January 2007
Compiled and written by
Gary Will
Issue 119 -- February 13, 2007
In this digest:
- DiskStream winds down operations after funding ends
- GE Fanuc closing Waterloo office
- Sandvine forecasts 60-90% growth in 2007
- RDM reports record sales on strong scanner sales
- Open Text reports first results after Hummingbird acquisition
- STOCK REPORT: ARISE and RDM continue to shine
- Miscellaneous tidbits from Virtek, ARISE, Navtech, NCR, Com Dev, ATS, RIM, MedShare, Accelerator Centre, RapidLabs, Symbility, Geosign, Synnex, RapidMind.
DiskStream winds down operations after funding ends
January 2007
DiskStream is shutting down, a little more than two years after it received seed funding from Tech Capital Partners. The company's seven employees have been let go.
DiskStream got its product to market and received some good reviews, but couldn't win enough customers. It had developed a system for archiving video content as digital files and was targetting small market broadcasters and specialty channels to use the product for news content, commercials, and other programming.
Tech Capital chose to discontinue funding DiskStream after market adoption proved to be slower than expected.
GE Fanuc closing Waterloo office
February 1, 2007
GE Fanuc Embedded Systems, which acquired SBS Technologies last year for about US$215 million, is shutting down what was SBS' Waterloo office. The local site had evolved out of Focus Automation, a company started by three former ATS employees 20 years ago.
In the late 1990s, Focus attracted about $10 million in funding from Telsoft (now Propulsion Ventures) and Ventures West, among others, but the VCs ended up writing off most of their investments when Focus' assets were sold to a Japanese company in 2001. The Waterloo office operated as V Technology North America for a few months before the Japanese owners walked away.
Not long after, the company reemerged as Avvida Systems, and less than a year-and-a-half later, was acquired by SBS Technologies for about $7 million. Co-founder Ron Strauss led the office through each of its incarnations.
GE Fanuc is a joint venture of General Electric and Japan's Fanuc Ltd.
Sandvine forecasts 60-90% growth in 2007
January 24, 2007
Sandvine finished its first fiscal year as a public company with sales of $9.2 million in the quarter ended November 30 (Q4 06). Sales were up 44% from a year ago and 14% from the previous quarter.
Net income was $116,000, all of which came from interest income -- Sandvine had $57.1 million in cash and securities at the end of the quarter. Loss from operations was $407,000, up from $261,000 in Q3. Operations consumed $2.1 million and another $1.6 million was spent on capital assets. Sandvine raised $13.5 million through the sale of shares with its TSX listing in the quarter.
The company added eight new customers in Q4, and 62% of all revenue, or a little under $6 million, came from a single U.S. customer.
For the year, Sandvine lost $382,000 on sales of $31.7 million. It expects to grow the top line to $50-60 million in 2007, partly through increased investments in sales and marketing, with an "increased focus on achieving profitability" later in the year.
RDM reports record sales on strong scanner sales
February 6, 2007
RDM got off to a strong start to fiscal 2007, reporting earnings of $1.3 million ($0.06/share) on sales of $11.7 million. This was a much stronger quarter for the company than Q4 -- which sent its stock into new highs. Sales were up 134% from a year ago and 62% from the previous quarter.
Digital imaging revenue -- driven by cheque scanner sales -- more than tripled from the previous year and were up 83% sequentially. More than 20,000 units were shipped in the quarter, although that was partly due to a backlog that had built up in the previous quarter. That more than made up for a sharp drop in electronic payments revenue. Combined, digital imaging and electronic payments accounted for 96% of sales, with the balance provided by RDM's legacy quality assurance business.
Operations generated $2.0 million in cash, which was about even with the previous quarter. RDM ended the quarter with $8.9 million in cash.
Open Text reports first results after Hummingbird acquisition
February 8, 2007
In its first quarter after the Hummingbird acquisition, Open Text reported earnings of US$2.3 million on sales of US$163.3 million. Profits were down from US$7.3 million last quarter and US$2.7 million a year ago, although the company said the acquisition was accretive to earnings in the quarter.
Operations provided US$31.4 million in cash. Open Text spent US$384.8 million in cash on the acquisition (net of acquired cash) -- paid through long-term debt -- and another US$17.8 million on acquisition-related expenses. It ended the quarter with US$124.4 million in cash
STOCK REPORT: ARISE and RDM continue to shine
January 2007
It was another strong month for shares in ARISE and RDM, which repeated their 1-2 finish from December. RDM shares have gained 275% over the last four months, while ARISE stock is up 165% in two months.
Sandvine shares had their best month since the company's IPO, and with some sharp swings in stock value in January came a few shifts in the market capitalization list. RDM is now worth more than MKS, while both Sandvine and Descartes passed Dalsa for market value in January. Sandvine now valued at $343 million.
For the month of January:
ARISE [TSXV: APV] +80%
RDM [TSX: RC] +40%
Sandvine [TSX: SVC] +26%
TurboSonic [OTCBB: TSTA] +20%
ATS [TSX: ATA] +8%
Descartes [TSX: DSG] +7%
MKS [TSX: MKX] +3%
RIM [TSX: RIM] +1%
--S&P TSX COMPOSITE INDEX +1%
===============================
--S&P TSX VENTURE INDEX -2%
Dalsa [TSX: DSA] -3%
Biorem [TSXV: BRM] -3%
Open Text [TSX: OTC] -8%
Navtech [OTCBB: NAVH] -8%
Com Dev [TSX: CDV] -11%
Virtek [TSX: VRK] -13%
The Open Text numbers don't include the bump its shares received from the announcement of its quarterly results. Open Text stock is up 20% so far in February.
