Gary Will

Waterloo Tech Digest - November 9, 2009

2009-11-09T01:50:00.001-05:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Sandvine sales up 22%, led by Asia-Pacific
Dalsa breaks even on flat sales
Open Text restructuring bites into bottom line
Arise expects lower losses, plans new German tech centre
STOCK REPORT: Good bounce for Com Dev in quiet month
Startup notes from Allerta, Poptiq, Aeryon, Igloo, Enflick, 2G Robotics, PostRank, Hippopost, Terepac
Miscellaneous tidbits from Open Text, RDM, ATS, Desire2Learn, exactEarth, RIM

////////////////////////////////////////////////////////////
S P O N S O R S

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EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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[1]---------------------------------------------------------------
Sandvine sales up 22%, led by Asia-Pacific
October 8, 2009

A slightly better quarter for Sandvine, which lost $4.4 million on sales of $16.0 million in the quarter ended August 31 (Q3 09). Sales were up 5.4% from Q2, and the bottom line was a $1.2 million improvement from the previous quarter. Year-over-year sales improved by 22%.

No significant revenue from Comcast, but a new customer -- or at least one that didn't buy anything over the first half of the fiscal year or in last year's Q3 -- accounted for $3.4 million or 21.3% of revenue in Q3.

For the second quarter in a row, sales to customers using Sandvine products in wireless applications outpaced sales to cable and DSL uses -- and the segment expanded its lead over the other two in Q3, accounting for 42% of sales. Sales in the Asia-Pacific area were particularly strong.

Sandvine received orders from 11 new customers in the quarter, up from 10 in Q2.

The company ended Q3 with $87.5 million in cash, down $2.6 million from the start of the period.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS TECHNOLOGY WHITEBOARDS
Our legal professionals discuss a range of issues affecting technology companies, including tips for start-ups, protecting your IP, outsourcing, technology agreements and more.
Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to clients ranging from start-ups to public companies. 40 professionals serving Waterloo Region/Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

////////////////////////////////////////////////////////////

[2]---------------------------------------------------------------
Dalsa breaks even on flat sales
October 29, 2009

Dalsa earned $48,000 on sales of $41.0 million in the quarter ended September 30 (Q3 09). Sales were up slightly from the previous quarter, but down 22% from a year ago. The company reiterated what it said at after Q2: that it is seeing signs of improvement in its business outlook, particularly in the Asia-Pacific region for its digital imaging business.

Income from operations of $254,000 was up from an operating loss of $326,000 in Q2. Continuing operations generated a profit of $113,000, all of which came from the digital imaging business. Dalsa's discontinued digital cinema business took $65,000 off the bottom line in the period. Dalsa sold some of its remaining digital cinema assets for about $500,000 in Q3 and is trying to sell the remainder of those assets.

Order backlog fell $11.0 million to $88.7 million, which is still the second highest in company history. The drop was partly due to the rise in the Canadian dollar, which lowers the value of U.S. dollar contracts.

Continuing operations generated $3.8 million in cash, and the company used $912,000 to pay dividends to shareholders and spent $1.5 million on capital assets. It ended the quarter with $11.4 million in cash, up $1.5 million from the end of Q2.

[3]---------------------------------------------------------------
Open Text restructuring bites into bottom line
October 27, 2009

Open Text earnings fell to just US$1.7 million on sales of US$211.4 million in the quarter ended September 30 (Q1 10). The big drop -- down from US$19.5 million in the previous quarter -- was caused by the company's latest round of restructuring, which it says will result in charges of US$32-40 million. There were US$14.6 million in charges in Q1, along with US$2.5 million from Open Text's 2009 restructuring and an additional US$1.4 million in acquisition-related charges.

Sales were up 4% from the previous quarter, with all gains coming through the acquisition of Vignette, which closed three weeks into the quarter. Vignette contributed US$25.9 million in revenue in Q1. Without the acquisition, Open Text sales would have been down 9% sequentially. Sales were up 16% from a year ago, with the Vignette acquisition again accounting for most of that increase. While Vignette helped the top line, it wasn't as beneficial at the bottom, contributing a net loss of US$4.3 million.

Operations generated US$4.5 million in cash and Open Text spent US$90.6 million in cash as part of the Vignette deal. It ended the quarter with US$212.2 million in cash.

[4]---------------------------------------------------------------
Arise expects lower losses, plans new German tech centre
November 2, 2009

A bunch of notes from Arise this month, including a preview of its forthcoming Q3 results (to be announced on Wednesday). The company sold 3.5MW of PV cells in the quarter, compared to 2.9MW in Q2. With prices for PV cells continuing to fall, revenue is expected to show a slight sequential decline. Net loss for the quarter is expected to be about $5.4 million. Arise is forecasting shipments of 7MW in the current quarter (Q4), with 2.3MW shipped in October. Based on preliminary numbers, it says its German plant had a positive EBITDA in October.

Some Arise customers had yield problems with cells produced late in Q3, but the cells were replaced and are back in inventory, where they are expected to be used in Arise systems next year. The company says the production problem has been resolved.

Arise also announced plans to build a technology centre in Gelsenkirchen, Germany and will lease what had been Scheuten Solar's PV cell manufacturing plant in that city. Arise has purchased the assets in the plant (which it plans to pay for through discounted sales of PV cells to Scheuten), and Scheuten has the option to sell the building to Arise in 2012. All 55 of the people who currently work at the plant will now be employed by Arise, with the German government picking up the tab for all employment costs while the plant is in transition.

The company says it expects some unspecified company insiders will sell Arise shares they currently own to raise money to purchase units in a planned $1 million share-warrant offering. Each unit in the offering would include a common share and a warrant for one additional share, with pricing to be "determined in the context of current market pricing." It hasn't appeared on SEDAR yet, but Arise says it filed a supplementary prospectus last Monday.

Arise received a $250,000 bridge loan for its Canadian operations on October 29. The loan bears annual interest of 20% and matures in 60 days.

The company also announced that founder Ian MacLellan is once again CTO, in addition to running the systems business. MacLellan held the CTO title for about nine months in 2008, giving it up about a year ago when he became president of the systems division.

[5]---------------------------------------------------------------
STOCK REPORT: Good bounce for Com Dev in quiet month
October 2009

Not much of note from the stock market during the month -- Com Dev shares showed the biggest gain and are up another 17% so far in November, taking them back up to where they were at the end of May.

Dalsa shares ended a four-month run of successive gains, during which time they went up 32%. With Dalsa stock still trading above $7, the only company on this list that has seen its share price fall in 2009 is Arise. Shares of TurboSonic (+81%), Sandvine (+68%), Descartes (+58%), and MKS (+58%) are all having strong years so far.

For the month of October:

Com Dev [TSX: CDV] +10%
ATS [TSX: ATA] +9%
RDM [TSX: RC] +8%
Arise [TSX: APV] +3%
Biorem [TSXV: BRM] +2%
MKS [TSX: MKX] +2%
--S&P TSX VENTURE INDEX +1%
Open Text [TSX: OTC] +1%
===============================
Sandvine [TSX: SVC] -3%
--S&P TSX COMPOSITE INDEX -4%
Descartes [TSX: DSG] -5%
TurboSonic [OTCBB: TSTA] -6%
Dalsa [TSX: DSA] -7%
RIM [TSX: RIM] -12%

RIM has joined the long list of companies with a share repurchase program. Its board authorized the company to spend up to US$1.2 billion over the next year to purchase shares through Nasdaq. RIM shares finished October at their lowest month-end price since December.

Companies with core operations outside the area:

Acorn Energy [Nasdaq: ACFN] +28%
Agfa-Gevaert [Brussels: AGFA] +9%
Ansys [Nasdaq: ANSS] +8%
Google [Nasdaq: GOOG] +8%
Sybase [NYSE: SY] +2%
Oracle [Nasdaq: ORCL] +1%
===================================
Blue Coat [Nasdaq: BCSI] -1%
Intel [Nasdaq: INTC] -2%
Electronic Arts [Nasdaq: ERTS] -4%
McAfee [NYSE: MFE] -4%
ON Semiconductor [Nasdaq: ONNN] -19%
NCR [NYSE: NCR] -27%

[6]---------------------------------------------------------------
Startup Notes

Allerta formally unveiled its inPulse Smartwatch, a Bluetooth watch that wirelessly connects to a BlackBerry and provides alerts of incoming e-mails and calls. Text messages, e-mail headers, and the caller-ID of incoming calls are automatically pushed to the watch's display screen. Allerta was founded by Eric Migicovsky, the then-VeloCity resident who won the pitch competition at last year's LaunchPad kickoff event. The company was named a runner up at LaunchPad in May and has received financial support from OCE. Allerta expects to start shipping devices in February.
Poptiq sent out word that the Gone Anime mobile video service -- which it created -- won the top award in the mobile interactive applications category at the 2009 ITV Awards in Cannes. The awards are presented by AFDESI, the Association for the Development of Enhanced TV Services and Interactivity.
Aeryon Labs was selected as one of the OnDC 100 list of top private companies by AlwaysOn, the media and events company founded by Tony Perkins (previously a founder of Upside and Red Herring). Aeryon was a runner-up in the government & security services category.
Igloo was one of 10 companies profiled in the IDC research report "Innovative Application Software Companies Under $100 Million to Watch," published in October.
Derek Ting -- one of two UW students who founded Enflick, along with Jon Lerner (see previous issue) -- wrote to say that the iTunes reviews of the company's Unlimited SMS service are much stronger on the U.S. store than in Canada, with an average four-out-of-five star rating. The service has difficulties with Rogers which has led to mixed reviews in Canada but is not a problem in the U.S.
Projects led by 2G Robotics and PostRank were among the 14 selected for funding from Ottawa-based Precarn. Precarn funding averages $150,000 per project. The PostRank project is to develop the PostRank Pro-Media Registry, a database of online publishers and the topics they cover with real-time social engagement rankings of the content they produce. 2G Robotics is developing a next-generation underwater laser scanner. A third project, which lists UW as a partner, is led by Toronto's Dreamcube Technologies, which is headed by Paul Vice, an MBET grad who was previously part of OCE's Waterloo office.
The Globe and Mail and the Record both profiled Hippopost, based in Kitchener and run by former RIM employees Donal Byrne (CEO) and Bob Millar (COO). According to the Globe, there are a half-dozen former RIMers at Hippopost. The company lets users send free advertiser-supported postcards (as in, real, delivered-by-the-post-office postcards) through its website, Facebook or BlackBerry app.
Terepac announced it is working with IMEC -- which bills itself as Europe's largest independent research center in nano-electronics and nano-technology -- and will have its technology tested in a wireless ECG patch being developed in the Netherlands. The first results are expected by the middle of next year.

[7]---------------------------------------------------------------
Miscellaneous Tidbits

Tom Jenkins, executive chairman, chief strategy officer, and former CEO of Open Text, and Ian McPhee, a founder and president of Watcom (which evolved into the Waterloo office of Sybase) and the current chair of the Accelerator Centre, were among this year's inductees into the Waterloo Region Entrepreneur Hall of Fame. Also inducted were Frank Rovers, co-founder and former president of engineering firm Conestoga-Rovers & Associates, along with Oscar Kuntz, founder of Kuntz Electroplating, and Harold Seegmiller of construction firm Seegmiller E&E Ltd.
Jenkins was also the recipient of the 2009 Ontario Ernst & Young Entrepreneur of the Year Award. The director of the awards credited Jenkins with "radically chang[ing] the way we use the internet in business."
RDM received the Excellence in Technology Award at the 2009 Waterloo Region Business Achievement Awards. Enermodal Engineering was named business of the year.
ATS and its Photowatt subsidiary announced that they're getting in on the Ontario feed-in tariff (FIT) program and will be developing solar projects in the province and building Photowatt modules at its Cambridge plant, as well as through an unnamed Ontario-based partner. ATS says it will create a "green wing" in Cambridge and invite companies that would like to partner with ATS to co-locate there.
The Desire2Learn 2GO BlackBerry app is being used by Laurier's MBA students this year, enabling them to view course information, get their grades, and communicate with classmates through their BlackBerrys. Desire2Learn also announced the launch of an analytics product that will enable educational institutions to extract information from terabytes of data from learning management systems and other sources to help them understand student activities and performance.
The U.S. appeals court that ruled in favour of Desire2Learn in its patent dispute with Blackboard (see July digest), has denied Blackboard's request for a rehearing. Blackboard says it will try to take its case to the U.S. Supreme Court, but acknowledged that the chances of the court agreeing to hear the appeal are pretty slim.
Space-based automatic identification and tracking systems developed by Com Dev subsidiary exactEarth have been used by Canadian Forces and the Department of Fisheries and Oceans to monitor illegal fishing activity in the northern Pacific.
The Record reported that RIM bought a 480,000 square-foot building near the Toyota plant in Cambridge. The company has not yet occupied the 193,000 square-foot former Spheral Solar building in Cambridge that it bought from ATS last year. According to the Record, RIM occupies 1.5 million square feet of space in 25 buildings in Waterloo.

