined earlier this month to "real-time interactive solutions for TV broadcasters, fantasy sports sites, and broadband TV portals."
Its NanoGaming product used to be about "wagering opportunities" and placing bets. Now it's a "two-screen synchronous entertainment solution" that "allows viewers to play along with their favorite TV shows."
LiveHive has officially launched its NanoGaming website, Speed of Sport, at http://www.speedofsport.com/ which gives users "prediction opportunities" within NFL games as they watch them on TV. All you can win are bragging rights, which no government has tried to tax, so far.
[6]---------------------------------------------------------------
Atria Networks to be acquired by investment firm
October 25, 2006
Atria Networks is being acquired by Toronto-based investment firm Birch Hill Equity Partners for an as-yet undisclosed amount. The deal is expected to close this month.
Atria is currently owned by Kitchener Power (parent of Kitchener-Wilmot Hydro), Waterloo North Hydro, Cambridge and North Dumfries Hydro, and Guelph Hydro. It was formed through the 2005 merger of Waterloo Region's FibreTech with Guelph's FibreWired.
According to a report in The Record, city councillors were told about the impending deal four months ago.
Atria wants to expand into new markets and pursue new product offerings that would be beyond its scope as an arm of regional public utilities.
Birch Hill lists Com Dev and Avotus (which evolved out of Waterloo's Switchview) among the companies it has worked with in the past.
[7]---------------------------------------------------------------
STOCK REPORT: RIM value hits $26B, RDM and Virtek climb
October 2006
According to the numbers on GlobeInvestor.com, RIM has passed Petro-Canada, BCE, and Rogers on the market capitalization list and is running just behind TransCanada Pipelines and CN. The company is now valued at $26 billion.
Shares of RDM and Virtek had a strong October. RDM stock is up 118% over the first 10 months of 2006 -- good for second place among the companies tracked here, trailing only Com Dev. Virtek shares, bouncing back from a disastrous September, are in third place with a 76% gain this year.
For the month of October:
RDM [TSX: RC] +26%
Virtek [TSX: VRK] +24%
RIM [TSX: RIM] +15%
Sandvine [TSX: SVC] +6%
--S&P TSX COMPOSITE INDEX +5%
--S&P TSX VENTURE INDEX +4%
ATS [TSX: ATA] +2%
Open Text [TSX: OTC] +2%
Com Dev [TSX: CDV] +2%
MKS [TSX: MKX] +0%
===============================
Dalsa [TSX: DSA] -6%
Navtech [OTCBB: NAVH] -6%
Descartes [TSX: DSG] -7%
ARISE [TSXV: APV] -8%
TurboSonic [OTCBB: TSTA] -17%
Biorem [TSXV: BRM] -20%
MKS' Q2 warning was announced on November 2, so its effects are not shown here. As of Friday's close, MKS shares were down 22% so far this month.
Companies with core operations outside the area:
Blue Coat [Nasdaq: BCSI] +24%
LSI Logic [NYSE: LSI] +22%
Google [Nasdaq: GOOG] +19%
McAfee [NYSE: MFE] +18%
Agfa-Gevaert [Brussels: AGFA] +6%
NCR [NYSE: NCR] +5%
Ansys [Nasdaq: ANSS] +4%
Oracle [Nasdaq: ORCL] +4%
Adobe [Nasdaq: ADBE] +2%
AMIS [Nasdaq: AMIS] +1%
Sybase [NYSE: SY] +0%
Senesco [Amex: SNT] 0%
===================================
Automated Benefits [TSXV: AUT] -8%
[8]--------------------------------------------------------------
Miscellaneous Tidbits
Gary Will
gary@garywill.com
In this issue:
- Sandvine raises $13M, trades on TSX
- Sandvine sales double from last year
- MKS warns quarterly results will be disappointing
- Dalsa sales and earnings dip slightly from prior quarter
- LiveHive -- two-screen interactive solutions, not gaming
- Atria Networks to be acquired by investment firm
- STOCK REPORT: RIM value hits $26B, RDM and Virtek climb
- Miscellaneous tidbits from Google, Tangam, We-Create, Open Text, RIM, ARISE, Virtek, Photowatt, Covarity, Aimetis, Christie.