Companies with core operations outside the area:
Ansys [Nasdaq: ANSS] +15%
NCR [NYSE: NCR] +11%
Google [Nasdaq: GOOG] +9%
Automated Benefits [TSXV: AUT] +5%
Sybase [NYSE: SY] +5%
Senesco [Amex: SNT] +5%
LSI Logic [NYSE: LSI] +4%
Blue Coat [Nasdaq: BCSI] +4%
McAfee [NYSE: MFE] +3%
Agfa-Gevaert [Brussels: AGFA] +2%
Oracle [Nasdaq: ORCL] +0%
===================================
AMIS [Nasdaq: AMIS] -2%
Adobe [Nasdaq: ADBE] -5%
Miscellaneous Tidbits
- Virtek raised gross proceeds of $4.2 million through a share offering. It issued 4.8 million new common shares, sold for 87 cents each. Paradigm Capital led the syndicate of agents. Net proceeds to the company after fees and expenses were $3.7 million.
- ARISE raised $3.6 million through a warrant financing. It also announced that it has a non-binding agreement with Commerzbank AG for debt funding to go toward the construction of a manufacturing plant in Germany. It still needs to raise about another $20 million to cover the full construction cost of the plant. ARISE has hired Sjouke Zijlstra as VP and GM of the proposed German manufacturing operations. He was previously with Shell Solar in Germany and The Netherlands. And ARISE has hired an IR/PR director: David Ward, formerly with Mosaid Technologies in the Ottawa area.
- Navtech lost US$178,000 on sales of US$9.8 million in the quarter ended October 31 (Q4 06). Sales were flat from the previous quarter. Operations generated US$2.3 million in cash, all of which came through an increase in payables. Navtech ended the quarter with US$6.8 million in cash. This was the first year with results from European Aeronautical Group AB.
- NCR is closing most of its Waterloo site -- cutting 450 jobs -- but its R&D and marketing operations here will continue. NCR has been in Waterloo for 35 years. It will still have 275 employees in Waterloo after this round of layoffs, which are expected to begin in the spring.
- Com Dev is adding 38,000 square feet of space to its Cambridge facility at a cost of $4 million. About half the space will be used for production, with the rest allocated to engineering, R&D, and corporate development.
- ATS is cutting 100 jobs in Cambridge from its Automation Systems Group, and another 80 jobs at other sites. It says the move will save about $11 million a year in payroll costs. ATS has also filed another amended prospectus for the planned IPO of its subsidiary, Photowatt Technologies Inc. The company announced that it plans to jointly develop its Spheral Solar technology with two Japanese companies: Clean Venture 21 Corporation of Kyoto and Fujipream Corporation of Hyogo. The companies have signed a non-binding letter of intent. Under the agreement, Photowatt would have the option to buy up to half of the solar cells and modules produced.
- RIM has launched the BlackBerry 8800, which includes built-in GPS, MP3 player, a full QWERTY keyboard and a trackball instead of a thumbwheel. No camera.
- J. Haynes -- the founder of JPH International, which evolved in several stages into EVER America -- is the new CEO of MedShare. Founder Barry Billings continues as president. The company is moving from Guelph to Cambridge in May.
- Tom Corr will become the new CEO of the Accelerator Centre on April 1. He was director of commercialization at the University of Toronto, and has been hired to run the Accelerator and as UW's associate vice-president of commercialization, which will include directing the university's technology transfer and licensing office. Current Accelerator Centre CEO Gerry Sullivan is stepping down after agreeing to serve on a short-term basis last year when Dan Melymuk became ill with cancer.
- Patricia Beretta, formerly marketing EVP at Medicalis, is now working with RapidLabs, where she will "assist in the formation of clinical strategies."
- David Chalmers is the new VP of business development for Symbility Solutions. He's a former RIM VP and previously worked at Descartes.
- New titles at Geosign for Brent Drewry and Chris Howlett. Drewry is now COO, while Howlett is VP of acquisition integration, acting as COO of acquired companies through their transition into Geosign. The company has also hired Brian Null -- the man behind GolfCourses.com and OfficeSupply.com, among many others -- as its VP of domain acquisitions and strategy. Geosign also announced that it has made an investment in Toronto's Ontogenix
- Synnex Canada is buying the former Imperial Tobacco building in Guelph. It will buy the building from Linamar, which is acquiring the site as the winner of a bidding process conducted last year. After being the top bidder, Linamar decided the building wasn't appropriate for its needs. Synnex had also placed a bid on the site.
- RapidMind announced that it is working with Colorado-based Terra Soft Solutions to assist developers in creating applications for the PlayStation 3 and other systems running the Cell BE.
- Forgot to mention in December that Jim Kopperson, former RDM CFO, is now CFO of Toronto-based Colombia Goldfields Ltd.
- Also from the "where are they now" file -- Eric Palmer, the former CFO of MKS, has been CFO at Syndesis in Richmond Hill for the last seven years. The company announced in January that it is being acquired for about $195 million.