Waterloo Tech Digest - October 6, 2009

2009-10-06T00:35:00.001-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Descartes share offering to gross $46M
RIM earnings lowered by patent suit settlement
Arise financing details, 7N silicon milestone
Canadian Solar opens Kitchener headquarters
STOCK REPORT: No news was good news for ATS shareholders
Startup notes from Aeryon Labs, Bayalink, Energent, Strike Face, Mespere, ParkVu, Tribe, Ladybug, Tungle, Enflick, LoyaltyMatch
Miscellaneous tidbits from Arise, Sandvine, RIM, Navtech, Desire2Learn, Com Dev, Innosphere, Vestec, IMS, MedShare

////////////////////////////////////////////////////////////
S P O N S O R S

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

EXCITING TIMES
"People crowded around our booth at the WES BlackBerry Conference to watch our new iLane video. Check it out at www.ilane.com. Bell Canada has recently signed on to promote and distribute our product. Exciting times for IMS!" Tony and Ken, IMS
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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]---------------------------------------------------------------
Descartes share offering to gross $46M
September 29, 2009

Descartes will raise $46 million through a bought deal share offering that is expected to close later this month. It will sell 7.9 million shares at $5.85 each. That includes the underwriters' overallotment option, which Descartes has said was exercised in full.

Descartes will receive gross proceeds of $41.9 million from the sale of 7.1 million new shares, while unspecified company officers and directors will receive $4.1 million from the sale of 693,296 of their own shares.

Underwriters are led by GMP Securities and CIBC World Markets and include Thomas Weisel Partners, Versant Partners, and Paradigm Capital.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS TECHNOLOGY WHITEBOARDS
Our legal professionals discuss a range of issues affecting technology companies, including tips for start-ups, protecting your IP, outsourcing, technology agreements and more.
Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to clients ranging from start-ups to public companies. 40 professionals serving Waterloo Region/Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

////////////////////////////////////////////////////////////

[2]---------------------------------------------------------------
RIM earnings lowered by patent suit settlement
September 24, 2009

RIM earned US$475.6 million on sales of US$3.53 billion in the quarter ended August 29, 2009 (Q2 10). Sales were up 3% from the previous quarter and 37% from a year ago, and were within the company's forecasted range of US$3.45-3.70 billion.

It was during this quarter that RIM settled the patent infringement suit that Visto had filed against the company in 2006 (see August 10 digest). The settlement included a payment by RIM of US$267.5 million, of which US$163.8 million was expensed as a litigation cost in Q2. Without that charge, RIM's operating income for the quarter would have been US$815.8 million, compared to US$690.1 million in Q1.

There were a net 3.8 million new BlackBerry subscribers in the quarter -- same as the previous quarter and at the bottom end of the company's forecast. That brought the total number of BlackBerry users to 32 million.

Operations generated US$1.2 billion in cash, and RIM ended the quarter with US$2.5 billion in cash, up US$78.5 million from the end of Q1.

RIM is expecting sales of US$3.60-3.85 billion in the current quarter, which would be a sequential increase of 2-9% and about 30-38% above last year. It is expecting to add another 4.0-4.3 million new BlackBerry subscribers.

[3]---------------------------------------------------------------
Arise financing details, 7N silicon milestone
September 15 & 24, 2009

Arise provided details about the $10 million in funding that it can access over the next three years by selling new shares at a discount to market prices (see previous digest). Providing the funds is Haverstock Master Fund, based in Roslyn, New York. At any time it chooses, Arise can take up to $500,000 per drawdown and Haverstock will pay the average price per share over the previous five days minus a 6.5% discount. Arise is also paying Haverstock $275,000 in fees, which it may pay with common shares priced at $0.55 each.

According to documents filed with the SEC in November, Haverstock Master Fund is 75% owned by Corey Ribotsky's Haverstock Partners LLC and 25% by Calgary's Eagle Ridge Capital. Ribotsky has had some interesting media coverage over the years.

Arise also announced that, for the first time, it produced PV cells using its own 7N+ silicon (99.99999% purity). Arise launched a "mini pilot plant" for its silicon process nearly two years ago and plans to build a 60,000 square-foot plant in Kitchener when economic and financing conditions improve. Arise's silicon feedstock development project is being partially funded by Sustainable Development Technology Canada (SDTC).

The company is expecting a jump in demand for its systems business with the introduction of Ontario's feed-in-tariff (FIT) program. It has signed an agreement with a contracting firm to handle residential solar systems installations in the province.

[4]---------------------------------------------------------------
Canadian Solar opens Kitchener headquarters
September 25, 2009

Canadian Solar Inc., a Nasdaq-listed company founded in 2001 with a market value of US$570 million, has opened what it is calling its global headquarters in Kitchener. Company founder and CEO Shawn Qu previously worked at ATS for its Photowatt and Matrix Solar subsidiaries.

Canadian Solar reported earnings of US$17.7 million on sales of US$114.2 million in the quarter ended June 30 (Q2 09). It performs all its manufacturing in China and lists Shouzou, China as the location of its mailing address. According to the Record, the Kitchener office will have about 15 employees, one of whom is Milfred Hammerbacher, the former president of ATS' Spheral Solar business.

Canadian Solar's R&D investment levels are not significant. In its most recent quarter, it spent an amount equal to 2% of gross profits (less than one-half of 1% of sales) on R&D. Its R&D spending over the first half of the current fiscal year is about one-quarter of what Arise spent in the same period.

Like Arise, Canadian Solar, will be pursing solar system installation opportunities expected to be stimulated by Ontario's new feed-in-tariff program.

[5]---------------------------------------------------------------
STOCK REPORT: No news was good news for ATS shareholders
September 2009

ATS didn't have any announcements during the month, and the last time it did (in August), it announced lackluster quarterly results, but that didn't stop its shares from soaring in September to their highest levels in the last year.

Insider trading reports show heavy buying from New York's Mason Capital -- one of the investment firms that spearheaded the ouster of ATS' board and CEO two years ago. SEDI reports that Mason Capital has bought 2.2 million ATS shares on the public market since late August. It had already been the company's largest shareholder before those purchases, and now owns 14% of ATS.

For the month of September:

ATS [TSX: ATA] +30%
Descartes [TSX: DSG] +20%
Sandvine [TSX: SVC] +16%
Biorem [TSXV: BRM] +15%
Arise [TSX: APV] +10%
--S&P TSX VENTURE INDEX +9%
Dalsa [TSX: DSA] +6%
Com Dev [TSX: CDV] +6%
--S&P TSX COMPOSITE INDEX +5%
Open Text [TSX: OTC] +4%
===============================
MKS [TSX: MKX] -0%
TurboSonic [OTCBB: TSTA] -4%
RDM [TSX: RC] -6%
RIM [TSX: RIM] -10%

Descartes shares went as high as $6.25 during September, which is their highest point since April 2002. It will be hard to push that back much further, since the stock traded above $40 for a short period in 2001 (and well above that level in 2000).

RIM shares dropped 17% the day the company announced its quarterly results. Apparently, some investors are only adjusting now to the realization that the days of 70-100% year-over-year revenue growth are over. It's amazing they lasted as long as they did (as noted in the tidbits section, RIM has been ranked as one of Canada's fastest growing technology companies, as measured by four-year revenue growth, for the last 12 years in a row).

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +15%
Acorn Energy [Nasdaq: ACFN] +15%
Sybase [NYSE: SY] +12%
McAfee [NYSE: MFE] +10%
Google [Nasdaq: GOOG] +7%
Ansys [Nasdaq: ANSS] +6%
Electronic Arts [Nasdaq: ERTS] +5%
Agfa-Gevaert [Brussels: AGFA] +4%
NCR [NYSE: NCR] +4%
ON Semiconductor [Nasdaq: ONNN] +2%
===================================
Intel [Nasdaq: INTC] -4%
Oracle [Nasdaq: ORCL] -5%

Three quarters of the way through the year, here's the ranking of local tech companies by market capitalization:

Market capitalization at September 30
in millions, using outstanding shares
(Change since June 30 in parentheses):

1. RIM ----- $41,132 (-$5,778)
2. Open Text ----- 2,252 (+16)
3. ATS ----- 502 (+121)
4. Descartes ----- 313 (+77)
5. Com Dev ----- 212 (-6)
6. Sandvine ----- 176 (-4)
7. Dalsa ----- 137 (+22)
8. MKS ----- 91 (+12)
9. Arise ----- 43 (-5)
10. RDM ----- 21 (+1)
11. TurboSonic ----- 20 (-2)
12. Biorem ----- 6 (+2)

The only change in ranking over the last three months is RDM edging ahead of TurboSonic. According to globeinvestor.com, RIM is the fifth most valuable company on the TSX, behind three banks and an oil and gas company.

////////////////////////////////////////////////////////////
S P O N S O R

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[6]---------------------------------------------------------------
Startup Notes

Aeryon Labs and Bayalink were among the 10 recipients of the 2009 Companies-To-Watch award -- part of the Deloitte Technology Fast 50 program. Aeryon Labs has developed what it describes as a "flying camera" -- a 2-pound hovering platform that captures high resolution video and photographs. Bayalink is one of the startups at the Accelerator Centre and has developed a USB stick that enables BlackBerry users to access e-mail and use their BlackBerry applications through the larger screen and keyboard of their laptop.
Aeryon was also one of the companies announced to be receiving money from Ontario's Investment Accelerator Fund. Other Waterloo-area companies that were just announced as recipients of IAF funding are Energent, which graduated from the Accelerator Centre last month (see previous digest) and Strike Face Technology, a company founded by Christian Kaufmann and two UW professors, Mike Worswick and Duane Cronin, that has developed ceramic armour technology for military applications. IAF was launched a couple of years ago and has been managed through Ontario Centres of Excellence, which is undergoing a major restructuring.
Mespere Lifesciences has received $122,618 through the National Research Council's IRAP program. Mespere has developed non-invasive technology to monitor central venous pressure -- the pressure of blood near the heart. It is located at the Accelerator Centre.
ParkVu has been selected as one of six presenters at CTIA Fund Fest this Friday, part of the CTIA Wireless IT & Entertainment conference in San Diego. Organizers say the Fund Fest will "spotlight the brightest, most innovative and promising companies in wireless." An investor panel will pick its favourite among the six, while attendees can vote for the "people's choice."
Joseph Fung (formerly of Lewis Media) and UW's Jesse Rodgers have launched Tribe. The company is developing HR management software targetted at companies with fewer than 200 employees.
Ladybug Teknologies has launched its BAQ Tracker Mobile application for the BlackBerry. It enables users to determine their blood alcohol concentration level through a simulation tool. The company says the $11 software is a less precise but far less expensive alternative to a breathalyzer -- one that is affordable for a wide range of users who wouldn't buy their own breathalyzer.
Tungle announced the availability of its Web-based cross-platform calendar sharing software for the iPhone. It made the announcement at DEMOfall in Boston.
Enflick formally announced the launch of its Unlimited SMS service that provides unlimited text messaging in the U.S. and Canada for the iPhone and iPod Touch. Unlimited SMS is sold through iTunes for $4.99. It first became available earlier this year. Reviews posted on iTunes have been mixed, averaging two stars out of five. Enflick was founded by UW student Derek Ting and is based at the Accelerator Centre.
LoyaltyMatch was one of the companies mentioned in a Toronto Star story about reward points.

[7]---------------------------------------------------------------
Miscellaneous Tidbits

The Canadian 2009 Technology Fast 50 list is out -- ranking tech companies by revenue growth from their 2004 and 2008 fiscal years (they call it "revenue growth over five years" but the first year is used as the base, so they're comparing revenue numbers that are four years apart). Local companies on the list are: Arise (#15), Sandvine (#17), RIM (#19), Navtech (#34), and Desire2Learn (#41). RIM has made the list in each of the 12 years the award has been presented. This was Arise's first appearance, while Desire2Learn (4th year), Sandvine (3rd year), and Navtech (2nd year) are all repeat winners. RIM also received the 2009 Technology Fast 50 Leadership award for telecom.
Navtech's been a private company for nearly two years, but based on its Tech Fast 50 ranking, it would have had US$44.3 million in revenue in its fiscal 2008 year. That would have been up about 6% from its run rate over the first nine months of FY07. At that time, the company was below the R&D spending requirements for the Tech Fast 50, so it must have beefed up its R&D spending over the next 15 months.
Com Dev has been named one of two recipients of the Desjardins Business Excellence Award for Large Business, part of the Ontario Business Achievement Awards from the Ontario Chamber of Commerce. The award will be presented at a gala at the Metro Toronto Convention Centre next month.
Guelph's Innosphere announced that sales in the fiscal year ended June 30 were up 23% from last year. The 15 year-old company performs outsourced software development and QA.
Vestec has partnered with Digium, developers of the Asterisk telephony software. Vestec will provide its speech recognition engine for use on the open source Asterisk platform. Vestec says it makes speech recognition capabilities affordable at a cost of $99 a port.
IMS' iLane is one of three nominees for best Bluetooth accessory at the CTIA Hot for the Holidays Awards. Winners will be announced later this week at the CTIA Wireless IT & Entertainment conference in San Diego.
MedShare has partnered with Montreal's Qualicode Software to create a bilingual version of its BlackBerry software for home healthcare workers.
A guest columnist at the Wall Street Journal's website listed Open Text as one of "five companies Google might buy next." Desire2Learn competitor Blackboard was also on the list.

