January 2005

Compiled and written by
Gary Will
E-mail:
gary@garywill.com

Issue 95 -- February 7, 2005
In this digest:

1. Dalsa finishes year with record quarterly sales
   
2. Kaleidescape sued by DVD association
   
3. CIGI gets $7M to deploy research portal with Open Text tech

4. Virtek pays $600K plus IP to settle Bio-Rad claim
   
5. IMS introduces ring tones for cars
   
6. STOCK REPORT: Navtech value tops $10M

7. Miscellaneous tidbits from Navtech, SlipStream, Covarity, Intelwaves, Leitch

Dalsa finishes year with record quarterly sales
January 27, 2005

Dalsa finished its fiscal year with record revenue in the quarter ended December 31 (Q4 04). It reported net income of $6.3 million on sales of $47.9 million. Sales were up 27% from a year ago and 9% sequentially, and fell within the company's forecast of $46-49 million.

Revenue from Dalsa's digital imaging segment was up 27% from the previous quarter, while the semiconductor segment reported a 16% drop in revenue. The company had forecast that semiconductor sales would be lighter than in Q3 and expects them to increase starting in the second quarter of 2005.

For the year, Dalsa had revenue of $168.6 million, up 23% from 2003. Net income in 2004 was $19.8 million, up from $11.6 million the previous year.

The company ended the year with $14.8 million in net cash and securities. Operations provided $9.0 million in cash in the quarter, and Dalsa spent a net $7.0 million on capital assets and an additional $662,000 in cash on its acquisition of Broadcast Plus, which is now the Dalsa Digital Cinema Center.

The digital cinema facility now has Dalsa's digital Origin camera in inventory and available for rental. Dalsa plans to spend about $13 million on rental inventory in 2005, with digital cinema accounting for 40% of capital spending in the year.

The company is forecasting sales of $37-40 million in Q1, traditionally its weakest quarter. For the year, Dalsa is expecting sales of $192-208 million -- or 14-23% growth -- and net income of $21.0-22.5 million.

Dalsa is creating a CMOS imaging group and says it is in the process of hiring someone with CMOS technology and market experience to lead the group.

At the end of the year, Dalsa employed 875 people worldwide, up about 100 from a year ago.

Kaleidescape sued by DVD association
December 7, 2004

In December, the DVD Copy Control Association filed suit against Kaleidescape, claiming that the company's DVD server is in violation of the license agreement for the CSS copy-protection system. Kaleidescape is based in California, but does its engineering work in Waterloo.

With the Kaleidescape technology, people can copy all of their DVDs onto a central server and have all the movies they own available on any TV in the home without having to dig through stacks of DVD boxes to find the one they want.

The DVD CCA is claiming that its license agreement requires that the physical DVD disc be present in the drive during playback -- something that would require a server to be like a jukebox that mechanically retrieves a disc and queues it for playback.

Kaleidescape CEO (and former UW prof) Mike Malcolm says the terms claimed by the DVD CCA are not actually in the license agreement. "We've scrupulously followed every one of their requirements," he told the San Jose Mercury News.

CIGI gets $7M to deploy research portal with Open Text tech
January 28, 2005

Waterloo's Centre for International Governance Innovation (CIGI), chaired by RIM co-CEO Jim Balsillie, will receive will receive nearly $7 million over the next five years from the Ontario government to develop IGLOO (International Governance Leadership Organizations Online), described as a "web-based platform for research on issues of global importance."

IGLOO will use the Livelink collaboration technology from Open Text.

CIGI's CTO is Dan Latendre, who previously worked at Open Text and was a VP at the company's old b2bScene subsidiary.

Virtek pays $600K plus IP to settle Bio-Rad claim
January 21, 2005

Virtek has agreed to release its claim on the remaining $425,000 owed to it by Bio-Rad Laboratories plus pay Bio-Rad an additional $170,000 as well as the rights to Virtek's mothballed FONA (Fibre-Optic Nucleic Acid) technology. This was to settle the claim made against Virtek last year in which Bio-Rad said that there were design and performance problems with the Chip Reader technology it bought from Virtek in 2002. At the time the claim was made, Virtek said it believed it was "totally without merit."

IMS introduces ring tones for cars
January 18, 2005

In the "from the sublime to the ridiculous" file, Waterloo's IMS, which has developed some highly sophisticated technology for automobile sensors, unveiled a new product that it's marketing in collaboration with California's On The Edge Marketing. The product is called RideTones and essentially consists of ring tones for your car -- MP3-quality sounds that you can blast out from your car when you lock or unlock the doors, open the trunk, or do various other things.

"Picture the fun of having AK-47s going off when you lock your car," says the company's sales materials. Yeah, now there's fun. Needless to say, the product is being targetted at a teenage/young male market. (The over-the-top copywriter also refers to "Intelligent Mechatronic Systems Inc. (IMS) of Canada, makers of the Blackberry.")

RideTones was unveiled at the 2005 Consumer Electronics Show in Las Vegas. IMS says the product will be available at the end of March.

STOCK REPORT: Navtech value tops $10M
January 2005

Not only did Navtech stock jump 31% in January, it has continued its momentum in the first few days of trading in February, giving the company a market value of over $10 million for the first time.

For the month of January:

Turbosonic [OTCBB: TSTA] +34%
Navtech [OTCBB: NAVH] +31%
ARISE [TSXV: APV] +29%
RDM [TSX: RC] +10%
MKS [TSX: MKX] +3%
Open Text [TSX: OTC] +1%
ClearFrame [TSXV: CLF] 0%
===============================
--S&P TSX COMPOSITE INDEX -0%
--S&P TSX VENTURE INDEX -2%
Com Dev [TSX: CDV] -4%
Descartes [TSX: DSG] -6%
Dalsa [TSX: DSA] -9%
RIM [TSX: RIM] -11%
Virtek [TSX: VRK] -13%

From the drop for Dalsa, it may seem like there was a poor reaction to the company's Q4 results, but actually the stock had been down 13% on the month before the financial results were released and rebounded after the numbers came out.

Biorem is now a public company, trading on the TSX Venture Exchange under the ticker BRM. It completed its merger with public shell Ontario Capital Opportunities Inc.

Companies with core operations outside the area:

Automated Benefits [TSXV: AUT] +55%
Blue Coat [Nasdaq: BCSI] +38%
LSI Logic [NYSE: LSI] +12%
Agfa-Gevaert [Brussels: AGFA] +5%
CheckFree [Nasdaq: CKFR] +2%
Ansys [Nasdaq: ANSS] +1%
==================================
Sybase [NYSE: SY] -2%
SBS Technologies [Nasdaq: SBSE] -7%
Adobe [Nasdaq: ADBE] -9%
Leitch [TSX: LTV] -11%
McAfee [NYSE: MFE] -11%
Senesco [Amex: SNT] -13%
Siebel [Nasdaq: SEBL] -17%
CVF [OTCBB: CNVT] -19%
AMIS [Nasdaq: AMIS] -35%

AMIS Holdings, the company that acquired Dspfactory in the fall, saw its value fall by more than one-third after it reported disappointing quarterly results.

Automated Benefits, the parent company of Waterloo's pre-revenue Symbility Solutions, is now valued at $45 million -- more than RDM and Virtek combined. This is the company that Scott Paterson and Peter Schwartz have hooked up with (and the company just announced that Kaleil Isaza Tuzman has joined its board -- Isaza Tuzman was featured in the documentary Startup.com a few years ago as the co-founder of dot-com govWorks). Symbility won't have a product on the market until later this year.

Miscellaneous Tidbits

• Navtech announced that it signed a long-term agreement with Air Canada that will see the airline's 8,000 flight attendants use Navtech's CLASS software to bid their scheduling preferences across the Internet.

• Paul Obert is the new sales VP for SlipStream. He previously held the same position with Markham's Redline Communications, which he joined two years ago.

• SlipStream also announced that had signed deals with ISPs in Pakistan, India, Thailand and Bangladesh, as well as with an Australian ASP.

• Didn't mention before that Ron Shuttleworth stepped down as president and CEO of Covarity and was succeeded by Rod Foster, who had been the company's marketing VP.

• Intelwaves also has a new president, who was previously one of Sirific's top engineers.

• Leitch completed its acquisition of Inscriber (see last month's digest).