Sandvine raises $13M, trades on TSX
October 26, 2006
Sandvine's second public offering this year netted the company $13.2 million dollars after expenses, and its shares now trade on the Toronto Stock Exchange.
The total offering size was $40 million, of which Sandvine's VCs got $19.3 million, including $3.2 million for Tech Capital, four company founders each sold 10% of their shares and split $3.4 million (Marc Morin, the fifth founder, was deleted from the selling shareholder list between the preliminary and final prospectuses), underwriters got $2.4 million, and other Sandvine employees received about $1.0 million. The rest went to Sandvine, which had about $0.9 million in expenses.
The offering was priced at $1.90 a share -- about 19% above Sandvine's March offering, but 21% below where its shares were trading on AIM by the end of that month. They didn't leave much money on the table, as the shares ended October at $2 and even briefly traded below the offering price on opening day (which they haven't done since then). At the end of the month, Sandvine's market value was $245 million. It passed Dalsa in market capitalization earlier this month.
There is an over-allotment option for another $6 million in shares, but none of the proceeds would go to Sandvine.
[2]---------------------------------------------------------------
Sandvine sales double from last year
October 30, 2006
In its first quarterly report (AIM-listed companies only report semi-annually), Sandvine announced sales of $8.1 million and earnings of $183,000 in the quarter ended August 31 (Q3 06). Sales were up 99% from a year ago and about 9% from the previous quarter.
As in the first half, 93% of revenue came from the U.S., with a single customer -- an American cable company -- accounting for $6 million in sales.
Operational loss was $261,000. Sandvine ended the quarter with $47.2 million in cash and securities, and that was before the $13.2 raised through the stock offering in October. Operations consumed $1.8 million in cash in the quarter, and an additional $1.4 million was spent on capital assets.
Despite the reported profits, Sandvine reiterated that it is not focusing on profitability in the short term, and that it would have reported a net loss if it had been able to hire all the sales reps the company is looking to add.
In the conference call, the company estimated that its products are currently being used to manage the traffic of about 7-8 million Internet users. It added five new customer in Q3, bringing the total to 64.
[3]---------------------------------------------------------------
MKS warns quarterly results will be disappointing
November 2, 2006
MKS has pulled its revenue and profitability guidance for the year off the table after logging its second consecutive money-losing quarter. The company says it expects to report sales of US$11.3-11.6 million in the quarter ended October 31 (Q2 07) -- about the same as last year's numbers, 8-10% below the previous quarter, and well below expectations. Unlike last year, MKS expects to report a net loss in the quarter this time, with operating costs in the US$12.4-12.8 million range.
The company says it had US$14.7 million in cash on October 31 -- down about US$700,000 from the beginning of the quarter.
MKS blamed the shortfall on longer sales cycles, new sales reps working their way up the learning curve, and what sounds like less revenue than expected from ramped-up operations in Asia.
Over the first half of fiscal 2006, MKS will have revenue of about US$24 million. It had been forecasting sales of US$57-60 million for the full year.
[4]---------------------------------------------------------------
Dalsa sales and earnings dip slightly from prior quarter
October 26, 2006
A mixed bag of results for Dalsa in the quarter ended September 30 (Q3 06). The company earned $3.3 million ($0.18/share) on sales of $47.4 million. Revenue was up 8% from last year, but down 3% sequentially.
A decline in margins led to an 11% drop in gross profits from the previous quarter, which was partly offset by a reduction in operating expenses. Operations generated $8.6 million in cash, and Dalsa spent $3.2 million to pay back long- and short-term debt, and another $3.8 million on capital assets (expected to climb to $5 million in the current quarter). It ended the quarter with $4.0 million in cash, up $1.8 million from the end of Q2 (with net cash increasing by $2.4 million).