Waterloo Tech Digest - September 14, 2009

2009-09-14T00:53:00.002-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

RapidMind acquired by Intel
T-Ray Science files for IPO
MKS starts fiscal 2010 with a big quarter
Com Dev reports continued strength in sales and profits
Arise signs $10M term sheet as prices & revenues fall
Open Text ends year with 8% growth, earnings of US$57M
Descartes sales up 9%
STOCK REPORT: Descartes shares near seven-year high
Startup notes from Energent, Terapac, Primal Fusion, Xylotek, LiveHive
Miscellaneous tidbits from eSentire, Dalsa, Arius, IMS, Biorem, RIM, Kaleidescape, Everus, Broadband Learning

////////////////////////////////////////////////////////////
S P O N S O R S

EXCITING TIMES
"People crowded around our booth at the WES BlackBerry Conference to watch our new iLane video. Check it out at www.ilane.com. Bell Canada has recently signed on to promote and distribute our product. Exciting times for IMS!" Tony and Ken, IMS
MFX Partners has a 25 year history of elevating B2B brands (including iLane and IMS), from concept to living breathing product. To see more visit our website.

EVERYBODY WANTS TO BE HEARD - and we want to listen
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we'll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

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.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
RapidMind acquired by Intel
August 20, 2009

Intel has bought RapidMind for an undisclosed amount. It says it intends to keep nearly all of RapidMind's 20-or-so Waterloo employees.

RapidMind -- originally called Serious Hack -- was founded by UW professor (and former UW student in his undergrad years) Michael McCool and then-UW grad student Stefanus Du Toit. McCool and Du Toit were originally known for Sh, a system that simplified the programming of shading for computer graphics. RapidMind developed technology that made it easier for developers to make use of multi-core processors. Since the beginning of 2006 it has been led by CEO Ray DePaul, who had previously worked at Waterloo tech firms Kaleidescape, RIM, and Switchview.

In 2007, RapidMind raised $10 million in venture capital in a round led by Ventures West with EdgeStone and BDC participating. BDC had provided $500,000 in seed funding in 2006, and the company also received support from OCE. It also received $200,000 last year from the Ontario government as the winner of the 2008 Premier's Catalyst Award for start-up company with the best innovation.

Intel becomes the latest in a long list of multi-billion-dollar tech giants who have been brought to Waterloo through the acquisition of a locally-developed startup. It follows Electronic Arts, Google, Sybase, Agfa, Oracle, and several others over the years.

////////////////////////////////////////////////////////////
S P O N S O R

GOWLINGS RELEASES NEW TECHNOLOGY LAW HANDBOOK
Gowlings is pleased to announce the first edition of Technology Law Issues--15 articles on topics ranging from valuing patents to open source software. Gowlings' Waterloo Region Technology Law Group provides sophisticated, practical and timely advice in all areas of technology law to a broad range of clients, from start-ups to public companies. 40 professionals serving Waterloo Region and Guelph (over 700 professionals nationwide). The Right People. Right Here. Contact David.Petras@gowlings.com or Sean.Gomes@gowlings.com at 519-576-6910.

////////////////////////////////////////////////////////////

[2]---------------------------------------------------------------
T-Ray Science files for IPO
August 31, 2009

T-Ray Science has filed a preliminary prospectus for a $1-1.5 million IPO. It plans to list its shares on the TSX Venture Exchange. The offering values T-Ray at $5.6 million (pre-money).

The company has an office at the Accelerator Centre and its CTO is Daryoosh Saeedkia, who received his doctorate from UW in electrical and computer engineering in 2005. Jake Thiessen, director of UW's School of Pharmacy (formerly director of Health Sciences) is on T-Ray's board of directors. Most of the company's other directors, and its CEO and CFO, are based in Vancouver. CEO and largest shareholder Thomas Braun -- a practicing securities lawyer until last year -- splits his time between T-Ray and LGC Skyrota Wind Energy Corp., which just went public itself last month.

T-Ray is developing products that use terahertz radiation, an alternative to X-rays and other imaging technologies such as ultrasound, MRI, and NIR. It says it hopes to "revolutionize the way skin cancer is diagnosed and cured" by creating portable scanning devices that are compact enough to be used in doctors' offices, clinics, and other non-hospital locations.

It says it has exclusive licenses for technologies developed at MIT and Germany's RWTH Aachen University. T-Ray lists its main collaborators as UW, OCE, NSERC and NRC. It has received $200,000 in NRC-IRAP grants and entered a two-year collaboration agreement with OCE in 2007 under which OCE contributed an estimated $306,000. It has also received funding from DFAIT for a research program in Armenia under a former visiting scientist at UW's Microwave and Terahertz Photonics Integrated System Lab. T-Ray has filed five provisional applications for patents.

The company raised about $500,000-670,000 earlier this year through private placements. At March 31, T-Ray was pre-revenue and reported R&D expenses of $464,000 over the prior 15-month period (with G&A expenses of $649,000). It sold its first products in April and June for revenue of about US$3,325. At March 31, the company had an accumulated deficit of $1.6 million with working capital of $61,275. It subsequently closed a private placement on July 31.

Under the IPO, T-Ray will offer 5-7.5 million new shares at $0.20 each for gross proceeds of $1-1.5 million. It currently has 27.9 million shares fully diluted. The agent is Research Capital, which tried to raise money with ARISE five years ago. Research Capital will receive 10% of the gross plus agent's warrants equal to 10% of the shares sold, along with a $25,000 fee.

[3]---------------------------------------------------------------
MKS starts fiscal 2010 with a big quarter
September 9, 2009

Following a couple of disappointing quarters, sales at MKS jumped back up to the levels they were at six and nine months ago -- with stronger earnings this time around. MKS reported earnings of US$1.4 million on sales of US$15.7 million in the quarter ended July 31 (Q1 10). Sales were up 16% from the previous quarter and 2% from a year ago.

Other than its record-breaking Q4 2008, this was probably MKS' best quarter in years. Operating income of US$2.3 million was well above the US$627,000 reported in Q4 and the US$1.1 million from a year ago. ALM sales in the quarter accounted for 91% of revenue, compared to 87% a year ago. The company had one licensing deal worth more than US$2 million.

Operations provided US$3.6 million in cash, with US$1.3 million returned to shareholders as quarterly dividends. MKS ended the quarter with US$19.7 million in cash.

[4]---------------------------------------------------------------
Com Dev reports continued strength in sales and profits
September 3, 2009

A strong bottom line for Com Dev in the quarter ended July 31 (Q3 09), as the company reported earnings of $5.2 million on sales of $61.5 million. Sales were up 19% from a year ago and down 4% from the record levels of Q2, but improvement in margins led to a small sequential increase in gross profits.

With one quarter remaining in the fiscal year, Com Dev sales are up 21% in 2009, so it should easily meet its forecast of at least 15% growth for the year.

The company booked $45 million in new orders in Q3 and its backlog at quarter-end was $156 million, down from $173 million at the start of the quarter. Com Dev says it expects to win work on 10 of the 11 satellite programs announced in the quarter (and on all four of the programs announced in Q1, with three already signed).

Operations used $6.2 million in cash and Com Dev ended the period with $19.8 million in cash, down $12.1 million from the end of Q2.

[5]---------------------------------------------------------------
Arise signs $10M term sheet as prices & revenues fall
August 12, 2009

Arise lost $13.6 million on sales of $6.6 million in the quarter ended June 30 (Q2 09). Revenue was down 8.2% from the previous quarter, although the company's shipments of PV cells increased from 2.3MW to 2.9MW over the same period. Prices for PV cells continue to decline and the company says it expects they will go lower still. PV sales accounted for nearly all of Arise's revenue in the quarter, as its home installation PV systems business generated only $33,000 in sales.

The loss included a $6.3 million inventory writedown, bringing the total writedowns over the last three quarters to $24.1 million. Excluding the writedown, Arise still had gross margins of -27.7%, a big drop from levels in the last three quarters.

Operating expenses went up 13% from Q1, but that was because of a reversal of $872,000 in government R&D funding that had been recorded in the last two quarters. The funding was tied to Arise's planned Kitchener PV silicon plant, which has been put on hold.

Operations used $843,000 in cash and the company was down to $3.0 million in cash (including restricted cash) at the end of the quarter, a drop from $7.2 million at the beginning of the period. The company says it has signed a term sheet with an unidentified fund that will provide it with up to $10 million in cash as needed. Arise would receive the money in return for common shares sold to the fund at a discount to market rates. Arise filed a preliminary prospectus which would cover up to $50 million raised over a 25-month period through various equity and debt offerings. At June 30, Arise had a working capital deficiency of $27.1 million, or $18.2 million excluding deferred revenue.

Arise also disclosed that one of its minor silicon suppliers, LDK Solar Hitech, has filed a statement of claim against the company, seeking about $940,000. Arise says it found the quality of wafers the company was supplying to be inadequate.

[6]---------------------------------------------------------------
Open Text ends year with 8% growth, earnings of US$57M
August 20, 2009

Open Text ended its 2009 fiscal year with Q4 sales of US$203.4 million in the period ended June 30, up slightly from a year ago and 6% from the previous quarter. Earnings of US$19.5 million were down from US$22.0 million in Q3. Operations generated US$38.6 million in cash in the period.

For the year, earned US$56.9 million on sales of US$785.7 million, which were up 8% from 2008.

The company ended the year with US$275.8 million in cash.

[7]---------------------------------------------------------------
Descartes sales up 9%
September 10, 2009

Descartes earned US$812,000 on sales of US$18.6 million in the quarter ended July 31 (Q2 10). Sales were up 7% from the previous quarter and 9% from a year ago.

Income from operations was US$2.7 million, up from US$1.7 million in Q1, but income tax expenses erased 71% of that, and the bottom line was below the US$2.2 million recorded in the previous quarter. Descartes expects that income tax expenses for the year will be 50-55% of operating income.

Operations generated US$4.3 million in cash, about the same as in Q1. Descartes ended the quarter with US$51.2 million in cash -- more than enough to continue to look for other acquisition opportunities.

[8]---------------------------------------------------------------
STOCK REPORT: Descartes shares near seven-year high
August 2009

Biorem shares climbed to their highest month-end price since February after the company announced strong sales growth in its most recent quarter as well as a seven-figure government investment (see tidbits below).

Descartes shares, after an 11% gain in August and the same percentage again so far in September, are now trading at their highest levels in nearly seven years. MKS shares also followed a strong August with an equally strong September, and are now at their highest point in two-and-a-half years.

For the month of August:

Biorem [TSXV: BRM] +24%
Descartes [TSX: DSG] +11%
MKS [TSX: MKX] +9%
TurboSonic [OTCBB: TSTA] +8%
Dalsa [TSX: DSA] +4%
--S&P TSX COMPOSITE INDEX +1%
RDM [TSX: RC] 0%
===============================
--S&P TSX VENTURE INDEX -0%
RIM [TSX: RIM] -2%
Sandvine [TSX: SVC] -5%
Arise [TSX: APV] -21%
ATS [TSX: ATA] -5%
Open Text [TSX: OTC] -6%
Com Dev [TSX: CDV] -15%

August had been the best-month end price for Dalsa shares since September of last year, and the stock is up another 10% so far this month. Sandvine shares didn't have a good August, but are up 16% in September. For no real reason that I can see, Com Dev shares had their lowest month-end price in three-and-a-half years. They're rebounded a little this month following the announcement of the quarterly results.

Companies with core operations outside the area:

Agfa-Gevaert [Brussels: AGFA] +66%
Acorn Energy [Nasdaq: ACFN] +13%
Ansys [Nasdaq: ANSS] +12%
ON Semiconductor [Nasdaq: ONNN] +11%
Intel [Nasdaq: INTC] +6%
Blue Coat [Nasdaq: BCSI] +5%
Google [Nasdaq: GOOG] +4%
NCR [NYSE: NCR] +3%
===================================
Oracle [Nasdaq: ORCL] -1%
Sybase [NYSE: SY] -3%
McAfee [NYSE: MFE] -11%
Electronic Arts [Nasdaq: ERTS] -15%

////////////////////////////////////////////////////////////
S P O N S O R

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[9]---------------------------------------------------------------
Startup Notes

Energent has become the third official graduate of the Accelerator Centre, following Primal Fusion and Miovision. The company develops software to help companies monitor and manage their energy consumption. Its largest customer is GM Canada. The company is a participant in the OCE-sponsored, UW-led Energy Hub Management System program, announced early in 2008.
Terepac, which itself is sort-of an Accelerator Centre graduate, announced it has launched pilot-scale production of its Microscale Circuit Cluster products and has started shipping samples to customers. The company says its technology will lead to wireless sensing and two-way communication systems "inexpensive and unobtrusive enough to be placed on virtually all ordinary objects."
Primal Fusion has published a tagged directory of sites that have been created by its alpha testers on a wide range of topics.
Kitchener-based IT consulting firm Xylotek Solutions has made the Profit Hot 50 list of "Canada's hottest startups" for the second year in a row. The company reported 123% revenue growth between 2006 and 2008, ending with $1.9 million in sales (slightly above its 2007 sales of $1.8 million). This was Xylotek's final year of eligibility for the listing.
LiveHive has introduced its Social Engagement Index, which it says ranks TV shows (at least 60 of them) by how active their viewers are in various online activities relating to the show while it's airing. Programs are ranked by their engagement levels per audience size, so a show with a small but highly engaged audience outranks one with a huge number of moderately engaged viewers. The low-rated One Tree Hill and 90210 top the LiveHive list by a wide margin. LiveHive's tvClickr Facebook app is one of the data sources and apparently Twitter is as well. Other sources haven't been specified. LiveHive says it will release "demographic trends of TV social engagement" this month.

