September 1999
Compiled and written by
Gary Will
E-mail:
gary@garywill.com
Issue 31 -- October 12, 1999
In this digest:
- Waterloo Ventures officially launched, signs up UW
- LivePage acquired by Toronto CRM developer for nearly $19 million
- Microsoft acquires company with Kitchener R&D office
- RIM looks to raise more than $200 million through share offering
- RIM quarter meets expectations
- RIM looking to open offices in other cities, build new facility
- U.S. ISP and PageNet Canada to offer RIM BlackBerry service
- Control Advancements now to become Betacom
- Finline says it's supplying $1.6 million system to Somalia
- RDM raises $500,000 through two placements
- Bell Canada uses PixStream technology to deliver TV services
- Nanodesign lands new president and CEO
- STOCK REPORT: Ho-hum September sees most shares remain even
- Miscellaneous Tidbits from Descartes, Jedor, MKS, Focus, Open Text
Waterloo Ventures officially launched, signs up UW
September 23, 1999
Waterloo Ventures, the $5 million seed capital fund announced earlier this year, was officially launched last month, and UW joined Laurier and Conestoga College as the fund's community sponsors.
Fund manager Andrew Abouchar says they're particularly interested in looking at Internet and networking companies, which must have less than a million dollars in revenue and assets and fewer than 50 employees to qualify. Initial investments will be no more than $250,000.
On its Web site, the fund says that it will invest in companies "affiliated" with UW, Laurier, and Conestoga, where affiliation is defined as using technology developed at the schools, employing graduates, or "having connections with professors" of the schools.
So far, no deals have been announced, although Abouchar says he's received several business plans. It'll be interesting to see if this area can provide the number of fundable start-ups that our hype suggests we should have.
Members of the board of directors include Descartes CEO Peter Schwartz, Richard Black of Helix Investments, and Ron Craig from Laurier, along with Abouchar and chair Toby Jenkins.
The fund was created by Working Ventures Canadian Fund, whose local investments have included tech firms Virtek, International Neural Machines, and CME Telemetrix. Working Ventures president Ron Begg said a the launch that he hopes that some companies funded through Waterloo Ventures can one day move up to the parent fund, which provides financing in the millions of dollars.
LivePage acquired by Toronto CRM developer for nearly $19 million
September 20, 1999
Janna Systems, a Toronto-based developer of customer relationship management software has acquired LivePage for $1.1 million in cash and 3.058 million Janna shares to be released between April and October next year. The Waterloo LivePage office will become a Janna R&D site.
At the time the deal was announced, Janna shares last traded at $5.75 on the Canadian Dealing Network, giving the acquisition a value of around $18.7 million. (Janna shares have tripled in value since the beginning of the year.)
LivePage lost $556,000 on revenues of only $159,000 over the first half of this year. In 1998, LivePage lost $634,000 on revenues of $69,000. Accumulated deficit at the time of acquisition was $1.6 million. The company had net working capital of $272,000 with $393,000 in cash and marketable securities.
Mike Strathdee's report in The Record says that three LivePage managers will become Janna VPs. Dave Boswell, LivePage president, becomes VP of marketing, Deanne Farrar, LivePage's VP of marketing, becomes Janna's VP of product marketing and moves to Toronto, while Gary Pianosi will remain in Waterloo as Janna's VP of product development.
Ian McPhee -- the former CEO of Watcom, from where many LivePage managers came -- is a director of both LivePage and Janna. He was the one who brought the companies together, according to Strathdee.
Janna says the LivePage technology will be used to add "Web content and personalization capabilities to the Janna suite of applications" and assist Janna in "providing complete eRM [eRelationship Management] solutions." The rebranded Janna LivePage is now part of the Janna Enterprise Suite.
The acquisition came less than a month after the death of LivePage CEO Wes Graham (see August digest).
In the first half of 1999, Janna earned $2.1 million on revenues of $8.0 million.
Microsoft acquires company with Kitchener R&D office
September 17, 1999
Microsoft acquired the assets of Softway Systems this month for an undisclosed amount. Although Softway is based in San Francisco, it had a Kitchener development office headed by R&D VP Stephen Walli. Walli is now headed to Redmond.
