Waterloo Tech Digest - December 5, 2006
Compiled and written by
Gary Will
gary@garywill.com
In this issue:
RDM sales climb 25% in 2006
November 17, 2006
RDM reported record revenue of $7.2 million in the quarter ended September 30 (Q4 06). Sales were up 16% from last year and 17% from the previous quarter. For the full 2006 fiscal year, RDM had sales of $24.3 million, up 25% from 2005.
Net income in Q4 was $1.6 million, but that gets an asterisk as during the quarter the company decided that it met the "more likely than not" criteria for R&D tax credits and recognized a $850,000 future tax asset. It also recognized a $264,000 tax credit as a reduction to its R&D expenses in the quarter. The tax assets helped push RDM's earnings for the fiscal year to $2.1 million ($0.10/share), with nearly four-fifths of that generated in Q4.
RDM's digital imaging segment showed big quarter-over-quarter and year-over-year gains in Q4, offsetting declines in the other two segments, electronic payments (EPS) and quality assurance. Digital imaging sales of $5.8 million in the quarter was up 39% from Q3 and 72% from a year ago. EPS sales -- which had shown big sequential jumps in Q4 the past couple of years -- fell 23% from the previous quarter and 50% from last year.
Year-end volume on RDM's ITMS electronic payment processing service was 850,000 transactions per week, up from 500,000 a year ago. That has since grown to 1 million transactions a week. The company has said that it needs to get to about 2 million a week to reach breakeven. The number of locations where payments can be processed through ITMS jumped from 386 to 3,300 during the year, so the number of transactions per location are much lower as RDM broadens its installed base. It ended the year with 15 banks as customers for the ITMS service -- the same number as at the end of Q3, but up from seven a year earlier.
Operations provided $1.9 million in cash and RDM ended the quarter with a cash position of $6.2 million.
RDM's financial statements showed that it paid $552,000 in royalties to DataTresury through the year. DataTreasury had sued RDM and others for patent infringement four years ago. The companies reached an agreement in 2003, and RDM at that time said it expected that DataTreasury's patents would eventually be found invalid.
[2]---------------------------------------------------------------
ARISE looks to raise money for R&D, factory
November 25, 2006
After its successful fundraising earlier in the year, ARISE will need to raise more money soon as it looks to fund R&D and manufacturing for its thin-film PV cell production process, as well as for its solar-grade silicon process.
In the quarter ended September 30 (Q3 06), ARISE lost $501,000 on sales of $203,000. Revenue was down 33% from the previous quarter, as the company is mostly focused on its research projects and their commercialization. It believes that some sales were delayed as Ontario residents waited to hear the details of the provincial government's subsidy program for electricity generated by renewable resources (solar, wind, water, biomass). The loss took ARISE's accumulated deficit to $10.4 million. It ended Q3 with $652,000 in cash, down $591,000 from the beginning of the quarter.
ARISE says its goal is to begin shipments 12 months after it has raised the funding needed for a factory. The company has applied for a grant from the German government to place its manufacturing facility there, but would need to raise money this month to qualify for the full 50% grant. The grant drops to 43% on January 1. ARISE has selected a Dutch engineering firm to build the facility.
The company also announced that it has produced a four-inch prototype PV cell, scaling up from its previous one-inch prototype.
[3]---------------------------------------------------------------
Descartes sales hold steady with hefty cash flow
November 30, 2006
No big changes for Descartes in its latest quarterly results. The company reported sales of US$13.4 million in the period ended October 31 (Q3 07), up 1% from the previous quarter and 17% from a year ago. It looks like all of those gains came through acquisitions, as these were the first quarterly results that included a full quarter's contribution from FCS, acquired by Descartes at the end of June. Last year's numbers also did not include sales from Ottawa's ViaSafe, which Descartes acquired in April.
Net income was US$449,000 (US$0.01/share), including income from operations of US$252,000. That was negatively impacted by Descartes' decision to fire two former ViaSafe executives, including CEO and co-founder Wael Aggan. That triggered an acceleration of payments they were to receive for not leaving the company for an 18-month period following the acquisition. Otherwise, expenses were flat from Q2.