[10]---------------------------------------------------------------
Miscellaneous Tidbits

Waterloo placed two companies in the top 15 on Fortune's list of the 100 fastest-growing companies in the world. RIM took top spot on the list, with Open Text ranking 15th. California-based chip maker Sigma Designs placed second, with Chinese search engine Sohu.com in third.
Cambridge's eSentire is getting $100,000 in IRAP funding for "two separate projects related to software security and network monitoring."
Dalsa is a founding partner of a new microelectronics innovation center in Bromont, Quebec, site of its semiconductor fab. The centre has received $178 million in grants from the governments of Quebec and Canada. Dalsa will assist in the design and operations of the centre, particularly its state-of-the-art 200mm MEMS and wafer-level packaging systems. IBM Canada is the other industrial partner.
Arius' OpenAdvantage account opening software is being used by Winnipeg investment firm Wellington West Capital. It says the software replaces what had been a five-day, manual paper-based process.
There was some kind of fundraising or restructuring at IMS in August, as the Ontario Securities Commission reported a $30 million transaction with one purchaser on August 24.
The Ontario government is investing $1.2 million in Biorem through its cleantech Innovation Demonstration Fund. The money will be used to fund two prototype demonstration projects, including one at the Preston Wastewater Treatment Plant in Cambridge. The company reported a $239,000 loss on sales of $5.7 million in the quarter ended June 30 (Q2 09). Sales were up 40% from the previous quarter and 130% from a year ago. The company ended the quarter with an $11.1 million order backlog, down from $14.6 million at the start of the period.
RIM has acquired Toronto's Torch Mobile, developers of the WebKit-based Iris Browser (which had been primarily focused on Windows Mobile devices).
Following a decision by a California appellate court, Kaleidescape is headed back to court to resolve the suit filed against the company by the DVD Copy Control Association. In 2007, Kaleidescape had successfully argued that a set of DVDCCA specifications were not part of its agreement and, therefore, it was not obliged to comply with them. But the appeals court found that Kaleidescape had promised to conform to specifications that would be provided by DVDCCA at some point in the future. With the specifications now considered to be part of the agreement, the matter goes back to the trial court to determine if there was a breach. DVDCCA says it will seek an injunction against the sale of Kaleidescape's products that do not comply with the agreement. Kaleidescape may seek to appeal the decision to the California Supreme Court.
Waterloo- and Holstein-based Everus Communications, which provides high-speed Internet access to rural Ontario communities, has gone into receivership. It is continuing to operate under the receiver's control while an investor is sought. The company is involved in projects in Grey County and Wellington County, among others. In 2008 it announced it had received $5 million in funding from Toronto's C.A. Bancorp, but Everus told the Owen Sound Times in August that its financial backer has decided to dispose of its holdings and would not fund the company's Grey County project, for which Everus had committed $2 million. The company used to be known as High-Speed FX.
From the where-aren't-they-now file: Broadband Learning Corp., which was at least nominally based in Waterloo when it went public in 2006 (it evolved out of Waterloo's AccessTNG, but most of its operations were based in Utah) has announced that it is ceasing operations. Most directors and executives have resigned and the company says its liabilities "far exceed" the value of its assets.

Waterloo Tech Digest - August 10, 2009

2009-08-10T01:25:00.002-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Desire2Learn wins appeal, Blackboard patent claims invalid
Maplesoft to be acquired by its Japanese reseller for $35M
Well.ca raises $1.1M from angels
Dalsa sees recovery ahead; Chamberlain to leave management team
Jim Estill leaves Nu Horizons
RDM returns to profitability in Q3
RIM criticizes Nortel asset auction; settles Visto suit
STOCK REPORT: Brief slip for Sandvine in uneventful month
Miscellaneous tidbits from EA, Tungle, Well.ca, Peer Group, Sandvine, Coreworx, PrinterOn, exactEarth, Open Text, Arise, Biomedical Photometrics

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything Annual Reports, Brand Identities, Brochures and Collateral, Email Marketing, Websites and more. Let's get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

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.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Desire2Learn wins appeal, Blackboard patent claims invalid
July 27, 2009

Desire2Learn has won its appeal of the February 2008 U.S. court judgment that had found the company infringed the patent of Washington, DC-based competitor Blackboard. The United States Court of Appeals for the Federal Circuit has overturned that judgment and invalidated the three patent claims used against Desire2Learn at the original trial.

The lower court had ruled that 35 of Blackboard's patent claims were invalid, but the three claims that remained were all Blackboard needed to win its case. The appeals court agreed that the first 35 claims were invalid, and found the remaining three to be invalid as well.

As a result of the original trial, Desire2Learn paid Blackboard US$3.3 million in June 2008 as compensation for lost profits and royalties. Following the decision of the appeals court, Blackboard recorded a US$3.5 million expense in the quarter ended June 30, but also made it clear that it was in no hurry to pay the money back (plus 6% interest per year) and would be waiting for a "final and non-appealable" decision. It plans to seek a review of the latest decision. Blackboard has also recorded a non-cash charge of US$7.5 million for impairment of capitalized patent costs.

Blackboard was issued a Canadian patent (#2378200) in March and filed suit the following month against Desire2Learn in Canada's Federal Court, accusing the company of infringing -- and inducing others to infringe -- Blackboard's Canadian patent.

[2]---------------------------------------------------------------
Maplesoft to be acquired by its Japanese reseller for $35M
July 30, 2009

Maplesoft will be acquired by Tokyo-based software distributor Cybernet Systems Co. Ltd. in a $35 million deal expected to close next month. Maplesoft will continue to operate as a standalone business. It has 122 employees.

Company co-founder Keith Geddes and CEO Jim Cooper own nearly 42% of the company between them, with Geddes holding a 22% stake and Cooper 19.8%. According to Cybernet, Maplesoft had sales of $14.6 million in the year ended March 31, 2009, down slightly from the previous year, but up about 12% from 2007. The company has been profitable in each of the last three years, with earnings around $360,000 in fiscal 2009. Operating income for 2009 was about $233,000.

Maplesoft -- the corporate name is still Waterloo Maple Inc. -- was incorporated in 1988, although the research that went into the product had started years earlier. The company was founded by Gaston Gonnet (president) and Keith Geddes (VP), both UW professors at the time and members of the computer science department's Symbolic Computation Group. Geddes remains at UW -- now emeritus -- while Gonnet has been based in Switzerland for several years.

Tim Bray, who would later join Open Text and go on to become well-known in computer circles, particularly for his work on XML, was company CEO in the late 1980s. Ron Neumann -- later of SlipStream and now Dejero Labs -- was CEO through a period of high growth in the early 1990s when Maple went from just a handful of staff to over 40 by 1993.

It was in this period that the company got caught up in a messy internal legal battle that went on for years. It filed suit against Gonnet, accusing him of breaching an agreement among all the creators of the Maple software to transfer IP ownership to the company. Maple claimed that instead of transferring ownership, Gonnet signed a restricted-use, royalty-bearing license for the technology -- an agreement the company said it didn't know about for almost two years. Maple asked for $8 million and ownership of the IP. In response, Gonnet said there never was any enforceable agreement of the kind Maple claimed. It wasn't until around 1999 that the two sides came to a settlement.

In the meantime, Neumann was let go and Dieter Hensler became president and CEO in 1994 after running the company's office in Germany. He resigned in 1998 and, following a period with a team of executives as acting CEO, Ian Suttie took the reins in March 1999. This was during the tech boom, and the company prepared to go public -- going so far as to release its quarterly financial results while still a private company. By now, Maple had grown to nearly 100 employees. But the boom went away, the IPO never happened, and Suttie left just a little more than a year after he started. He was succeeded in October 2000 by Jim Cooper, hired the previous year as R&D VP.

After all that turmoil, it's been pretty quiet ever since. Nearly nine years later, Cooper remains CEO and the company's software has expanded from an academic user base in the 1990s to a broader mix of business and academic users today. The automotive industry is apparently one of the largest markets for the company. Sales growth has been modest, expanding from $10 million in annual revenue a decade ago to nearly $15 million today.

Over the years, some of the notable members of the local community who have served on Maple's board include Wes Graham, Randall Howard, Ted Cross, Peter Schwartz and John Whitney (and probably others I never heard about).

Cybernet Systems is a distributor of computer-aided engineering (CAE) software, and distributes Maplesoft products in Japan, China and Taiwan. After being launched in 1985 as a spinoff from Control Data Corporation, the company was later acquired by Kobe Steel and then by Fujisoft in 1999. It has been listed on the Tokyo Stock Exchange since 2003 and Fujisoft remains majority owner.

Maplesoft will be its second acquisition of a North American software company. Just days before the Maplesoft announcement was made, Cybernet acquired Sigmetrix, a developer of mechanical engineering software in Dallas.

[3]---------------------------------------------------------------
Well.ca raises $1.1M from angels
July 30, 2009

Well.ca has closed a $1.1 million angel financing, led by Jordan Banks's Thunder Road Capital. It's the second round of funding for the company, which raised $425,000 in May 2008 from six investors, including Jim Estill. Banks will join Well.ca's board of directors.

Banks was CEO of Toronto's JumpTV for about seven months starting in November 2007, essentially replacing Kaleil Isaza Tuzman, who was a familiar face in the Waterloo area. Banks was CEO when the company merged with New York-based NeuLion. Before that, he had been managing director of eBay Canada.

Other investors in the round include Andrew Sloss, the UW grad who became eBay Canada's "country manager" in 2007 and is GM of Kijiji Canada (an eBay company), David Ceolin, founder of marketing services company Digital Cement, acquired by Pitney Bowes in 2007 for $40 million, and pharmacist Hilton Silberg, founder of Hamilton's DayNight Pharmacy chain, sold last year to the company behind Rexall Pharma Plus.

After some strong years for startups in the region, this deal was the first major round of funding to be announced in 2009 by a local company less than seven years old.

According to Well.ca, its monthly sales in June were four times what they were a year earlier and its web traffic was up 135% over that period. It says it has now shipped nearly 250,000 items since it launched.

[4]---------------------------------------------------------------
Dalsa sees recovery ahead; Chamberlain to leave management team
July 29 & August 5, 2009

Not a good quarter for Dalsa in the period ended June 30 (Q2 09), but the company sees indications of a recovery in its markets, particularly in the Asia/Pacific region.

For the period, Dalsa earned $142,000 on sales of $40.3 million. Sales were down 24% from a year ago, but up 6% from a weak Q1. Dalsa had a $326,000 operating loss in the quarter -- down from operating income of $698,000 last quarter -- partly caused by the appreciation of the Canadian dollar in the quarter, which created a $1.1 million foreign exchange loss. A $491,000 income tax recovery -- also related to foreign exchange -- kept the bottom line in the black. Revenue in both of the company's business segments was up from the previous quarter and down from a year ago.

Operations generated $2.5 million in cash, and the company spent $3.1 million on property and equipment and another $0.9 million was distributed to shareholders as dividends. Dalsa ended the quarter with $9.9 million in cash, down $1.6 million from the end of Q1. Some digital cinema assets were sold in the quarter for $0.7 million.

It ended the quarter with a record order backlog of $99.7 million.

The company also announced that founder and chairman Savvas Chamberlain will be leaving the management team and stepping down as CTO in October. He will remain chairman. Chamberlain became CTO two years ago when he passed the CEO reins to Brian Doody.

[5]---------------------------------------------------------------
Jim Estill leaves Nu Horizons
August 3, 2009

Jim Estill has already parted ways with Nu Horizons Electronics, the Nasdaq-listed New York company that attracted him to the U.S. He was CEO for just two months. The announcement of his departure didn't give any explanation, but obviously the fit wasn't what had been expected -- even though the two sides had talked for months before Estill started the job on June 1.

Estill had signed a four-year employment agreement on May 8. Two of the company's three founders, who had run the business for over 25 years, were executive chairman and COO, with Estill in the middle as CEO. The three executives formed a management committee and any major business matter on which the three did not unanimously agree would be brought to the board of directors.

Estill was to receive a base salary of US$350,000 plus bonuses up to additional US$525,000 with a US$262,500 target. If the company ever lost money for three consecutive quarters, his salary would have fallen to US$30,000 until the next profitable quarter was announced.

He will receive a US$175,000 severance payment and the company would also pay his moving expenses to return to Canada, although Estill told Long Island's Newsday that he planned to remain in the area for now.

[6]---------------------------------------------------------------
RDM returns to profitability in Q3
July 30, 2009

After five consecutive money-losing quarters, RDM earned $175,000 on sales of $5.9 million in the quarter ended June 30 (Q3 09). Sales were up 3% from the previous quarter and 13% from a poor Q3 last year.

Digital imaging accounted for half of all revenue, with sales up 21% from Q2. RDM shipped 5,250 scanner units in the quarter. Sales from RDM's payment processing services business were down 4% sequentially, which the company attributed to a rising Canadian dollar. ITMS transaction volumes were up 4% from Q2 and 38% from last year.