Digital imaging sales were flat quarter-over-quarter. The decline came from the semiconductor segment, which saw a 7% drop in revenue from Q2, but an 11% increase from last year.
Digital cinema continues to be a drain, with losses climbing to $1.7 million from $0.9 million last year. Segment sales of $391,000 were 7% below last year's numbers. Over half of Dalsa's capital asset expenses in the quarter were from its digital cinema segment.
The digital cinema business unit will now be run by Rob Hummel. He was most recently a SVP at Warner Bros. and had previously worked at DreamWorks, Sony, Disney, and Technicolor. In March, he was one of 22 recipients of the Digital Cinema Pioneer Award at ShoWest 2006 in Las Vegas.
Hummel will also oversee operations of Dalsa's rental facility in Woodland Hills, Calif., succeeding Bob DaSilva. DaSilva was the founder of Broadcast Plus, which rented equipment for TV productions when Dalsa acquired it two years ago. Dalsa converted the Broadcast Plus facility near Los Angeles into its digital cinema centre.
[5]---------------------------------------------------------------
LiveHive -- two-screen interactive solutions, not gaming
October 12, 2006
With the online gaming industry facing a shutdown in the U.S. and heavy regulation in many other countries, LiveHive Systems is quickly repositioning itself away from the gambling business.
It wasn't long ago that the company described its business as creating "real-time event wagering solutions for the online gaming industry." Now LiveHive says it creates "real-time event entertainment solutions" which it refined earlier this month to "real-time interactive solutions for TV broadcasters, fantasy sports sites, and broadband TV portals."
Its NanoGaming product used to be about "wagering opportunities" and placing bets. Now it's a "two-screen synchronous entertainment solution" that "allows viewers to play along with their favorite TV shows."
LiveHive has officially launched its NanoGaming website, Speed of Sport, at http://www.speedofsport.com/ which gives users "prediction opportunities" within NFL games as they watch them on TV. All you can win are bragging rights, which no government has tried to tax, so far.
[6]---------------------------------------------------------------
Atria Networks to be acquired by investment firm
October 25, 2006
Atria Networks is being acquired by Toronto-based investment firm Birch Hill Equity Partners for an as-yet undisclosed amount. The deal is expected to close this month.
Atria is currently owned by Kitchener Power (parent of Kitchener-Wilmot Hydro), Waterloo North Hydro, Cambridge and North Dumfries Hydro, and Guelph Hydro. It was formed through the 2005 merger of Waterloo Region's FibreTech with Guelph's FibreWired.
According to a report in The Record, city councillors were told about the impending deal four months ago.
Atria wants to expand into new markets and pursue new product offerings that would be beyond its scope as an arm of regional public utilities.
Birch Hill lists Com Dev and Avotus (which evolved out of Waterloo's Switchview) among the companies it has worked with in the past.
[7]---------------------------------------------------------------
STOCK REPORT: RIM value hits $26B, RDM and Virtek climb
October 2006
According to the numbers on GlobeInvestor.com, RIM has passed Petro-Canada, BCE, and Rogers on the market capitalization list and is running just behind TransCanada Pipelines and CN. The company is now valued at $26 billion.
Shares of RDM and Virtek had a strong October. RDM stock is up 118% over the first 10 months of 2006 -- good for second place among the companies tracked here, trailing only Com Dev. Virtek shares, bouncing back from a disastrous September, are in third place with a 76% gain this year.
For the month of October:
RDM [TSX: RC] +26%
Virtek [TSX: VRK] +24%
RIM [TSX: RIM] +15%
Sandvine [TSX: SVC] +6%
--S&P TSX COMPOSITE INDEX +5%
--S&P TSX VENTURE INDEX +4%
ATS [TSX: ATA] +2%
Open Text [TSX: OTC] +2%
Com Dev [TSX: CDV] +2%
MKS [TSX: MKX] +0%
===============================
Dalsa [TSX: DSA] -6%
Navtech [OTCBB: NAVH] -6%
Descartes [TSX: DSG] -7%
ARISE [TSXV: APV] -8%
TurboSonic [OTCBB: TSTA] -17%
Biorem [TSXV: BRM] -20%
MKS' Q2 warning was announced on November 2, so its effects are not shown here. As of Friday's close, MKS shares were down 22% so far this month.
Companies with core operations outside the area:
Blue Coat [Nasdaq: BCSI] +24%
LSI Logic [NYSE: LSI] +22%
Google [Nasdaq: GOOG] +19%
McAfee [NYSE: MFE] +18%
Agfa-Gevaert [Brussels: AGFA] +6%
NCR [NYSE: NCR] +5%
Ansys [Nasdaq: ANSS] +4%
Oracle [Nasdaq: ORCL] +4%
Adobe [Nasdaq: ADBE] +2%
AMIS [Nasdaq: AMIS] +1%
Sybase [NYSE: SY] +0%
Senesco [Amex: SNT] 0%
===================================
Automated Benefits [TSXV: AUT] -8%
[8]--------------------------------------------------------------
Miscellaneous Tidbits
- Members of the former Requireless team now with Google are credited by the company with developing the new Gmail client for mobile devices. It's certainly a huge improvement over the previous browser-based method of retrieving e-mail from a Gmail account.
- Tangam Gaming -- which can still be in the gambling business, since it works with real-world casinos -- announced that its table game tracking system is being used in a beta test by Barona Valley Ranch Resort and Casino in San Diego. Tangam says the testing began eight months ago.
- We-Create just disclosed in October that it raised $400,000 in April from five investors through a debenture offering.
- Open Text completed its acquisition of Hummingbird and promptly announced that it would be cutting 525 jobs from the combined company. It is also reducing its number of offices worldwide by 38, through closures and consolidations. It expects most of the integration of Hummingbird to be complete by the end of the year.
- RIM has still not released its final quarterly results for the period ended September 2 (Q2 07). Preliminary results were announced in September, but the company is reviewing how it historically accounted for stock options. One error was identified in September, and a second was found in October, which RIM says will "substantially increase" charges associated with option grants in previous years. It doesn't expect there will be material changes to results from the current fiscal year.
- Com Dev CEO John Keating has become chair of Conestoga College's board of governors and vice-chair of Communitech's board. Communitech's new chair is Tim Jackson of Tech Capital Partners, succeeding John Whitney who had served as chair since Communitech was founded in 1997.
- Bruce West is already gone (again) from ARISE, just three months after it was announced he had rejoined the company as CFO. In 2005 he served a similarly brief period as president & COO and had worked with ARISE as a consultant before being rehired. UW president David Johnston has become a director of ARISE.
- Kevin Quinlan, Virtek's sales & bizdev VP, is leaving the company at the end of the year. Quinlan is based in the Boston area and has been with Virtek since 2002. In October, Virtek announced a $4.2 million deal with Boeing, which it described as its first "major integration contract" with the aircraft manufacturer.
- ATS' Photowatt Technologies, which is mostly based in France, has entered into a 10-year supply contract with Germany's Deutsche Solar AG where it will receive enough solar-grade, multi-crystalline polysilicon wafers to produce about 15 megawatts of solar power products annually. Deliveries aren't scheduled to begin until the first half of 2009.
- Covarity has added Laurentian Bank of Canada to its customer list.
- Aimetis' video analytics software will be integrated into the GeViScope video surveillance product line from Germany's Geutebrück GmbH.
- A Christie 3D digital movie projector has been installed in Singapore's S'pore Discovery Centre.
posted by Gary Will at 12:00 AM
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