March 2005

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

Issue 97 -- April 11, 2005
In this digest:

1. RIM makes half-billion-dollar settlement with NTP
2. RIM poised to pass the 3 million subscriber mark
3. ARISE looks to shuffle balance sheet after losses in 2004

4. STOCK REPORT: RIM settlement pleases investors
5. Miscellaneous tidbits from Dalsa, Navtech, Handshake, PrinterOn, Semacode, Symbility, Biorem, Meikle, Com Dev

RIM makes half-billion-dollar settlement with NTP
March 16, 2005

RIM has agreed to pay NTP Inc. US$450 million to settle the patent infringement suit NTP successfully brought against it in 2001. NTP won the jury trial in 2002 and then won the appeal at the end of last year. From that point, there was really very little doubt that some kind of agreement would be reached.

The deal is a one-time payment, which RIM has recorded in the final quarter of fiscal 2005 (see below). There will be no ongoing royalties. For RIM, it puts an end to the ordeal where it found that, no matter how successful it had been in the marketplace, when it stepped into the courtroom, nobody -- from the jury to the trial judge to the appellate judges -- was buying what it was trying to sell.

The settlement amount is just over CDN$550 million, which is about the value of Dalsa, Com Dev, and MKS combined. It's undoubtedly a boatload more money than the company could have paid to settle the matter five years ago when it first heard from NTP. But RIM shareholders weren't complaining. As of Friday's close, RIM was valued at just under $18 billion -- just behind Petro-Canada and Alcan, according to the data at GlobeInvestor.com. Even after paying off NTP, it will still have US$1.3 billion in cash.

Business Week has reported that the U.S. Patent & Trademark Office has rejected one of the five NTP patents on which RIM was found to have infringed. Too little, too late for RIM at this point.

RIM poised to pass the 3 million subscriber mark
April 5, 2005

RIM finished fiscal 2005 with its annual sales topping the US$1 billion mark for the first time. In Q4, ended February 26, the company had sales of US$404.8 million, up 92% from a year ago and 11% from the previous quarter. Sales were in-line with RIM's guidance of US$390-410 million.

Net loss in the quarter was US$2.6 million (US$0.01/share) following a couple of extraordinary items. Included in the results was an expense of US$294.2 million to cover the balance of the money that will be paid to NTP. There was also an income tax recovery provision of US$144.6 million, which helped to soften the bottom-line impact of the NTP settlement.

RIM ended the year with US$1.7 billion in cash, which will decrease to about US$1.3 billion once the NTP money is paid. In Q4, operations generated US$130.3 million in cash.

The number of BlackBerry subscribers grew to more than 2.5 million with the addition of 470,000 new subscribers in Q4. RIM expects to top the 3 million subscriber mark this quarter.

Guidance for Q1 remained essentially unchanged, at revenue of US$430-455 million and net income per share of $0.51-0.56 -- down one penny on the high end due to a 2006 tax rate that will be higher than anticipated. RIM is looking for sales of US$460-485 million in Q2.

For fiscal 2005, RIM reported profits of US$213.4 million (US$1.14/share) on sales of US$1.35 billion. Revenue was up 127% from 2004.

ARISE looks to shuffle balance sheet after losses in 2004
March 22, 2005

ARISE lost $415,330 on sales of $318,965 in the quarter ended December 31, 2004 (Q4 04). Sales were down 29% from the previous year, which the company attributed to a global scarcity of photovoltaic modules. Gross profits in Q4 were down to only $32,465. The company did not provide an update on its cash position.

For the year, ARISE lost $1.8 million on sales of $1.9 million, with revenue sliding 12% from 2003.

ARISE is trying to make its balance sheet look more appealing by separating itself from its online sales business, SolarSense.com, which used to account for the majority of ARISE revenue (78% in 2001, 86% in 2000). SolarSense.com began as a joint venture with a Vancouver company in 1999. ARISE bought out its partner the following year.

The operation is now slated to become the property of Geosign, whose primary business has been developing tools that index websites geographically. This was spun into "e-commerce expertise" in the news release, which is ironic since part of Geosign's pitch has been that people prefer to buy items in person rather than online. Synnex Canada president Jim Estill is a significant backer of both companies.

ARISE says the arrangement will improve its balance sheet by $600,000.

STOCK REPORT: RIM settlement pleases investors
March 2005

RIM stock jumped up 14% in March, thanks mostly to relief that the company's long-standing dispute with NTP Inc. was finally over.

As has been the case for years, RIM stock went up on rumours that someone might want to acquire it, now that its legal problems are resolved. Those kind of rumours have been floating for years. There aren't too many companies left that can afford to buy RIM with its current market value.

For the month of March:

ARISE [TSXV: APV] +26%
RIM [TSX: RIM] +14%
Biorem [TSXV: BRM] +11%
Navtech [OTCBB: NAVH] +8%
Turbosonic [OTCBB: TSTA] +7%
===============================
MKS [TSX: MKX] -1%
--S&P TSX COMPOSITE INDEX -1%
--S&P TSX VENTURE INDEX -5%
Com Dev [TSX: CDV] -6%
Dalsa [TSX: DSA] -6%
Virtek [TSX: VRK] -6%
Descartes [TSX: DSG] -7%
Open Text [TSX: OTC] -9%
RDM [TSX: RC] -10%
ClearFrame [TSXV: CLF] -14%

After an impressive December, Com Dev shares are down 12% over the first quarter of 2005. That's still better than the performance of Virtek shares, which have fallen 28% in those three months. They had their lowest month-end price ever in March. Over the same period in 2004, Virtek stock was up 76%, but it's been all downhill for the company since then. Its stock has declined in 11 of the last 12 months and is down 63% over that time.

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +26%
CVF [OTCBB: CNVT] +19%
Leitch [TSX: LTV] +9%
Automated Benefits [TSXV: AUT] +9%
Adobe [Nasdaq: ADBE] +9%
Siebel [Nasdaq: SEBL] +7%
CheckFree [Nasdaq: CKFR] +6%
Senesco [Amex: SNT] +3%
Agfa-Gevaert [Brussels: AGFA] +1%
AMIS [Nasdaq: AMIS] +0%
==================================
Sybase [NYSE: SY] -2%
McAfee [NYSE: MFE] -2%
Ansys [Nasdaq: ANSS] -5%
SBS Technologies [Nasdaq: SBSE] -8%
LSI Logic [NYSE: LSI] -12%

BlueCoat stock performed strongly in March, but that turned around after the company disclosed in the first week of April that it is under investigation by the SEC for possible illegal insider trading.

Miscellaneous Tidbits

• Dalsa has received another $1.0 million through the Technology Partnerships Canada (TPC) program. It is a follow-on to the $1.7 million received in 2002 and again will be put toward R&D for Dalsa's digital cinema technology.

• Navtech announced a contract with Delta Airlines to provide its crew management applications. It also announced some recent contracts in the Asia Pacific region.

• Handshake VR's virtual touch software is being bundled with devices and toolkits from Massachusetts-based SensAble.

• PrinterOn, which until now has focused on selling its technology to hotels, is expanding into the university market with its WiFi Campus Printing System, targeted at libraries, computing labs, residences, print centers and common areas. It says the system is already being used at Western and Queen's, among other sites.

• Semacode says its URL barcode technology will be used by New York-based marketing communications firm Shepardson Stern and Kaminsky (SS+K). According to the Semacode website, the company has just grown beyond its founder, Simon Woodside, and now has part-time employees. Semacode was mentioned in The Economist Technology Quarterly in March, along with a photo of semacode on a bus stop.

• Symbility has launched a three-month pilot program with Gore Mutual Insurance Company. The previously-announced pilots with Allstate and Economical should either be complete or be in their final stages by now.

• Biorem reported net income of $972,000 on revenue of $9.9 million in the year ended December 31. Sales were up 15% from the previous year. The company's new CFO is Greg Flanagan. He was previously with Brantford's Nu-Gro Corporation for 13 years, which was a TSX-listed company during his time there.

• Meikle Automation has received a US$7 million order from an unnamed customer and says it has booked $20 million in new business over the first 14 weeks of 2005.

• Keith Ainsworth was formally announced as the new chairman of Com Dev, succeeding the late Val O'Donovan. Ainsworth had been deputy chairman.