As the company had warned, revenue from its electronic payments solutions (EPS) business took a steep tumble following a reduction in RDM's contract work for the U.S. government. EPS revenue was down more than 65% both quarter-over-quarter and year-over-year.

Foreign exchange losses had taken a huge bite out of the company's bottom line in its previous two quarters, but that was completely turned around in Q3 and RDM reported a $692,000 foreign exchange gain.

The company ended the quarter with $16.9 million in cash.

RDM has started beta tests of its Simply Deposit Mobile software for BlackBerrys and iPhones and the product is expected to be launched soon.

[7]---------------------------------------------------------------
RIM criticizes Nortel asset auction; settles Visto suit
July 20 & August 7, 2009

RIM has complained about the way Nortel's CDMA and LTE access businesses were auctioned off. Sweden's Ericsson won the auction, which was held as part of Nortel's bankruptcy proceedings. RIM says it was "effectively prevented" from bidding because it would only be recognized as a qualified bidder if it agreed not to bid on other Nortel assets over the next year. RIM was interested in buying the businesses along with complementary Nortel assets, including the underlying patents for the LTE business, but the auction was set up so that it could only bid on one or the other, at least within the next year. It chose not to make a bid.

RIM has been playing the maple leaf card, saying that it would keep the Nortel technology in Canadian hands, and went so far as to suggest that there are national security reasons for the technology to stay Canadian. Mike Lazaridis appeared before a parliamentary committee last Friday, asking the federal government to use its influence to arrange a meeting between RIM, Nortel, and Ericsson executives and to review the deal to make sure it is in Canada's best interests. Nortel and Ericsson have argued that the deal isn't subject to review because -- even though Ericsson agreed to pay $1.13 billion -- the assets only have a book value of about $150 million, which is well below the threshold for a review under the Investment Canada Act.

Lazaridis said RIM thought it had an agreement with Nortel to buy some of the company's assets before it filed for bankruptcy and that it felt "snookered." He evoked the Avro Arrow and said the government needed to protect "a national treasure." Among those supporting the calls for a government review is former Mulroney finance minister Don Mazankowski.

In other news from RIM, the company will pay Visto US$267.5 million to settle the patent infringement suit the California-based company had filed in 2006. Earlier this year, Visto acquired Good Technology (which, over the years, had been sued for patent infringement by both RIM and Visto) from Motorola and is now using the Good Technology name in place of Visto. During the NTP-RIM patent dispute, NTP became shareholders in Visto and the two signed a licensing agreement that NTP trumpeted as proof its patent claims were valid.

[8]---------------------------------------------------------------
STOCK REPORT: Brief slip for Sandvine in uneventful month
July 2009

Not a particularly noteworthy month on the stock market for local tech companies -- only one company saw a double-digit shift in its stock price (compared to an average of eight companies each month this year). Sandvine shares fell 11% in July, but have already recovered most of those losses so far in August.

While I'm on the topic of Sandvine shares, I realized right after I sent out last month's digest (e-mail version only) with the market capitalization ranking that I hadn't updated the Sandvine number. The company currently has a market value of $172 million, up from $110 million at the end of 2008.

For the month of July:

RDM [TSX: RC] +8%
--S&P TSX VENTURE INDEX +8%
Dalsa [TSX: DSA] +8%
Com Dev [TSX: CDV] +8%
ATS [TSX: ATA] +6%
MKS [TSX: MKX] +5%
--S&P TSX COMPOSITE INDEX +4%
Arise [TSX: APV] +3%
===============================
Descartes [TSX: DSG] -0%
RIM [TSX: RIM] -1%
Biorem [TSXV: BRM] -3%
Open Text [TSX: OTC] -4%
TurboSonic [OTCBB: TSTA] -5%
Sandvine [TSX: SVC] -11%

MKS shares had a 1-for-5 reverse split during the month, leaving the company with just over 10 million outstanding shares -- the smallest number of all companies listed here. MKS said the consolidation would result in a trading price "that better reflects its maturity, profitability and dividend yield."

Dalsa shares have gone up in four of the last five months and are up another 6% so far in August. In July, they had their best month-end price since September.

Companies with core operations outside the area:

Acorn Energy [Nasdaq: ACFN] +44%
Sybase [NYSE: SY] +14%
Blue Coat [Nasdaq: BCSI] +13%
NCR [NYSE: NCR] +9%
Agfa-Gevaert [Brussels: AGFA] +7%
ON Semiconductor [Nasdaq: ONNN] +6%
McAfee [NYSE: MFE] +6%
Google [Nasdaq: GOOG] +5%
Oracle [Nasdaq: ORCL] +4%
Ansys [Nasdaq: ANSS] +0%
===================================
Electronic Arts [Nasdaq: ERTS] -1%

[9]---------------------------------------------------------------
Miscellaneous Tidbits

EA acknowledged its acquisition of J2Play (see last month's digest) in a things-we-did-this-quarter list in the news release announcing its latest financial results.
Tungle (#9) and Well.ca (#15) both made Backbone magazine's PICK 20 list of Canada's leading Web 2.0 companies.
The Peer Group has acquired the connectivity software business of California's Asyst Technologies for US$2 million. The Asyst products are used by many of the world's largest semiconductor equipment manufacturers. The business became available after Asyst filed for bankruptcy protection in April. The Peer Group had been a reseller for the software.
Local MP Peter Braid, on behalf of the federal government, announced that Sandvine received a $1 million IRAP contribution. The company was also recognized for its R&D achievements with the National Research Council's Canadian Innovation Leader certificate.
Coreworx had sales of about US$1.1 million in the quarter ended June 30 (Q2 09), according to parent company Acorn Energy.
PrinterOn announced a partnership with Ricoh under which the Japanese company receives exclusive rights to embed PrinterOn software in its line of Wi-Fi hotspot printers. The announcement was made at a Williams Coffee Pub with federal cabinet minister Gary Goodyear in attendance.
David Martin, long-time product management VP at MKS, is now in a similar role at exactEarth, the new Com Dev subsidiary.
Open Text completed its US$321 million acquisition of Vignette (see May digest).
Arise has negotiated a one-year deferral on payments towards its $19.3 million (€12.55 million) in long-term debt raised to construct its manufacturing plant in Germany. Arise was scheduled to make quarterly payments of $963,000. It also negotiated an extension of a $15 million (€10 million) credit facility with a German bank to the end of this year.
Biomedical Photometrics has a new gallery of fluorescence pathology images, which includes what it believes may be the largest pathology image ever (61.3 gigapixels or 184GB).

Waterloo Tech Digest - July 13, 2009

2009-07-13T00:58:00.003-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

EA comes to town; no announcement of J2Play acquisition
Com Dev creates exactEarth
Com Dev raises growth targets after another strong quarter
Sandvine reports disappointing quarter
RIM set to pass 30 million BlackBerry users this quarter
STOCK REPORT: Com Dev shares fall despite good quarter
Miscellaneous tidbits from Dalsa, Atria, Netsweeper, Navtech, PostRank, Arise, Maplesoft, TurboSonic, Biorem, Logisense

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

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.

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything from start-ups to global brands. Let¹s get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

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.

BERESKIN & PARR LLP - 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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
EA comes to town; no announcement of J2Play acquisition
June 10, 2009

California-based game developer and publisher Electronic Arts (EA) has disclosed that it now has an office in the Waterloo area, although it has not yet publicly confirmed that it has acquired Kitchener's J2Play. Stories of the J2Play deal began circulating through the area just over a month ago.

EA was founded in 1982 and is listed on Nasdaq with a market value of US$6.8 billion. It reported sales of US$4.2 billion in the year ended March 31. Over the years, it has made acquisitions in Burnaby (1991) and Vancouver (2002), and opened a Montreal office five years ago.

J2Play spun out of J2X Technologies in 2006 under founder Rob Balahura. A year ago, it received $250,000 from Facebook's fbFund. It had previously received funding from Toronto's Extreme Venture Partners.

Although the Waterloo area is known for software development, its record with games has so far been less than impressive. The most significant game developed in Waterloo was Unreal, over a decade ago. It was a blockbuster hit, but the company that created it -- Digital Extremes, led by UW grad James Schmalz -- found it didn't get much value from its just-off-UW-campus address (in what is now a RIM building, of course). Within about a year of Unreal's launch, the company chose to leave town and move down the 401 to London, where it remains to this day. Before Unreal, and while still in Waterloo, Schmalz created Extreme Pinball, which was distributed by EA.

[2]---------------------------------------------------------------
Com Dev creates exactEarth
June 10, 2009

Com Dev has created a new subsidiary, called exactEarth Ltd. It will be built around the space-based automatic identification system (AIS) technology that Com Dev has been developing for the last five years. Com Dev publicly unveiled the technology about two years ago.

The launch of exactEarth was announced at the Nor Shipping Conference in Oslo. The new company will be launching three AIS microsatellites, which are now under construction. Applications include search and rescue, environmental monitoring, vessel traffic management and maritime security.

exactEarth is based in Cambridge and is led by president Peter Mabson, who has been with Com Dev in various roles since 1981. The company will be moving into a 30,000 square-foot building that Com Dev recently agreed to purchase. The building will also be home to Com Dev's mission development group.

[3]---------------------------------------------------------------
Com Dev raises growth targets after another strong quarter
June 11, 2009

Another good quarter for Com Dev, which reported earnings of $4.9 million on sales of $64.1 million in the period ended April 30 (Q2 09). Sales were up 13% from the previous quarter and 18% from a year ago.

With sales over the first half of the fiscal year now up 22% from last year, Com Dev has raised its annual revenue forecast to at least 15% growth, up from the 10% it had stated up to now.

It booked $50 million in new business in the quarter and it ended Q2 with an order backlog of $173 million, down from $189 million at the end of Q1.

Gross R&D expenses were up 44% from Q1 to $5.5 million, or 9% of revenue.

Operations generated $7.2 million in cash and the company raised $21.6 million through a share offering. It ended Q2 with $31.9 million in cash, up $22.7 million from the end of Q1.

[4]---------------------------------------------------------------
Sandvine reports disappointing quarter
July 9, 2009

Comcast was back to being Sandvine's top customer in the quarter ended May 31 (Q2 09), although it was more by default as no other company provided the $2 million in revenue that Comcast accounted for in the period. That worked out to be 13% of Sandvine's total sales of $15.2 million -- down 18% from a good Q1 and up 37% from a weak period last year. Net loss in Q2 was $5.7 million, compared to $5.0 million in the previous quarter. The company described the results as "disappointing."

Sandvine won nine new customers in the quarter, with eight coming through resellers and one through a distribution partnership with Nokia Siemens Network. Of the nine new customers, six were mobile data operators and eight were from outside North America. Four customers -- including Comcast and the reseller who had been Sandvine's top customer in Q1 -- accounted for 47% of all sales.

R&D spending was slightly down from the previous quarter, but was still $6.9 million, or 45% of revenue. Operations consumed $1.5 million in cash and Sandvine ended the quarter with $90.0 million in cash, down $2.6 million from the start of the quarter.

[5]---------------------------------------------------------------
RIM set to pass 30 million BlackBerry users this quarter
June 18, 2009

A rarity for RIM -- I can't think when it last would have happened -- as the company reported a slight sequential decline in sales in the quarter ended May 30 (Q1 10). Revenue of US$3.42 billion fell 1% below that of the previous quarter (which had included the busy Christmas buying season). Sales were still up 53% from a year ago, and RIM's gross profit was up 8% from the previous quarter, thanks to stronger margins.

RIM's Q1 sales in the past two years had gone up 19% and 16% sequentially, but BlackBerry sales in this year's holiday buying period were particularly strong. Revenue fell within the company's forecast of US$3.3-3.5 billion. Net income for the quarter was US$643.0 million, up from US$518.3 million in Q4 and above the company's forecast.

There were 3.8 million new BlackBerry subscribers in Q1, just slightly down from 3.9 million in Q1. RIM will cross the 30 million subscriber mark in the current quarter.

RIM ended the quarter with US$2.4 billion in cash, up US$180.4 million from the end of Q4. Operations generated US$614.6 million in cash in the period.

RIM is forecasting sales of US$3.45-3.70 billion in Q2, with earnings of about US$575 million. It expects to add another 3.8-4.1 million BlackBerry subscribers in the quarter.

[6]---------------------------------------------------------------
STOCK REPORT: Com Dev shares fall despite good quarter
June 2009

When you see that a company 1) has released quarterly results in the month and 2) is at the bottom of the stock market performers for that month, the two are usually related. Not this time, though. Com Dev stock showed the biggest decline in the month -- down 19% -- but the drop wasn't triggered by the quarterly results (which were good) or of the new subsidiary.

The drop was partly caused by a one-day jump in the stock's closing price on the last day of trading in May. And then the stock did lose value later in the month, but that happened days after the company had made its major announcements. I don't know what caused the drop, but it was the second-worst month for Com Dev shares in the last year.