Operations provided $4.2 million in cash, leaving Descartes with $20.8 million in cash and securities at the end of the quarter.
Also in November, Descartes announced that it will be acquiring assets of Toronto's Cube Route Inc. in an all-cash deal expected to close next month. Cube Route provides a suite of Web-based logistic management modules and raised $7 million a year ago from CIBC Capital Partners and J.L. Albright Venture Partners. Albright had previously invested $4 million in Cube Route in 2004. John Albright had been a director of Descartes until earlier this year.
[4]---------------------------------------------------------------
MKS' disappointing quarter in line with warning
November 29, 2006
MKS' results were in-line with its earlier warning (see last digest). The company lost US$690,000 on sales of US$11.5 million. Sales were flat from a year ago and down 9% from the previous quarter. It has lowered its annual revenue forecast by US$5 to US$52-55 million. Net income forecasts were lowered by US$4 million to US$0-2 million.
Operations provided $875,000 in cash and MKS spend $1.0 million on dividends and $599,000 to purchase capital assets. It ended the quarter with $14.7 million in cash.
MKS says when it analyzed sales trends it found that its oldest and largest customers were the ones where revenue decline was most notable. It believes this is partly due to a lack of support services offered to those customers, and is trying to fill that gap.
[5]---------------------------------------------------------------
STOCK REPORT: RDM soars, MKS stumbles
November 2006
The market responded strongly to RDM's financial results, as the company's shares jumped to their highest point since December 2000 and had their third-best month ever, climbing 75% in November. That took the company's market value to over $65 million -- up from $18 million at the beginning of the year.
With a month to go in 2006, RDM had overtaken Com Dev as the top performing stock among the companies tracked here. RDM shares are now up 266% for the year, with Com Dev at 182%.
For the month of November:
RDM [TSX: RC] +75%
RIM [TSX: RIM] +20%
--S&P TSX VENTURE INDEX +10%
Descartes [TSX: DSG] +9%
Open Text [TSX: OTC] +5%
--S&P TSX COMPOSITE INDEX +3%
===============================
Com Dev [TSX: CDV] -1%
Navtech [OTCBB: NAVH] -2%
Sandvine [TSX: SVC] -5%
ARISE [TSXV: APV] -6%
ATS [TSX: ATA] -7%
Dalsa [TSX: DSA] -8%
Virtek [TSX: VRK] -10%
Biorem [TSXV: BRM] -11%
TurboSonic [OTCBB: TSTA] -13%
MKS [TSX: MKX] -22%
MKS shares plunged in value after the company issued an earnings warning on November 2 (see previous digest and below). The stock traded below $2 for the first time this year.
RIM shares continued to climb, reaching an all-time high of $161.15 on November 23. The company's market value was just under $30 billion as of Friday's close.
Com Dev shares spent the entire month above $6 -- the first time that's happened since April 2001. Open Text shares are up 40% over the last four months.
After a big spring, ARISE shares have now declined for seven consecutive months, losing 43% of their value in that time. Because of those gains early in the year, ARISE stock probably won't be a contender for worst performance of the year. It looks like Biorem shares will be trail the field, with MKS stock now second from the bottom.
Companies with core operations outside the area:
Blue Coat [Nasdaq: BCSI] +15%
AMIS [Nasdaq: AMIS] +13%
LSI Logic [NYSE: LSI] +6%
Adobe [Nasdaq: ADBE] +5%
NCR [NYSE: NCR] +3%
Oracle [Nasdaq: ORCL] +3%
Ansys [Nasdaq: ANSS] +2%
Google [Nasdaq: GOOG] +2%
McAfee [NYSE: MFE] +1%
===================================
Senesco [Amex: SNT] -1%
Sybase [NYSE: SY] -2%
Agfa-Gevaert [Brussels: AGFA] -9%
Automated Benefits [TSXV: AUT] -17%
[6]--------------------------------------------------------------
Miscellaneous Tidbits
Gary Will
gary@garywill.com
In this issue:
- RDM sales climb 25% in 2006
- ARISE looks to raise money for R&D, factory
- Descartes sales hold steady with hefty cash flow
- MKS' disappointing quarter in line with warning
- STOCK REPORT: RDM soars, MKS stumbles
- Miscellaneous tidbits from Desire2Learn, Open Text, Symbility, Biorem, RIM, NCR, Athena, Jaywil, GUARD, RapidMind, Dalsa, Sandvine, Spheral Solar, TurboSonic, Virtek
RDM sales climb 25% in 2006
November 17, 2006
RDM reported record revenue of $7.2 million in the quarter ended September 30 (Q4 06). Sales were up 16% from last year and 17% from the previous quarter. For the full 2006 fiscal year, RDM had sales of $24.3 million, up 25% from 2005.
Net income in Q4 was $1.6 million, but that gets an asterisk as during the quarter the company decided that it met the "more likely than not" criteria for R&D tax credits and recognized a $850,000 future tax asset. It also recognized a $264,000 tax credit as a reduction to its R&D expenses in the quarter. The tax assets helped push RDM's earnings for the fiscal year to $2.1 million ($0.10/share), with nearly four-fifths of that generated in Q4.
RDM's digital imaging segment showed big quarter-over-quarter and year-over-year gains in Q4, offsetting declines in the other two segments, electronic payments (EPS) and quality assurance. Digital imaging sales of $5.8 million in the quarter was up 39% from Q3 and 72% from a year ago. EPS sales -- which had shown big sequential jumps in Q4 the past couple of years -- fell 23% from the previous quarter and 50% from last year.
Year-end volume on RDM's ITMS electronic payment processing service was 850,000 transactions per week, up from 500,000 a year ago. That has since grown to 1 million transactions a week. The company has said that it needs to get to about 2 million a week to reach breakeven. The number of locations where payments can be processed through ITMS jumped from 386 to 3,300 during the year, so the number of transactions per location are much lower as RDM broadens its installed base. It ended the year with 15 banks as customers for the ITMS service -- the same number as at the end of Q3, but up from seven a year earlier.
Operations provided $1.9 million in cash and RDM ended the quarter with a cash position of $6.2 million.
RDM's financial statements showed that it paid $552,000 in royalties to DataTresury through the year. DataTreasury had sued RDM and others for patent infringement four years ago. The companies reached an agreement in 2003, and RDM at that time said it expected that DataTreasury's patents would eventually be found invalid.
[2]---------------------------------------------------------------
ARISE looks to raise money for R&D, factory
November 25, 2006
After its successful fundraising earlier in the year, ARISE will need to raise more money soon as it looks to fund R&D and manufacturing for its thin-film PV cell production process, as well as for its solar-grade silicon process.
In the quarter ended September 30 (Q3 06), ARISE lost $501,000 on sales of $203,000. Revenue was down 33% from the previous quarter, as the company is mostly focused on its research projects and their commercialization. It believes that some sales were delayed as Ontario residents waited to hear the details of the provincial government's subsidy program for electricity generated by renewable resources (solar, wind, water, biomass). The loss took ARISE's accumulated deficit to $10.4 million. It ended Q3 with $652,000 in cash, down $591,000 from the beginning of the quarter.
ARISE says its goal is to begin shipments 12 months after it has raised the funding needed for a factory. The company has applied for a grant from the German government to place its manufacturing facility there, but would need to raise money this month to qualify for the full 50% grant. The grant drops to 43% on January 1. ARISE has selected a Dutch engineering firm to build the facility.
The company also announced that it has produced a four-inch prototype PV cell, scaling up from its previous one-inch prototype.
[3]---------------------------------------------------------------
Descartes sales hold steady with hefty cash flow
November 30, 2006
No big changes for Descartes in its latest quarterly results. The company reported sales of US$13.4 million in the period ended October 31 (Q3 07), up 1% from the previous quarter and 17% from a year ago. It looks like all of those gains came through acquisitions, as these were the first quarterly results that included a full quarter's contribution from FCS, acquired by Descartes at the end of June. Last year's numbers also did not include sales from Ottawa's ViaSafe, which Descartes acquired in April.
Net income was US$449,000 (US$0.01/share), including income from operations of US$252,000. That was negatively impacted by Descartes' decision to fire two former ViaSafe executives, including CEO and co-founder Wael Aggan. That triggered an acceleration of payments they were to receive for not leaving the company for an 18-month period following the acquisition. Otherwise, expenses were flat from Q2.
Operations provided $4.2 million in cash, leaving Descartes with $20.8 million in cash and securities at the end of the quarter.
Also in November, Descartes announced that it will be acquiring assets of Toronto's Cube Route Inc. in an all-cash deal expected to close next month. Cube Route provides a suite of Web-based logistic management modules and raised $7 million a year ago from CIBC Capital Partners and J.L. Albright Venture Partners. Albright had previously invested $4 million in Cube Route in 2004. John Albright had been a director of Descartes until earlier this year.
[4]---------------------------------------------------------------
MKS' disappointing quarter in line with warning
November 29, 2006
MKS' results were in-line with its earlier warning (see last digest). The company lost US$690,000 on sales of US$11.5 million. Sales were flat from a year ago and down 9% from the previous quarter. It has lowered its annual revenue forecast by US$5 to US$52-55 million. Net income forecasts were lowered by US$4 million to US$0-2 million.
Operations provided $875,000 in cash and MKS spend $1.0 million on dividends and $599,000 to purchase capital assets. It ended the quarter with $14.7 million in cash.
MKS says when it analyzed sales trends it found that its oldest and largest customers were the ones where revenue decline was most notable. It believes this is partly due to a lack of support services offered to those customers, and is trying to fill that gap.
[5]---------------------------------------------------------------
STOCK REPORT: RDM soars, MKS stumbles
November 2006
The market responded strongly to RDM's financial results, as the company's shares jumped to their highest point since December 2000 and had their third-best month ever, climbing 75% in November. That took the company's market value to over $65 million -- up from $18 million at the beginning of the year.
With a month to go in 2006, RDM had overtaken Com Dev as the top performing stock among the companies tracked here. RDM shares are now up 266% for the year, with Com Dev at 182%.
For the month of November:
RDM [TSX: RC] +75%
RIM [TSX: RIM] +20%
--S&P TSX VENTURE INDEX +10%
Descartes [TSX: DSG] +9%
Open Text [TSX: OTC] +5%
--S&P TSX COMPOSITE INDEX +3%
===============================
Com Dev [TSX: CDV] -1%
Navtech [OTCBB: NAVH] -2%
Sandvine [TSX: SVC] -5%
ARISE [TSXV: APV] -6%
ATS [TSX: ATA] -7%
Dalsa [TSX: DSA] -8%
Virtek [TSX: VRK] -10%
Biorem [TSXV: BRM] -11%
TurboSonic [OTCBB: TSTA] -13%
MKS [TSX: MKX] -22%
MKS shares plunged in value after the company issued an earnings warning on November 2 (see previous digest and below). The stock traded below $2 for the first time this year.
RIM shares continued to climb, reaching an all-time high of $161.15 on November 23. The company's market value was just under $30 billion as of Friday's close.
Com Dev shares spent the entire month above $6 -- the first time that's happened since April 2001. Open Text shares are up 40% over the last four months.
After a big spring, ARISE shares have now declined for seven consecutive months, losing 43% of their value in that time. Because of those gains early in the year, ARISE stock probably won't be a contender for worst performance of the year. It looks like Biorem shares will be trail the field, with MKS stock now second from the bottom.
Companies with core operations outside the area:
Blue Coat [Nasdaq: BCSI] +15%
AMIS [Nasdaq: AMIS] +13%
LSI Logic [NYSE: LSI] +6%
Adobe [Nasdaq: ADBE] +5%
NCR [NYSE: NCR] +3%
Oracle [Nasdaq: ORCL] +3%
Ansys [Nasdaq: ANSS] +2%
Google [Nasdaq: GOOG] +2%
McAfee [NYSE: MFE] +1%
===================================
Senesco [Amex: SNT] -1%
Sybase [NYSE: SY] -2%
Agfa-Gevaert [Brussels: AGFA] -9%
Automated Benefits [TSXV: AUT] -17%
[6]--------------------------------------------------------------
Miscellaneous Tidbits
- Desire2Learn filed a request with the U.S. patent office for a reexamination of Blackboard's patent which is at the centre of the patent infringement suit against Desire2Learn. The USPTO has three months to decide whether to grant the request. The Software Freedom Law Center in New York, which provides legal services in support of free and open source software, has also filed a request for a reexamination of the Blackboard patent. The request was filed on behalf of three developers of open source educational software applications.
- In Open Text's last set of quarterly results before the inclusion of numbers from Hummingbird, the company reported net income of US$7.3 million on sales of US$101.2 million for the period ended September 30 (Q1 07). Revenue was on the high end of Open Text's forecast of US$93-101 million, up 9% from last year and down 4% from the previous quarter. The company ended Q1 with US$111.2 million in cash, up US$3.9 million from the beginning of the quarter.
- Symbility Solutions, which is a subsidiary of Automated benefits Corp., reported a loss of $823,000 on sales of $183,545 in the quarter ended September 30 (Q3 06). Those numbers were nearly unchanged from the previous quarter. The company says it has found that a rollout of its system takes a lot of time and customer training. It also announced multi-year contracts for its mobile claims system with Quebec's Promutuel du Lac au Fjord and Ohio-based State Auto Mutual Insurance Company. It now has contracts with eight insurance companies, split between the U.S. and Canada.
- Biorem lost $320,000 on sales of $2.8 million in the quarter ended September 30 (Q3 06). Sales were flat from the previous quarter, but improvements in margins led to a 63% sequential increase in gross profit. R&D spending fell from Q2 to 4% of revenue or $119,000. The company raised $3.4 million through a share offering, while operations consumed $1.2 million. Biorem ended the quarter with $2.9 million in cash.
- Toronto's Epoch Integration, a developer of business applications for the BlackBerry, has been acquired by RIM. RIM didn't announce the deal -- it wasn't material to its operations -- but Epoch changed its Web site on November 21 to say the company had been acquired and that its development team had joined RIM. Epoch was founded in 1997 and lists Time Warner, Interpol, BP, and the U.S. Army among its customers.
- NCR announced new software developed in Waterloo that will help financial institutions detect and evaluate suspicious cheque deposits before payments are posted.
- Guelph's Athena Software passed along word that it has grown to over $1 million in revenue and 100 clients, including a contract to supply case management technology to social service agencies funded by the New South Wales government in Australia.
- Guelph's Jaywil Software says its ResourceMate library automation software is now being used by 5,000 libraries worldwide. It announced that it had hit the 4,000 mark about a year ago.
- One more item from Guelph -- Jim Romahn reports that GUARD has been placed into bankruptcy. GUARD used to get a lot of coverage here (see February digest for a recap). It was a U of G affiliate created to commercialize technology from the university and other research centres and had a 10-year right of first refusal to commercialize all intellectual property owned or controlled by U of G. Once the company fell into a shambles, the university quickly moved to dissociate itself from the mess. There will be nothing left for shareholders after GUARD's few remaining assets are distributed among creditors.
- RapidMind was at the IBM booth at Supercomputing 2006 in Tampa, demonstrating how applications cal be ported and tuned to the Cell Broadband Engine with RapidMind's development platform.
- Dalsa unveiled a new 16 megapixel scientific and medical X-Ray camera at the annual conference of the Radiological Society of North America in Chicago.
- Sandvine's overallotment option was taken in full by its underwriters, which increases the offering size by $6 million to $46 million. None of the additional funds from the overallotment pool will go to the company, as the shares were purchased from Sandvine's investors and employees.
- ATS' Spheral Solar unit lost $3.4 million with no revenue in the quarter ended September 30. The company emphasized that the technological and commercialization hurdles it faces with the Spheral Solar technology are "substantial" and that there will be a review next month of the progress that has been made.
- TurboSonic lost US$188,000 on sales of US$3.1 million in the quarter ended September 30 (Q1 07). Sales were down 10% from a year ago. In a release, CEO Ed Spink said the company is "looking forward to a period of major revenue recognition for the remainder of fiscal 2007."
- Virtek says it will save about $750,000 a year after chopping seven jobs and moving some of its FOBA engineering work from Boston to Waterloo. Virtek now has 191 employees worldwide.
posted by Gary Will at 12:00 AM
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