Softway was founded in 1995 and their core product is Interix (formerly OpenNT) -- a UNIX/NT interoperability tool. It competes against the Nutcracker product that MKS acquired in February as part of its purchase of DataFocus. Walli was formerly with MKS, as were others in the Kitchener Softway office.
The Microsoft news release says that they will continue to work with companies like MKS on UNIX/NT interoperability, but that might be more of a challenge with Microsoft now owning a competing technology.
RIM looks to raise more than $200 million through share offering
September 23, 1999
RIM wants to expand an already healthy balance sheet through an offering of 5 million shares, mostly to U.S. buyers. At the current price for RIM shares, the offering would raise about $225 million. The over-allotment option of 750,000 shares could add more than $30 million to the total amount raised.
At August 31, RIM had $97.9 million in cash and marketable securities on the balance sheet with net working capital of $141.9 million.
Merrill Lynch is the lead underwriter for the share offering, and all shares are being sold from treasury.
The use of proceeds list wasn't specific (sales & marketing, product development, capital equipment, general) but did allow for the possibility of an acquisition.
RIM quarter meets expectations
September 23, 1999
For the quarter ended August 31 (Q2 00), RIM reports a net income of $3.5 million ($0.05/share) on revenues of $28.7 million.
Pager revenues were about $19.5 million -- up 5% from $18.6 million in the previous quarter. BlackBerry revenues were approximately $1.4 million, and RIM says there are now 1,500 companies using the service and 5,000 subscribers.
RIM says that sales to BellSouth accounted for about $15 million in revenue during the quarter. BellSouth isn't expected to make any significant contribution to revenue in the current quarter, although RIM expects another order from them in Q4.
RIM expects that the hole caused by the absence of BellSouth revenues this quarter will be filled by orders from American Mobile Satellite Corp. (AMSC).
Co-CEO Jim Balsillie says the company expects to make modules for the new Visor handheld product from Handspring, the company founded by the creators of the Palm Pilot.
RIM looking to open offices in other cities, build new facility
September 24, 1999
In their Q2 conference call, RIM said it will open offices in other cities to attract employees who don't want to come to the K-W area.
"We've had a significant demand from people who want to [work] for RIM but who don't necessarily want to make the move to Waterloo," said a company spokesman. "We'll try to satisfy that need by opening offices in other cities."
Balsillie said the company is exploring the possibility of opening offices in "other North American technology centres."
At the same time, RIM is now rumoured to be a likely candidate for the UW Waterloo Technology Park. Balsillie added fuel to the rumours by confirming that the company is looking at a new manufacturing facility in Waterloo, even though the current Kitchener site is operating well below capacity. With the company's forecasts of producing more than one million devices a year, the current facility would be "stretched soon" even if operating with three shifts.
The managers of the UW tech park said in the last month that they are now looking to local companies as tenants instead of pursuing a major high-tech company from another city as the elusive "anchor tenant."
One company that slipped through the fingers of the UW park is MKS. As expected, MKS has selected the former Clemmer land on Albert Street for their new 100,000 square foot headquarters.
That site is now being called the "Waterloo Technology Campus" although it's not on a campus. The "campus" name and MKS's reference to itself as the "anchor tenant" for the site seemed like some nose-thumbing at the UW people who were rumoured to have considered MKS's space requirements too small to kick off the north campus park.
U.S. ISP and PageNet Canada to offer RIM BlackBerry service
September 1999
Espernet.com, an amalgamation of dozens of local ISPs in the U.S. (which has just filed for an IPO), will offer RIM BlackBerry Internet Edition to its subscribers. RIM says the initial order is expected to generate over US$6 million in revenue.
PageNet Canada will also offer BlackBerry Internet Edition, selling the service through its direct sales force and retail and reseller channels. PageNet Canada currently has more than 250,000 subscribers.
In other RIM news, Clearnet Communications, which operates the Clearnet and Mike networks, announced that Jim Balsillie has joined its board of directors.
Control Advancements now to become Betacom
September 17, 1999
A year ago, Control Advancements' shareholders voted to change the name of the company to Odyssey Corporation. For months, the company has said that the name change was expected to become final "in the next four weeks" and it even registered the domain odysseycorporation.com.
Apparently all those plans are being abandoned, as the company announced this month that it "anticipates" changing its name to Betacom after acquiring the 30% of Betacom Corporation that it did not already own and merging the two companies. Betacom CEO Brian McCarthy will become CEO of the combined company. The news release did not say what will happen to Control Advancements' CEO Jeff Preitauer, but he will apparently still be involved with the company.
The balance of Betacom is being acquired for 4 million new shares of Control Advancements, of which 2.1 million will be issued at closing, 900,000 issued upon the completion of a licensing agreement with Johns Hopkins University of Baltimore for the development and commercialization of their LVES technology, and the remaining million shares to be issued in equal proportion upon the achievement of EBITDA annual profits of $500,000, $1 million, and $1.5 million if they occur over the next five years.
The LVES (pronounced "elvis" -- an acronym for low vision enhancement system) technology was initially developed at Johns Hopkins five years ago and manufactured and marketed by a company in Minnesota that was accused of over-promising results and using poor suppliers. It went out of business in 1997. The technology would fit in well with other products currently being marketed by Betacom for the low vision market.
Control Advancements also announced that they have "developed a strategy for the disposition" of their investments in Dantec and Ventax. Both of those companies were scheduled to go public long ago, but the anticipated IPOs never occurred. Reports from Ventax are that the company has had significant management problems over the last year and has lost many of its employees.
Control Advancements subsidiary Alliance Technologies will continue as the R&D services company for products from both Betacom and third parties.
Finline says it's supplying $1.6 million system to Somalia
September 22, 1999
Finline announced this month that it will sell a "wireless cable" MMDS system to HornAfrik Media that will provide 6 TV channels to an area covering about 500,000 homes in Mogadishu, Somalia.
The deal is estimated to be worth "in excess of" $1.6 million, with immediate orders of $200,000. Initial deliveries are scheduled to begin next month.
Finline also announced that it intends to raise up to $150,000 through a private placement of shares at $0.25/share.
RDM raises $500,000 through two placements
September 29, 1999
Bell Canada plans to use PixStream technology to deliver the TV and music channels available through Bell's ExpressVu satellite service through broadband DSL lines running on existing copper wires.
The PixStream technology is already being used by NBTel (see May digest) as well as a British company.
According to Mike Strathdee's report in The Record, the current trial consists of a single condo complex in Toronto with 100 residents. They won't have to pay for the service over the six month duration of the trail. If it goes well, a larger trial will be launched next year which could lead to a commercial roll-out later in the year.
Bell Canada uses PixStream technology to deliver TV services
September 29, 1999
Bell Canada plans to use PixStream technology to deliver the TV and music channels available through Bell's ExpressVu satellite service through broadband DSL lines running on existing copper wires.
The PixStream technology is already being used by NBTel (see May digest) as well as a British company.
According to Mike Strathdee's report in The Record, the current trial consists of a single condo complex in Toronto with 100 residents. They won't have to pay for the service over the six month duration of the trail. If it goes well, a larger trial will be launched next year which could lead to a commercial roll-out later in the year.
Nanodesign lands new president and CEO
September 22, 1999
Nanodesign has hired Ian Anderson as its new CEO. He succeeds Laurence Russ, who resigned in July. Anderson was most recently with MDS Inc. where he was involved with "identifying and investigating business opportunities for new screening technologies," according to the release.
Nanodesign also announced that Jeffrey Turner has joined its board. Turner, the CEO of Nexia Biotechnologies, is already a director of Nanodesign's parent company, GUARD.
STOCK REPORT: Ho-hum September sees most shares remain even
September 1999
There wasn't much action in the stock market in September. Descartes did end up regaining almost all of its losses in August and closed the month up 29% at $6.50. It was as high as $7.90 mid-month.
Open Text had its worst month of the year, dropping another 23% to $29.00 for its fifth consecutive month of losses. Most of the September losses have been regained so far in October.
GUARD shares fell another 21% to $1.50 -- half of what they were worth for the first five months of the year.
Otherwise, the only other interesting tidbit is that RIM was able to squeak out another increase -- up 3% in September to $45.60. Its shares were highly volatile over the month, ranging from $34.55 to $56.15.
Miscellaneous Tidbits
WATERLOO TECH DIGEST
Compiled and edited monthly by
Gary Will
FAX: 786/513-0516
gary@garywill.com
75 King Street South, Box 40005, Waterloo, Ontario, Canada N2J 4V1