For the month of June:

TurboSonic [OTCBB: TSTA] +22%
Dalsa [TSX: DSA] +11%
Open Text [TSX: OTC] +10%
Descartes [TSX: DSG] +3%
--S&P TSX COMPOSITE INDEX +0%
===============================
ATS [TSX: ATA] -1%
--S&P TSX VENTURE INDEX -3%
RIM [TSX: RIM] -4%
MKS [TSX: MKX] -6%
Arise [TSX: APV] -10%
Biorem [TSXV: BRM] -13%
RDM [TSX: RC] -14%
Sandvine [TSX: SVC] -18%
Com Dev [TSX: CDV] -19%

Over the first eight days of trading in July, the stocks with double-digit percentage changes are Sandvine (-22%), Arise (-14%), and Biorem (-12%).

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +17%
Acorn Energy [Nasdaq: ACFN] +10%
NCR [NYSE: NCR] +10%
Oracle [Nasdaq: ORCL] +9%
McAfee [NYSE: MFE] +8%
Ansys [Nasdaq: ANSS] +4%
Google [Nasdaq: GOOG] +1%
ON Semiconductor [Nasdaq: ONNN] +1%
===================================
Sybase [NYSE: SY] -4%
Agfa-Gevaert [Brussels: AGFA] -6%

We've reached the half-way point of 2009, and here's how the shares of local companies have fared so far this year:

TurboSonic [OTCBB: TSTA] +182%
RIM [TSX: RIM] +67%
Sandvine [TSX: SVC] +64%
MKS [TSX: MKX] +44%
--S&P TSX VENTURE INDEX +37%
Descartes [TSX: DSG] +25%
RDM [TSX: RC] +15%
--S&P TSX COMPOSITE INDEX +15%
Open Text [TSX: OTC] +15%
===============================
Dalsa [TSX: DSA] -9%
Com Dev [TSX: CDV] -9%
ATS [TSX: ATA] -13%
Biorem [TSXV: BRM] -24%
Arise [TSX: APV] -28%

Market capitalization at June 30
in millions, using outstanding shares
(Year-to-date change in parentheses):

1. RIM ----- $46,910 (+$18,893)
2. Open Text ----- 2,236 (+318)
3. ATS ----- 381 (-5)
4. Descartes ----- 236 (+47)
5. Com Dev ----- 218 (+3)
6. Sandvine ----- 180 (+70)
7. Dalsa ----- 115 (-14)
8. MKS ----- 79 (+23)
9. Arise ----- 48 (-19)
10. TurboSonic ----- 22 (+14)
11. RDM ----- 20 (+2)
12. Biorem ----- 4 (-1)

Descartes jumped ahead of Com Dev in June, while TurboSonic edged in front of RDM.

[7]---------------------------------------------------------------
Miscellaneous Tidbits

Dalsa founder, chairman, and CTO Savvas Chamberlain was one of 59 appointees to the Order of Canada announced on Canada Day. Chamberlain was made a Member of the Order of Canada in recognition of "his contributions to Canada's reputation as a global leader in high-performance imaging and semiconductors."
Steve McCartney has left Atria Networks, where he had been president and CEO for six years, going back to the days when it was FibreTech Telecommunications and was owned by the hydro companies in Waterloo Region. (McCartney's predecessor at FibreTech, Bill Crosbie, briefly served as acting CEO of Amtrak last fall.)
Andrew Graydon is the new COO of Guelph's Netsweeper. He was previously CTO of Mississauga's BorderWare and before that was a VP at Toronto-based Wysdom.
UW grad Mike Neudoerffer has been promoted to COO of Navtech. He had been CTO for the last two years and joined the company as software development VP in 2006. It has also hired Lee Granger as product marketing VP. She was most recently a travel business consultant and previously spent 12 years with the American Automobile Association (AAA). The company -- which uses Toronto in the dateline of its news releases -- announced deals with three companies in Africa and the Middle East.
AideRSS/PostRank has partnered with Colorado-based Gnip and will provide the company with real-time and archived RSS content and metrics.
Arise got a three month extension on a €7.0 million ($11.4 million) line of credit that it uses at its German manufacturing plant.
Maplesoft, along with Toyota, are the industry sponsors of a new research chair at UW. The NSERC-Toyota-Maplesoft Industrial Research Chair in Mathematics-Based Modeling and Design has been granted to Prof. John McPhee, who had been executive director of WatCAR (Waterloo Centre for Automotive Research) at UW.
Maplesoft was also the recipient of the 2009 Omond Solandt Award from the Canadian Operational Research Society, recognizing the company's contributions to operational research in Canada.
Also from Maplesoft: the company reported that it has sold nearly 500 licenses of its MapleSim modeling and simulation software since the product was released in December.
TurboSonic received a $4 million order to design and install a catalytic gas treatment system at a plant in North Carolina.
Biorem announced that it has received two industrial air pollution treatment contracts in China worth $800,000 -- one from a repeat customer in Shanghai.
LogiSense's EngageIP billing and CRM software is being used by Omaha-based wireless broadband company KeyOn Communications.

Waterloo Tech Digest - June 9, 2009

2009-06-09T00:16:00.001-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Covarity closes $3M round
Open Text reports solid profits and cash flow
Open Text to acquire Vignette
MKS ends profitable year
Dalsa sued by ex-digital cinema GM
Descartes sales up 7%
STOCK REPORT: Another big month for TurboSonic, Sandvine shares
Miscellaneous tidbits from Aeryon Labs, Bayalink, Bioinformatics Solutions, Unitron, Biorem, RIM, TurboSonic, Desire2Learn, Atria

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

BERESKIN & PARR LLP - 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.

AERO CORPORATE BENEFITS - Your Employee Benefits Solutions Provider
Located in Waterloo, we've served the KW technology community for over 20 years, providing employee benefits solutions to companies large and small. Our mission is simple. Help our clients succeed by doing what we do best: -- Design and monitor programs that attract & retain the most qualified employees -- Contain costs of employee benefits, retirement plans, and HR support -- Provide employee-level support & advice to help you manage risk & compliance. Please contact Herb Goedecke at 519.489.2376 x11 or herbg@aero-corp.com for details.

EVERYBODY WANTS TO BE HEARD - and we want to listen.
Hagon Design is #1 at creating marketing communications that get heard. Our technology industry experience includes everything from start-ups to global brands. Let¹s get together for a coffee and chat. You tell us where you want to go, we listen, and we¹ll help pave the way to successful marketing. Give creative director, Ben Hagon a call at 519.500.7985 or email ben@hagondesign.com

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.

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Covarity closes $3M round
May 6, 2009

Covarity has raised another round of financing, receiving $3 million from Tech Capital Partners, BDC, GrowthWorks and VentureLink -- all of which were existing investors in the company.

Covarity raised $2.5 million in 2007 and $3.2 million in 2006, on top of other rounds since it was founded in 2001.

[2]---------------------------------------------------------------
Open Text reports solid profits and cash flow
May 6, 2009

Open Text had earnings of US$22.0 million on sales of US$192.0 million in the quarter ended March 31 (Q3 09). Sales were down 8% from the previous quarter but up 7% from a year ago. This was the first quarterly report to include a full three months of results from Captaris, which was acquired at the end of October. Operating income of US$21.0 million was within the range of the previous two quarters.

Operations provided US$72.9 million in cash and the company ended the quarter with US$237.0 million in cash, up US$64.2 million from the end of Q2.

Open Text also announced that it received a 10-year contract with the Government of Ontario to be the exclusive vendor of record of enterprise information management solutions. Along with managing information across all ministries, Open Text says its products will help the government to deploy wikis, blogs, forums and other social media applications.

[3]---------------------------------------------------------------
Open Text to acquire Vignette
May 6, 2009

Open Text will acquire Austin, Texas-based Vignette in a cash and stock deal valued at about US$310 million. Vignette will operate as a wholly-owned subsidiary of Open Text. The deal must still be approved by Vignette shareholders, and is expected to close later this year.

Vignette shareholders will receive US$8 in cash and 0.1447 Open Text common shares for each Vignette share. As of Friday's close, that would be a total of just under US$13 a share. At the time the announcement was made, Vignette shares were trading for US$9 and had been below US$6 as recently as March. Vignette shares last traded at a price above the Open Text offer last summer.

Vignette develops web content management software and has 700 employees worldwide. It reported a loss of US$1.8 million on sales of US$33.9 million in the quarter ended March 31 and has been reporting declining sales in recent quarters. Vignette was a high-flyer in the dot-com boom, with its shares peaking at a price around US$800, adjusting for a split and a reverse split along the way.

[4]---------------------------------------------------------------
MKS ends profitable year
June 2, 2009

MKS closed its 2009 fiscal year with earnings of US$2.0 million on sales of US$13.6 million in the quarter ended April 30 (Q4 09). Sales were up 3% from the previous quarter but down 36% from a very strong Q4 last year. MKS said its ALM licensing revenue fell below expectations, but that it had won several promising customers it hopes will lead to strong follow-on sales down the road.

Most of the Q4 earnings came from an income tax recovery of US$1.4 million. Operating income of US$627,000 was an improvement on Q3, but three-quarters of the company's operating income for the year came in the first two quarters.

For the year, MKS reported earnings of US$4.3 million on sales of US$58.4 million. Sales were down 4.5% from 2008 but operating income was up 19% year-over-year. ALM sales accounted for 87% of total revenue, just slightly less than a year ago, as the mature IO business -- projected to show a sales decline -- managed to maintain its 2008 sales levels.

Year-end cash balance was US$17.1 million, up from US$12.9 million at the start of the year. MKS is raising its quarterly dividend by 25%, or about an extra US$1 million over the year, assuming the higher dividend is maintained in future quarters.

MKS ended the year with 309 employees worldwide.

[5]---------------------------------------------------------------
Dalsa sued by ex-digital cinema GM
June 5, 2009

Dalsa is being sued by the founder of the California company it acquired in 2004 as part of its failed digital cinema initiative. Bob DaSilva has filed a statement of claim in Ontario seeking more than $22 million.

In October 2004, Dalsa announced that it was buying the assets of DaSilva's Broadcast Plus business in Woodland Hills, Calif. for US$250,000 in cash plus up to 7.5% of the voting shares of a new subsidiary called Dalsa Digital Cinema Inc. DaSilva then became GM of the Dalsa Digital Cinema Center. At the time, DaSilva looked like an odd choice, since his business and background seemed to be focused on the television industry, while Dalsa was targetting filmmakers for its digital movie camera. Two years later, Dalsa hired someone else to run its California digital cinema office.

According to Dalsa, DaSilva had the option to have his stake in Dalsa Digital Cinema Inc. repurchased upon the termination of his employment. Dalsa says it had applied to the court to appoint a valuator for the business, but there was apparently a disagreement with DaSilva around the process to set a valuation. Dalsa says it will defend the claim and file a counterclaim.

[6]---------------------------------------------------------------
Descartes sales up 7%
May 28, 2009

Descartes reported earnings of US$2.2 million on sales of US$17.4 million in the quarter ended April 30 (Q1 10). Sales were up 7% from a year ago and 11% from the previous quarter, aided by two more acquisitions in Q1.

The bottom line was boosted by an income tax recovery of US$0.7 million. Expenses were also up across the board, with R&D spending jumping 24% from the previous quarter to US$3.4 million, or 19% of revenue. Operating income was US$1.7 million, down from US$2.4 million in the last two quarters, but up from a year ago.

Descartes spent US$14.8 million on acquisitions in the quarter, but still ended Q1 with US$46.9 million in cash. Operations generated US$4.4 million in cash.

[7]---------------------------------------------------------------
STOCK REPORT: Another big month for TurboSonic, Sandvine shares
May 2009

TurboSonic shares had another strong month after the company reported impressive top- and bottom-lines in its latest quarterly results. The shares are up 149% in the last two months and finished the month above US$1 for the first time since October 2007.

And it was the same story with Sandvine shares, which have jumped 117% in the last two months. They closed May at their highest month-end price since March of last year.

For the month of May:

TurboSonic [OTCBB: TSTA] +70%
Sandvine [TSX: SVC] +24%
Biorem [TSXV: BRM] +22%
MKS [TSX: MKX] +16%
RDM [TSX: RC] +15%
--S&P TSX VENTURE INDEX +11%
--S&P TSX COMPOSITE INDEX +11%
Descartes [TSX: DSG] +11%
ATS [TSX: ATA] +8%
RIM [TSX: RIM] +4%
===============================
Open Text [TSX: OTC] -2%
Dalsa [TSX: DSA] -5%
Arise [TSX: APV] -7%
Com Dev [TSX: CDV] -9%

Descartes shares had their highest month-end price since September 2007, while RDM shares finished the month above a dollar for the first time since September.

There hasn't been any bad news from Com Dev, but along with having the biggest decline in May, the company's shares were down another 10% in June as of yesterday's close. The stock had some big gains in March and April and is now back to about where it was at the beginning of the year.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +26%
Agfa-Gevaert [Brussels: AGFA] +26%
Ansys [Nasdaq: ANSS] +8%
Blue Coat [Nasdaq: BCSI] +7%
Acorn Energy [Nasdaq: ACFN] +6%
NCR [NYSE: NCR] +6%
Google [Nasdaq: GOOG] +5%
McAfee [NYSE: MFE] +5%
Oracle [Nasdaq: ORCL] +1%
===================================
Sybase [NYSE: SY] -4%

[8]---------------------------------------------------------------
Miscellaneous Tidbits

Aeryon Labs and Bayalink were two of the companies selected to receive the Canadian Angel Capital Top Five Award at the 2009 Canadian Co-Investment Summit in Toronto. Recipients were selected through an investor vote from the 15 companies that made presentations. Aeryon and Bayalink were the only two Waterloo area companies to present at the conference.
Lots of Waterloo-area winners at the 2009 Premier's Innovation Awards. Ming Li, co-founder of Bioinformatics Solutions (BSI) and UW professor, won the $250,000 Discovery Award for Innovation Leadership. At the same time, his BSI and UW colleague, Bin Ma, won the $200,000 Catalyst Award for Best Young Innovator. Two-thirds of this year's Premier's Catalyst Awards went to Waterloo Region recipients, with Navid Zargari named Innovator of the Year for a technology he developed for Rockwell Automation, Unitron Hearing named Company with the Best Innovation, and UW professor and Certicom co-founder Scott Vanstone presented the Lifetime Leadership in Innovation award. Each of those prizes also came with a $200,000 award.
Biorem announced a $700,000 sale of a biotrickling filtration system to a buyer in Florida and two other biofiltration orders in the "midwest and western coast of the United States" for a combined $1.3 million. The company lost $425,000 on sales of $4.0 million in the quarter ended March 31 (Q1 09). Sales were up 27% from a year ago. Order backlog at the end of the quarter stood at $12.8 million.
Jim Estill's new corporate home is Nu Horizons Electronics, a components distributor based in Melville, New York on Long Island. He became president and CEO of the company on June 1 and has also been appointed to the board of directors. Nu Horizons is listed on Nasdaq with a market value just under US$70 million.
RIM has acquired Sunnyvale, Calif.-based Dash Networks for an undisclosed amount. In fact, the entire acquisition was more discovered than disclosed. Dash developed a GPS-based device that provided drivers with traffic information. At one point, it was thought to be a promising startup, attracting investments from Kleiner Perkins and Sequoia, among others. But the company had fallen on hard times and laid off most of its staff in the fall. It then shifted from being a device company to a software provider, selling applications that could run on various devices.
TurboSonic earned US$604,000 on sales of US$7.0 million in the quarter ended March 31 (Q3 09). Sales were up 216% from the same quarter last year, and sales over the first three quarters of the fiscal year are double what they were a year ago.
According to Bloomberg News, the U.S. International Trade Commission has agreed to review Blackboard's request to block the sale of Desire2Learn software in the U.S. Blackboard acquired another major competitor in May, and Desire2Learn has said that the U.S. Department of Justice is investigating the deal (this was subsequently confirmed by Blackboard). Desire2Learn is also preparing for another patent infringement suit from Backboard -- this time in Canada. In April, the U.S. Patent and Trademark Office issued a preliminary ruling rejecting all 57 claims in the original Blackboard patent. Unfortunately for Desire2Learn, even if that were to be the ultimate ruling, it would probably take years to get to that point.
Michael Stephens is the new marketing and product development VP at Atria Networks. Stephens -- a UW engineering grad -- will work out of the company's Markham office.

The book Howard Burton believes contributed to his removal from Perimeter Institute

2009-05-05T18:08:00.001-04:00

I'd been looking forward to reading Howard Burton's book for over two years -- ever since people who knew him told me he had written it ... and that it wasn't going over well with Perimeter Institute bigwigs. Burton was the institute's first executive director -- the man picked by PI founder and principal benefactor Mike Lazaridis to turn his vision of a physics institute into reality.

It wasn't long after I heard about the book -- maybe a couple of months, I don't really remember -- that PI announced that Burton, to borrow an expression from another field, had been future endeavored* and was "seeking new challenges."

Now the book has been published and we can read the words that apparently caused so much agitation. First Principles: The Crazy Business of Doing Serious Science was released by Key Porter Books a few weeks ago. Although it's only discussed briefly in a six-page epilogue, Burton always felt the book was a significant factor in his departure from PI, an outcome he makes clear was the institute's idea and not his, and which he still finds "mystifying."

On the one hand, there's not much here that could reasonably become any kind of cause célèbre, but I know firsthand how irrationally hyper-reactive some folks can become -- particularly control freaks or people used to being big fish (often in tiny ponds) -- when something is written that doesn't match what they think should be said. So, it's possible that this book really did create an uproar in some circles, even if it mostly consists of reasonable observations about the importance of basic research, the role of universities, and the pressure for "commercialization," along with the central story of how Burton went about putting the institute together.

There are some anecdotes that show the eccentric side of Lazaridis, but not many and nothing mean. The funniest is probably the tale of a meeting at Lazaridis's house with UW president David Johnston. Burton says the three of them went to look at the home theatre in the basement and Lazaridis played the DVD of Armageddon, the Bruce Willis movie. "I glanced at my watch and wondered how much more of this I would have to endure," Burton writes. "After half an hour or so, it began to dawn on me that, much to my horror, we were going to watch the entire movie. To this day, I'm not entirely sure why we did this." Funny lines -- and Armageddon was a silly movie (I loved The Island, though, which only got slightly better reviews) -- but I have some doubts that Burton would have included the story if Lazaridis had screened La Dolce Vita.

Burton cleans up the story of his one public rift with Lazaridis: the incident in the waning days of the 2006 federal election campaign when then-Prime Minister Paul Martin -- looking like he was imminently to become ex-Prime Minister -- announced funding for Perimeter Institute and UW's Institute for Quantum Computing, along with two other research centres. Burton saw it as a cynical election ploy and, even worse, one that would be hitching PI's horses to the losing wagon -- something that would probably be remembered by the new government when forming its first budget.

"I was amazed to discover that surrounding university officials and representatives were ecstatic to make the lemming-like drive off the cliff to wed their fortunes with those of the desperate Martinites," Burton writes ... not mentioning that one of those university officials was UW chancellor Lazaridis, who, along with Johnston, happily drove to Markham to be photographed with Martin and praise the announcement. "I couldn't even stomach the thought of showing up," Burton wrote at the time -- a sentiment he echoes in the book.

Burton says he always realized that if PI got off the ground that he "would be its Achilles heel" -- the guy with no reputation in the physics world, or in any world, really, who got hired because he wrote a letter to the right person at the right time and made a good impression. He says he was initially treated with suspicion by some members of Lazaridis's inner circle who were concerned that he was some leech intent on sucking away on the Lazaridis fortune.

In the end, he says that it's "hard to feel that there isn't at least some grain of truth" to stories that he and Lazaridis both wanted to take credit for creating PI, leading to a "clash of egos." Two years after Burton's departure, the PI website still mentions Burton in the first paragraph of its "About PI" section, and says he was "instrumental" in shaping the institute, so whatever clash there may have been didn't extend to erasing Burton from the history books or understating his contribution.

Burton's views on basic research and commercialization are similar to mine, and when he writes that "university presidents will flexibly adopt whatever raison d'etre for their institutions they feel maximizes the momentary liklihood of procuring additional government resources for their cause," I can add that it's not just university presidents who behave that way.

According to the book, he now lives in France. He didn't think much of Waterloo. Like Burton, I also came to Waterloo from Toronto and had a big-city chip on my shoulder, but my nose never reached the altitute that his did. He thought Toronto was beneath his worldly tastes, but coming to Waterloo made it seem exciting in comparison. He makes a point of discussing the 2004 Lisa Rochon Globe & Mail story where she called Waterloo "a city of surpassing ugliness" and a "dystopia," making it clear that it was all he could do to restrain himself from shouting "hear, hear" when asked to comment on the article. The forword to the book even has Roger Penrose calling Waterloo "a seemingly unremarkable town."

For those of us who have become accustomed to histories of UW published by UW and the history of the City of Waterloo published by the City of Waterloo, Burton's book is a welcome alternative. While it's hardly a tell-all, the book at least gives the reader something outside the party line. And, in a small community like Waterloo, that can be enough to create controversy.

----
* When companies announce that someone has left the organization, the last line is often "we wish him well in his future endeavors" or something similar. That phrasing was so popular with WWE that now, when someone gets released or their contract isn't renewed, it's become an in-joke within wrestling to say the person was "future endeavored." The actual line in the PI announcement was "I wish Howard well in his future activities," which could have been written by WWE. On top of being a useful expression, I just enjoy making a pro wrestling reference in a post about someone with highbrow pretentions.

Waterloo Tech Digest - May 5, 2009

2009-05-05T01:12:00.001-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Sandvine shows it doesn't need Comcast for strong top line
Dalsa starts 2009 with slow sales and weak profits
Open Text acquires Toronto's Vizible
Arise hopes for rebound later in the year; delays CEO search
RDM reduces losses on weaker sales
STOCK REPORT: Sandvine bounces back; great month for RIM stock
Miscellaneous tidbits from LoyaltyMatch, Aeryon Labs, AideRSS, Tungle, ParkVu, RIM, Com Dev, Virtek, TurboSonic, Desire2Learn, Maplesoft

LoyaltyMatch has launched its OnDemand software-as-a-service platform that lets users develop web-based customer loyalty programs. The news release included a quote from Sherry Colbourne, CEO of Ladybug Teknologies, sponsor of the not-for-profit SipSmart, which has a program that rewards designated drivers.
Aeryon Labs -- developers of a flying vehicle that takes video and photographs for security and surveillance applications -- won the 2009 TiEQuest Business Venture Competition in Toronto on April 17. The prize money over the last couple of years has been $50,000 to the winner. KR Golf, which also has Waterloo connections, was another of the four finalists.
AideRSS' PostRank statistics are now being used by AdAge as the largest component of its Power150 ranking of top marketing blogs. PostRank account for 50 points of the 150 that each blog can earn -- as much as Yahoo, Google, and Technorati combined.
Tungle has formally launched what it calls the first calendar accelerator. The free software -- which has been in beta for several months -- makes it easy for users to share calendars and schedule meetings and works with a variety of calendar applications, including Outlook, Google Calendar, and iCal.
ParkVu's i2b BlackBerry-iTunes software (see previous digest) has been accepted by RIM for the BlackBerry App World online store, and is now available there.
RIM announced that its push API is out of beta and now available to developers of consumer apps who want to push content to BlackBerrys. Toronto's Polar Mobile (which has Waterloo ties) has been using the API in its software -- including apps it has written for The Hockey News and UW.
Keith Ainsworth has stepped down as chairman of Com Dev, a position he held for six years. He will remain on the board. Terry Reidel, who's been on Com Dev's board for the last year and a half, has been named the company's new chairman.
Virtek CFO Peter Monsberger is leaving the company this month. He's been with Virtek for the last seven years. Since its acquisition last year, Virtek continues to operate as a subsidiary of Gerber Technology. Hal Osthus -- a 25-year employee at Gerber -- is Virtek's president, while Waterloo-based Peter Richter oversees Virtek's imaging and templating business as VP. The company recently announced a five-year agreement to provide laser templating systems to Stork Fokker of The Netherlands and follow-on sales to Finland's Patria Aerostructures.
TurboSonic received a US$2.3 million order from a European oil refinery, which will use TurboSonic technology to manage its particulate emissions.
Desire2Learn was among the companies honored by the United States Distance Learning Association (USDLA) at that organization's annual conference in St. Louis.
Maplesoft has released the newest version of Maple -- the mathematics software that led to the creation of the company in the 1980s. Along with Maple 13, the company also released a new version of its MapleSim modelling and simulation software.

Waterloo Tech Digest - April 7, 2009

2009-04-07T00:37:00.004-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

RIM sales jump 84% in fiscal 2009
RIM launches BlackBerry App World
Jim Estill leaves Synnex ... likely U.S.-bound
Arise looks to cut costs in the face of lower demand, prices
Descartes annual sales up 12%
Descartes acquires Toronto's Scancode
STOCK REPORT: A March bounce ... and a 43% jump for RIM in April
Miscellaneous tidbits from Primal Fusion, ParkVu, Unsynced, Giftah, Dejero Labs, Metranome, LiveHive, Navtech, MedShare, IMS, RIM, Desire2Learn, Miovision, Tilted Pixel, ATS, Biorem, Igloo, Dalsa, Covarity, LoyaltyMatch, Mespere

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[1]---------------------------------------------------------------
RIM sales jump 84% in fiscal 2009
April 2, 2009

RIM ended its fiscal year with a strong quarter, reporting earnings of US$518.3 million on sales of US$3.5 billion in the quarter ended February 28 (Q4 09). Sales were up 84% from last year and 24% from a tepid Q3 -- and on the high end of RIM's forecasts.

There were 3.9 million new BlackBerry subscribers on the quarter, well above RIM's forecast of 2.9 million. The company shipped 7.8 million units in the quarter, up from 6.7 million in Q3.

For the year, RIM earned US$1.9 billion on sales of US$11.1 billion -- up 84% from fiscal 2008. RIM ended the year with US$2.2 billion in cash.

The company is forecasting that Q1 will look a lot like Q4, with 3.7-3.9 million new BlackBerry subscribers and sales of US$3.3-3.5 billion.

RIM also announced that it completed its acquisition of Certicom (see previous three digests).

[2]---------------------------------------------------------------
RIM launches BlackBerry App World
April 1, 2009

RIM has launched the much awaited online store BlackBerry App World. App World is itself a BlackBerry, and is open to users in Canada, the U.S. and the UK. RIM expects that there will be about 1,000 applications in the store by the end of its first week.

Software on App World can be free, or at prices starting at $2.99. Developers receive 80% of the revenue. RIM established a partnership with PayPal to process payments.

Mike Lazaridis helped kick off the launch with his keynote speech on Wednesday morning at the CTIA 2009 conference in Las Vegas.

[2]---------------------------------------------------------------
Jim Estill leaves Synnex ... likely U.S.-bound
March 25, 2009

Jim Estill has stepped down as CEO of Synnex Canada, a position he has held since selling EMJ -- the company he founded -- to California's Synnex in 2004. It hasn't been announced where he's headed, but it's expected that he'll be going to the U.S. to lead a public company there.

Estill's departure will be a loss for the local startup community. Estill has been one of the most active angel investors in the area, having made dozens of investments. Most have not been publicly disclosed, but those that have include his investments in Primal Fusion and Well.ca. He was also an investor in SlipStream Data, which was acquired by RIM.

Estill invested in RIM when it was a private company and has been on RIM's board of directors since 1997. At the time of RIM's IPO that year, he was one of three outside directors, along with Doug Wright and Val O'Donovan. He's been on the board ever since -- only Mike Lazaridis has served longer, among RIM's current directors.

Between EMJ and Synnex, Estill had remained with the same company for 30 years. He founded EMJ Data Systems in 1979 while finishing his systems design engineering degree at UW and grew it to include a U.S. subsidiary about 10 years later and then an IPO and TSX listing in 1994. By that year, EMJ had $68 million in annual sales and 100 employees. By the time the company was sold to Synnex for $56 million in 2004, it had grown to over $350 million in sales and 300 employees.

[3]---------------------------------------------------------------
Com Dev continues to win business; backlog climbs to new high
March 9, 2009

Com Dev came out of the gate quickly to start its 2009 fiscal year, reporting sales of $56.5 million in the period ended January 31 (Q1 09) -- a 26% jump from last year and down 6% from a record-setting Q4. Net income was $4.4 million, which is in line with the previous two quarters.

The company booked $88 million in new orders in Q1 -- including $33 million in military orders -- taking its order backlog at quarter-end to a new record high of $189 million.

Com Dev ended the quarter with $9.2 million in cash, down $6.9 million from the end of Q3 with operations consuming $3.8 million in cash. Since then, the company has raised gross proceeds of $23 million through a share offering (see February digest).

[4]---------------------------------------------------------------
Arise looks to cut costs in the face of lower demand, prices
March 9, 2009

Sales for Arise in the quarter ended December 31 (Q4 08) were up 19% sequentially to $18.9 million, but still fell below the company's forecasts. Arise had been looking for sales of $21-24 million in the period -- a forecast lowered from its original projection of $30 million. The company had warned investors that Q4 sales would fall about $3 million below expectations.

Arise lost $22.2 million in the quarter, including a $3.9 million writedown of its inventory and a $5.1 million writedown of silicon wafer prepayments. Excluding the writedowns, gross margins were -15.2%, a small improvement from -16.7% in Q3.

For the year, Arise lost $42.3 million on sales of $35.7 million. Most of the revenue came from PV cell shipments over the last half of the year. The company shipped 6.1MW of PV cells in Q4 and 5MW in Q3. Accumulated deficit at year-end stood at $65.5 million.

Completion of a second, more advanced, production line at its facility in Germany is back on schedule after Arise had warned that there could be a four-to-eight week delay. Arise announced that some initial PV cells came off the new line during test runs in March. Those cells had an efficiency of 15.1-15.9%, and Arise is hoping to achieve 18% efficiency in the future.

Arise ended the year with $22.6 million in cash -- an amount equal to its current bank loans. By March 6, Arise was down to $7.6 million in cash. It's now reviewing its planned capital expenditures, growth plans, and staffing requirements and believes that by cutting costs and slowing its growth plans that it has sufficient money to fund operations for several more months. Arise is looking for additional capital, either through a financing or partnerships.

[5]---------------------------------------------------------------
Descartes annual sales up 12%
March 11, 2009

Descartes ended its fiscal year with sales of US$15.7 million in the quarter ended January 31 (Q4 09). Sales were down 8% from Q3 and 2% from last year. Income from operations was US$2.4 million -- unchanged from Q3 -- but a non-cash deferred income tax recovery of US$13.1 million pushed Descartes reported quarterly earnings to US$15.7 million.

For fiscal year 2009, Descartes had revenue of US$66.0 million, up 12% from last year. Operating income was US$8.0 million and net income, including the tax recovery, was US$20.5 million. The company ended the year with US$57.6 million in cash, up US$4.1 million from the end of Q3.

[6]---------------------------------------------------------------
Descartes acquires Toronto's Scancode
March 11, 2009

Descartes also announced that it has made another acquisition, this time picking up Toronto-based logistics software developer Scancode Systems for approximately $8.5 million.

Scancode has about 50 employees and announced that it had signed its 1,000th customer last fall.

[7]---------------------------------------------------------------
STOCK REPORT: A March bounce ... and a 43% jump for RIM in April
March 2009

March saw local tech firms having their best month on the stock market in a long time, which admittedly 1) isn't saying much and 2) is much easier to achieve after the prices have been hammered down.

For the month of March:

Arise [TSX: APV] +40%
Dalsa [TSX: DSA] +26%
Descartes [TSX: DSG] +22%
Com Dev [TSX: CDV] +16%
ATS [TSX: ATA] +14%
MKS [TSX: MKX] +14%
--S&P TSX VENTURE INDEX +11%
Open Text [TSX: OTC] +8%
--S&P TSX COMPOSITE INDEX +7%
RIM [TSX: RIM] +7%
Sandvine [TSX: SVC] +3%
RDM [TSX: RC] 0%
TurboSonic [OTCBB: TSTA] 0%
===============================
Biorem [TSXV: BRM] -28%

Arise shares -- at the bottom of the list last month -- made back all of their February losses and finished the month back where they were at the end of January.

Com Dev shares are back to their pre-market collapse levels. Descartes shares are back to where they were at the end of August, while MKS shares are where they were at the end of July. Open Text stock continues to soar. Sandvine stock didn't do much in March, but is up 15% over the first four days of trading in April. Still, the only companies whose shares are trading above the levels they were at three years ago are RIM and Open Text.

And it's RIM shares that are looking like they might top the charts in our next issue -- they're currently up 43% in April and are trading at their highest point since the September collapse. According to globeinvestor.com data, RIM is once again the second most valuable company in Canada, trailing only RBC.

Companies with core operations outside the area:

Ansys [Nasdaq: ANSS] +24%
McAfee [NYSE: MFE] +20%
Acorn Energy [Nasdaq: ACFN] +19%
Oracle [Nasdaq: ORCL] +16%
Sybase [NYSE: SY] +11%
Blue Coat [Nasdaq: BCSI] +9%
ON Semiconductor [Nasdaq: ONNN] +7%
Google [Nasdaq: GOOG] +3%
NCR [NYSE: NCR] +0%
===================================
Agfa-Gevaert [Brussels: AGFA] -30%

With the first quarter of the year now complete, here's an updated list of the area's public companies, ranked by market capitalization.

Market capitalization at April 3
in millions, using outstanding shares
(change since Dec. 31 in parentheses):

1. RIM ----- $41,220 (+$13,203)
2. Open Text ----- 2,150 (+232)
3. ATS ----- 359 (-27)
4. Com Dev ----- 265 (+50)
5. Descartes ----- 204 (+15)
6. Sandvine ----- 122 (+12)
7. Dalsa ----- 105 (-24)
8. MKS ----- 68 (+12)
9. Arise ----- 57 (-10)
10. RDM ----- 15 (-3)
11. TurboSonic ----- 6.5 (-1)
12. Biorem ----- 4.2 (-1)

Since the beginning of the year, Sandvine has moved ahead of Dalsa while MKS has gone ahead of Arise.

[8]---------------------------------------------------------------
Miscellaneous Tidbits

Primal Fusion unveiled its "thought networking" platform at the DEMO conference in California at the beginning of March. It's currently in a private alpha stage, but -- for this week only -- the company is making its alpha open to anyone who goes to its site and requests an account. Video of Primal Fusion's DEMO presentation (which is useful in understanding the alpha) is here.
ParkVu, founded a year ago by Jeff Fedor and Terry Goertz, has launched its first product: i2b, a BlackBerry app that gives users mobile access to the iTunes libraries on their home computers (running Windows Vista or XP). It's available from the ParkVu website.
Also in the mobile music space was one of the winners in the latest VeloCity project exhibition. Unsynced says it will let BlackBerry users access to their music from anywhere. It is currently in a prototype stage. Team members are Ted Livingston, Vassili Skarine, Karan Bhangui, Chris Best, and Tina Randall. Giftah, an online marketplace for gift cards, was another winner in the VeloCity competition. It was founded by Rezart Bajraktari, Nick Belyaev, and Henry Finn.
Former SlipStream president Ron Neumann is now chairman of Dejero Labs, a company founded last year by Bodgan Frusina that has developed compression software to make broadcast-quality video available over cellular networks in real time.
Metranome announced the launch of its Poptiq Powered mobile video application platform, which lets companies create self-branded mobile applications for the iPhone and iPod Touch. Initial customers are DadLabs of Austin, Texas and 60Frames of Los Angeles.
According to a story in Media in Canada, Rogers Sportsnet says that between 3,000 and 6,000 people played LiveHive's NanoGaming trivia and prediction games each week during the NHL season. NanoGaming has now moved to baseball, where it will be played during 100 Blue Jay games this season -- starting with last night's game.
Forgot to mention last month that Mike Hulley is the new CEO of Navtech. He spent over four years with EDS as president of its global transportation group and five years with IBM as travel and transportation VP. Most recently, Hulley was with Tata Consultancy Services and, before that, was briefly CEO of Florida-based startup LeisureLogix.
MedShare has received $284,500 in funding and other assistance from IRAP. Gary Goodyear, federal minister of state for science and technology, made the announcement from MedShare's Cambridge office.
IMS's iLane and RIM's BlackBerry Bold were two of the three nominees for "Most Innovative Mobile Device" at the 2009 Andrew Seybold Choice Awards. But it was the third nominee, a GPS device from California-based TeleNav, that took home the prize at the CTIA conference last Wednesday. RIM had received the 2008 award for the BlackBerry Pearl.
Washington, DC-based Blackboard has filed another patent infringement suit against Desire2Learn, this time claiming that the Kitchener company is infringing on a new U.S. patent Blackboard received in February (a continuation of the patent that it successfully sued Desire2Learn for infringing). The claims of the original patent were given a preliminary rejection in a re-examination by the U.S. patent office, and the new patent gives Blackboard the opportunity to rewrite its claims. Desire2Learn says it has implemented a workaround that avoids infringing on the Blackboard patent.
Michelin Development says it has provided nearly $3 million in loans to local businesses in the last two years, and announced that it had provided funding to Miovision and website developer Tilted Pixel. The $3 million figure is up $750,000 from the announcement Michelin Development made six months ago.
In addition to its Michelin funding, Tilted Pixel and its founder, Matt Inglot, was Laurier's representative at the finals of the national Nicol Entrepreneurial Award competition in Ottawa in March.
ATS announced that it cutting 80 full-time jobs in Cambridge and another 160 at its Photowatt business in France.
Biorem earned $191,000 on sales of $4.6 million in the quarter ended December 31 (Q4 08). For the year, the company had sales of $14.4 million, up 52% from 2007. It booked $17.4 million in new orders, raising its order backlog at year-end to $14.8 million. Net loss in 2008 was $432,000, an improvement from a loss of $3.0 million the previous year. Biorem ended the year with $2.2 million in cash. The company also announced that it had opened an office in China in December. Biorem is currently working on five projects in China.
There have been a lot of new BlackBerry apps this month -- including one from Waterloo's Igloo Software that will allow members of Igloo online communities to access their sites and contribute content through a BlackBerry.
Dalsa founder, chairman and CTO Savvas Chamberlain was one of 20 engineers to be made a Fellow of the Engineering Institute of Canada in recognition of his contributions to engineering and society.
Covarity has added Boston-based risk management consultant and author James Lam to its board of directors.
LoyaltyMatch announced a partnership with Toronto-based travel planning site PlanetEye. The two will refer users to each other through direct links on both sites.
Waterloo medical device startup AcMed Technology has been renamed Mespere Lifesciences.

Waterloo Tech Digest - March 3, 2009

2009-03-03T01:16:00.001-05:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

RIM set to acquire Certicom for $132M
RIM settles with OSC & SEC
MKS remains profitable despite weak economy
Com Dev raises $23M
RDM reports loss on higher payment processing revenue
STOCK REPORT: Big drops for Arise, RIM, Dalsa, and ATS shares
Miscellaneous tidbits from Primal Fusion, Tangam, RapidMind, Desire2Learn, LoyaltyMatch, RIM, Arise, Descartes, Arius, MedManager

Primal Fusion announced the launch of its "thought networking" platform technology at the DEMO conference in California. The company will be offering a free online service, which is currently in an private alpha testing stage.
Tech company founders Peter Sweeney (Primal Fusion), Prem Gururajan (Tangam), Stefanus Du Toit (RapidMind) and John Baker (Desire2Learn) were among those recognized in the Waterloo Region Record's "40 Under 40."
Ross Goodwin is the new business development VP at LoyaltyMatch. He is based in Santa Rosa, