Waterloo Tech Digest - February 3, 2009
Compiled and written by
Gary Will
gary@garywill.com
In this issue:
A D V E R T I S E M E N T S
RISK FREE LEAD GENERATION
From sales opportunity development to increasing attendance for events, Virtual Causeway accelerates your sales process! With a focus on selling and marketing complex services and technology, we guarantee a consistent and reliable flow of quality leads - assuring that your pipeline is constantly full. Contact us today to learn how we can help connect you with your next customer. Call 519-886-1600 ext. 405 or email marketing@v-causeway.com for details.
BERESKIN & PARR - INTELLECTUAL PROPERTY LAW
Bereskin & Parr is a leading Canadian intellectual property law firm on your doorstep. Our Waterloo region office brings a wealth of experience to serve the growing high technology and manufacturing communities in Canada's Technology Triangle and surrounding areas. Bereskin & Parr's practice encompasses all areas of intellectual property from patents to trade marks and related litigation. Please contact Tim Sinnott (tsinnott@bereskinparr.com) or Jason Hynes (jhynes@bereskinparr.com), at (519) 783-3210 for more information.
DELOITTE - SHAPING CANADIAN BUSINESS FOR 150 YEARS
Deloitte's technology, media and telecommunications practice delivers a suite of services including audit, tax, financial advisory, enterprise risk and consulting. We work with all types of technology companies, including early stage and high-growth companies, to help them succeed. We'll help you grow through contacts, M&A, raising capital and most of all through great business advice. We want to be your trusted advisor and look forward to working with you. Contact Jamie Barron 289-259-3385, jabarron@deloitte.ca or Jane Jantzi at 519-650-7788, jjantzi@deloitte.ca.
ENHANCE YOUR COMPETITIVE ADVANTAGE
INO can deliver competitive advantage to fuel company growth. As described in this video, INO's optical recognition technology helped Optosecurity raise $20 million in financing and create a world-class team. Further information on INO's optical recognition technology can be found here. Please contact Glenn Smith in Waterloo at 519-502-1305 to explore how INO might deliver competitive advantage to your organization.
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.
////////////////////////////////////////////////////////////
[1]---------------------------------------------------------------
ARISE looks for new CEO
January 28, 2009
Bart Tichelman is out as CEO of Arise, slightly less than one year after taking the job. He had served on the company's board of directors for more than seven years when he became CEO, and has resigned from that role as well.
Arise is searching for a new CEO, with chairman Vern Heinrichs filling in on an interim basis.
CFO Dave Chornaby told the Record that there had been "a difference of opinion" between Tichelman and the board over the direction of the company.
[2]---------------------------------------------------------------
Sandvine reports big jump in sales, R&D spending
January 15, 2009
Sandvine sales bounced back to their highest level in over a year in the period ended November 30, 2008 (Q4 08). It wasn't enough to make the company profitable, but sales of $18.6 million were up 9% from a year ago and 42% from the previous quarter. Net loss was $1.8 million, down from $6.3 million in Q3.
One of the reasons for the loss was the company's increased R&D spending, which jumped to $7.6 million or 41% of sales during the quarter. Sandvine says it will continue to increase R&D spending to support product development.
Comcast was back as a major customer, accounting for 41% of sales or $7.6 million in revenue -- not quite up to the $10-11 million it was providing Sandvine at its peak, but a huge jump from $1.2 million in Q3. A second customer -- a reseller -- accounted for 34% of sales, so two customers were responsible for nearly three-quarters of revenue.
Indirect sales through resellers and equipment vendors provided 45% of revenue, up from 26% in the previous quarter. Of the 14 new customers Sandvine won in the quarter, only two were from North America, although -- thanks to Comcast -- North American revenue was up sharply from Q3.
Sandvine ended the quarter, and the year, with $92.5 million in cash and securities, down $3.5 million from the end of Q3. Operations used $230,000 in cash in Q4 and the company spent $3.0 million on capital expenses.
For the year, Sandvine lost $19.6 million on sales of $51.1 million, a 31% drop in revenue from the previous year.
[3]---------------------------------------------------------------
RIM's hostile bid for Certicom gets judicial thumbs down
January 19, 2009
An Ontario judge ruled in favour of Certicom's board of directors in their attempt to block RIM from making a hostile $1.50 a share bid for the company (see last digest). Certicom's board has since endorsed a $2.10 a share offer from California-based VeriSign.
Certicom argued that RIM's bid made use of confidential information received under NDAs -- one signed in July 2007, five months after RIM and Certicom began having discussions about a possible acquisition, and a second signed last June when, according to Certicom, the companies were discussing "possible technology partnering arrangements." Certicom said this gave RIM an unfair advantage over other potential acquirers and that RIM hadn't sufficiently told Certicom shareholders the extent of the confidential information it had when it made its bid.
Certicom's version of events, as laid out in a board circular, is that RIM co-CEO Jim Balsillie told the company near the end of October that RIM was ready to proceed with a friendly acquisition. By that point Certicom was in discussions with "a large multinational technology company" about a possible acquisition. Certicom rejected RIM's request for an exclusivity period and asked for a standstill agreement from RIM, which was also rejected. Certicom says it received a non-binding $1.50 a share proposal from RIM on Friday, November 28 requesting a response by the end of the business day on Monday. On Wednesday morning, RIM sent out a news release announcing the offer and saying that it had been "unable to engage Certicom management in a meaningful dialogue."
Following the ruling, RIM withdrew its bid. The VeriSign offer was announced three days later.
[4]---------------------------------------------------------------
Dalsa's digital cinema sale falls through; sales up 16% in 2008
January 29, 2009
Dalsa couldn't come to terms with ARRI, so the German company won't be buying Dalsa's digital movie camera business after all. Dalsa had signed a letter of intent with ARRI (see October digest) and had hoped to continue to supply image sensors for the camera, but the two companies couldn't reach an agreement. Dalsa says it will "pursue other alternatives."
In the quarter ended December 31 (Q4 08), Dalsa reported a $10.1 million loss from its discontinued digital cinema business. That included a $6.2 million asset writedown along with severance and lease termination costs of $2.6 million. Dalsa announced that it sold its inventory of movie camera equipment -- other than its digital camera and related equipment -- to a California-based equipment rental company.
With the digital cinema losses, Dalsa reported a net Q4 loss of $5.8 million on sales of $46.2 million. Sales were down 12% from the previous quarter and 1.5% from last year. Net income from continuing operations was $4.3 million, down from $6.0 million in Q3. Semiconductor sales were flat from Q3 while digital imaging sales fell 21%.
For the year, Dalsa had revenue of $206.0 million, up 16% from 2007, and a net loss of $18.6 million. Excluding the digital cinema business, Dalsa had earnings of $21.9 million.
The company cautioned that the current economic environment created a "less positive outlook for 2009" and said that it would be looking to expand in new markets and to target markets that were less sensitive to the downturn. It will also be looking for revenue from contract work to offset declines in standard product sales.
Dalsa ended the year with $12.4 million in cash. In Q4, it spent $914,000 to repurchase shares in the company. It also paid $916,000 in dividends, and will spend about the same in the current quarter.
[5]---------------------------------------------------------------
Open Text stays profitable, despite restructuring charges
January 28, 2009
Open Text reported earnings of US$741,000 on sales of US$207.7 million in the quarter ended December 31 (Q2 09). Earnings were down sharply from recent quarters because of severance and other restructuring charges related to its international job cuts in the quarter (see October digest). Open Text reported US$11.4 million in special charges in the quarter.
The quarter included about two months of results from newly-acquired Captaris, and that probably accounted for most of Open Text's 14% sequential gains in revenue (Captaris had sales of US$34.5 million in its last-reported quarter.)
Operations generated US$39.8 million in cash, and Open Text spent US$101.5 million in cash on Captaris and ended Q2 with US$172.9 million in cash, down US$77.3 million from the end of Q1.
[6]---------------------------------------------------------------
STOCK REPORT: Open Text shares reach all-time high
January 2009
After four months of declines, RIM shares turned in their best month in nearly five years, and finished January just below where they were at the end of September.
But even more impressive was the performance of Open Text shares, which hit their all-time high in January (and then topped that mark yesterday in the first day of trading in February).
For the month of January:
RIM [TSX: RIM] +37%
Open Text [TSX: OTC] +17%
Biorem [TSXV: BRM] +11%
--S&P TSX VENTURE INDEX +11%
===============================
Com Dev [TSX: CDV] -1%
MKS [TSX: MKX] -3%
--S&P TSX COMPOSITE INDEX -3%
TurboSonic [OTCBB: TSTA] -7%
Descartes [TSX: DSG] -7%
ATS [TSX: ATA] -10%
RDM [TSX: RC] -11%
Sandvine [TSX: SVC] -16%
Dalsa [TSX: DSA] -16%
Arise [TSX: APV] -25%
Investors apparently weren't impressed by Sandvine's big jump in sales. Its shares went as high as $1.25 in the early days of January, but slipped before the quarterly results came out and fell even further after, closing the month at $0.68 -- its lowest month-end price ever.
Dalsa has chopped its only money-losing business, but that didn't stop its shares from falling to their lowest month-end price in over seven years. Its shares fell another 13% yesterday.
Companies with core operations outside the area:
Acorn Energy [Nasdaq: ACFN] +79%
Agfa-Gevaert [Brussels: AGFA] +48%
ON Semiconductor [Nasdaq: ONNN] +23%
Blue Coat [Nasdaq: BCSI] +14%
Sybase [NYSE: SY] +10%
Google [Nasdaq: GOOG] +10%
===================================
Oracle [Nasdaq: ORCL] -5%
Ansys [Nasdaq: ANSS] -11%
NCR [NYSE: NCR] -11%
McAfee [NYSE: MFE] -12%
Adobe is off the list after shutting its Waterloo office. The small Waterloo site was Adobe's first Canadian R&D office when it opened eight years ago. The company came to town when it acquired a video titling technology from Waterloo's Inscriber (and was initially based within Inscriber's office). The site survived the Adobe layoffs during the tech bust but didn't make it through the company's latest round of cutbacks.
[7]---------------------------------------------------------------
Miscellaneous Tidbits
Gary Will
gary@garywill.com
In this issue:
- ARISE looks for new CEO
- Sandvine reports big jump in sales, R&D spending
- RIM's hostile bid for Certicom gets judicial thumbs down
- Dalsa's digital cinema sale falls through; sales up 16% in 2008
- Open Text stays profitable, despite restructuring charges
- STOCK REPORT: Open Text shares reach all-time high
- Miscellaneous tidbits from RIM, Open Text, ATS, ON Semiconductor
A D V E R T I S E M E N T S
RISK FREE LEAD GENERATION
From sales opportunity development to increasing attendance for events, Virtual Causeway accelerates your sales process! With a focus on selling and marketing complex services and technology, we guarantee a consistent and reliable flow of quality leads - assuring that your pipeline is constantly full. Contact us today to learn how we can help connect you with your next customer. Call 519-886-1600 ext. 405 or email marketing@v-causeway.com for details.
BERESKIN & PARR - INTELLECTUAL PROPERTY LAW
Bereskin & Parr is a leading Canadian intellectual property law firm on your doorstep. Our Waterloo region office brings a wealth of experience to serve the growing high technology and manufacturing communities in Canada's Technology Triangle and surrounding areas. Bereskin & Parr's practice encompasses all areas of intellectual property from patents to trade marks and related litigation. Please contact Tim Sinnott (tsinnott@bereskinparr.com) or Jason Hynes (jhynes@bereskinparr.com), at (519) 783-3210 for more information.
DELOITTE - SHAPING CANADIAN BUSINESS FOR 150 YEARS
Deloitte's technology, media and telecommunications practice delivers a suite of services including audit, tax, financial advisory, enterprise risk and consulting. We work with all types of technology companies, including early stage and high-growth companies, to help them succeed. We'll help you grow through contacts, M&A, raising capital and most of all through great business advice. We want to be your trusted advisor and look forward to working with you. Contact Jamie Barron 289-259-3385, jabarron@deloitte.ca or Jane Jantzi at 519-650-7788, jjantzi@deloitte.ca.
ENHANCE YOUR COMPETITIVE ADVANTAGE
INO can deliver competitive advantage to fuel company growth. As described in this video, INO's optical recognition technology helped Optosecurity raise $20 million in financing and create a world-class team. Further information on INO's optical recognition technology can be found here. Please contact Glenn Smith in Waterloo at 519-502-1305 to explore how INO might deliver competitive advantage to your organization.
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.
////////////////////////////////////////////////////////////
[1]---------------------------------------------------------------
ARISE looks for new CEO
January 28, 2009
Bart Tichelman is out as CEO of Arise, slightly less than one year after taking the job. He had served on the company's board of directors for more than seven years when he became CEO, and has resigned from that role as well.
Arise is searching for a new CEO, with chairman Vern Heinrichs filling in on an interim basis.
CFO Dave Chornaby told the Record that there had been "a difference of opinion" between Tichelman and the board over the direction of the company.
[2]---------------------------------------------------------------
Sandvine reports big jump in sales, R&D spending
January 15, 2009
Sandvine sales bounced back to their highest level in over a year in the period ended November 30, 2008 (Q4 08). It wasn't enough to make the company profitable, but sales of $18.6 million were up 9% from a year ago and 42% from the previous quarter. Net loss was $1.8 million, down from $6.3 million in Q3.
One of the reasons for the loss was the company's increased R&D spending, which jumped to $7.6 million or 41% of sales during the quarter. Sandvine says it will continue to increase R&D spending to support product development.
Comcast was back as a major customer, accounting for 41% of sales or $7.6 million in revenue -- not quite up to the $10-11 million it was providing Sandvine at its peak, but a huge jump from $1.2 million in Q3. A second customer -- a reseller -- accounted for 34% of sales, so two customers were responsible for nearly three-quarters of revenue.
Indirect sales through resellers and equipment vendors provided 45% of revenue, up from 26% in the previous quarter. Of the 14 new customers Sandvine won in the quarter, only two were from North America, although -- thanks to Comcast -- North American revenue was up sharply from Q3.
Sandvine ended the quarter, and the year, with $92.5 million in cash and securities, down $3.5 million from the end of Q3. Operations used $230,000 in cash in Q4 and the company spent $3.0 million on capital expenses.
For the year, Sandvine lost $19.6 million on sales of $51.1 million, a 31% drop in revenue from the previous year.
[3]---------------------------------------------------------------
RIM's hostile bid for Certicom gets judicial thumbs down
January 19, 2009
An Ontario judge ruled in favour of Certicom's board of directors in their attempt to block RIM from making a hostile $1.50 a share bid for the company (see last digest). Certicom's board has since endorsed a $2.10 a share offer from California-based VeriSign.
Certicom argued that RIM's bid made use of confidential information received under NDAs -- one signed in July 2007, five months after RIM and Certicom began having discussions about a possible acquisition, and a second signed last June when, according to Certicom, the companies were discussing "possible technology partnering arrangements." Certicom said this gave RIM an unfair advantage over other potential acquirers and that RIM hadn't sufficiently told Certicom shareholders the extent of the confidential information it had when it made its bid.
Certicom's version of events, as laid out in a board circular, is that RIM co-CEO Jim Balsillie told the company near the end of October that RIM was ready to proceed with a friendly acquisition. By that point Certicom was in discussions with "a large multinational technology company" about a possible acquisition. Certicom rejected RIM's request for an exclusivity period and asked for a standstill agreement from RIM, which was also rejected. Certicom says it received a non-binding $1.50 a share proposal from RIM on Friday, November 28 requesting a response by the end of the business day on Monday. On Wednesday morning, RIM sent out a news release announcing the offer and saying that it had been "unable to engage Certicom management in a meaningful dialogue."
Following the ruling, RIM withdrew its bid. The VeriSign offer was announced three days later.
[4]---------------------------------------------------------------
Dalsa's digital cinema sale falls through; sales up 16% in 2008
January 29, 2009
Dalsa couldn't come to terms with ARRI, so the German company won't be buying Dalsa's digital movie camera business after all. Dalsa had signed a letter of intent with ARRI (see October digest) and had hoped to continue to supply image sensors for the camera, but the two companies couldn't reach an agreement. Dalsa says it will "pursue other alternatives."
In the quarter ended December 31 (Q4 08), Dalsa reported a $10.1 million loss from its discontinued digital cinema business. That included a $6.2 million asset writedown along with severance and lease termination costs of $2.6 million. Dalsa announced that it sold its inventory of movie camera equipment -- other than its digital camera and related equipment -- to a California-based equipment rental company.
With the digital cinema losses, Dalsa reported a net Q4 loss of $5.8 million on sales of $46.2 million. Sales were down 12% from the previous quarter and 1.5% from last year. Net income from continuing operations was $4.3 million, down from $6.0 million in Q3. Semiconductor sales were flat from Q3 while digital imaging sales fell 21%.
For the year, Dalsa had revenue of $206.0 million, up 16% from 2007, and a net loss of $18.6 million. Excluding the digital cinema business, Dalsa had earnings of $21.9 million.
The company cautioned that the current economic environment created a "less positive outlook for 2009" and said that it would be looking to expand in new markets and to target markets that were less sensitive to the downturn. It will also be looking for revenue from contract work to offset declines in standard product sales.
Dalsa ended the year with $12.4 million in cash. In Q4, it spent $914,000 to repurchase shares in the company. It also paid $916,000 in dividends, and will spend about the same in the current quarter.
[5]---------------------------------------------------------------
Open Text stays profitable, despite restructuring charges
January 28, 2009
Open Text reported earnings of US$741,000 on sales of US$207.7 million in the quarter ended December 31 (Q2 09). Earnings were down sharply from recent quarters because of severance and other restructuring charges related to its international job cuts in the quarter (see October digest). Open Text reported US$11.4 million in special charges in the quarter.
The quarter included about two months of results from newly-acquired Captaris, and that probably accounted for most of Open Text's 14% sequential gains in revenue (Captaris had sales of US$34.5 million in its last-reported quarter.)
Operations generated US$39.8 million in cash, and Open Text spent US$101.5 million in cash on Captaris and ended Q2 with US$172.9 million in cash, down US$77.3 million from the end of Q1.
[6]---------------------------------------------------------------
STOCK REPORT: Open Text shares reach all-time high
January 2009
After four months of declines, RIM shares turned in their best month in nearly five years, and finished January just below where they were at the end of September.
But even more impressive was the performance of Open Text shares, which hit their all-time high in January (and then topped that mark yesterday in the first day of trading in February).
For the month of January:
RIM [TSX: RIM] +37%
Open Text [TSX: OTC] +17%
Biorem [TSXV: BRM] +11%
--S&P TSX VENTURE INDEX +11%
===============================
Com Dev [TSX: CDV] -1%
MKS [TSX: MKX] -3%
--S&P TSX COMPOSITE INDEX -3%
TurboSonic [OTCBB: TSTA] -7%
Descartes [TSX: DSG] -7%
ATS [TSX: ATA] -10%
RDM [TSX: RC] -11%
Sandvine [TSX: SVC] -16%
Dalsa [TSX: DSA] -16%
Arise [TSX: APV] -25%
Investors apparently weren't impressed by Sandvine's big jump in sales. Its shares went as high as $1.25 in the early days of January, but slipped before the quarterly results came out and fell even further after, closing the month at $0.68 -- its lowest month-end price ever.
Dalsa has chopped its only money-losing business, but that didn't stop its shares from falling to their lowest month-end price in over seven years. Its shares fell another 13% yesterday.
Companies with core operations outside the area:
Acorn Energy [Nasdaq: ACFN] +79%
Agfa-Gevaert [Brussels: AGFA] +48%
ON Semiconductor [Nasdaq: ONNN] +23%
Blue Coat [Nasdaq: BCSI] +14%
Sybase [NYSE: SY] +10%
Google [Nasdaq: GOOG] +10%
===================================
Oracle [Nasdaq: ORCL] -5%
Ansys [Nasdaq: ANSS] -11%
NCR [NYSE: NCR] -11%
McAfee [NYSE: MFE] -12%
Adobe is off the list after shutting its Waterloo office. The small Waterloo site was Adobe's first Canadian R&D office when it opened eight years ago. The company came to town when it acquired a video titling technology from Waterloo's Inscriber (and was initially based within Inscriber's office). The site survived the Adobe layoffs during the tech bust but didn't make it through the company's latest round of cutbacks.
[7]---------------------------------------------------------------
Miscellaneous Tidbits
- The Globe & Mail reported that the Ontario Securities Commission will seek a penalty of up to $100 million from Jim Balsillie and Mike Lazaridis over RIM's past stock option mispricings (see February and May 2007 digests). When I think of all the shenanigans I've seen over the last 12 years, THIS is what the OSC wants to use to grab a headline-grabbing fine? Stock option "backdating" is illegal, should be illegal, and if you get caught, you should expect to pay a penalty. But it wouldn't make the top 10 list of issues that the OSC needs to be addressing.
- The Record had a story about a former employee of Spicer who is accused of setting up a company in the Czech Republic that sold a knockoff version of Spicer's core product based on stolen source code. According to the story, Open Text (which subsequently acquired Spicer) is seeking $1.5 million in damages.
- ATS closed the $50 million share offering announced last month.
- I'm told that the ON Semiconductor layoffs had no impact on the Waterloo office. Employees will be temporarily laid off without pay for a couple of weeks in each of the next two quarters.
posted by Gary Will at 12:27 AM
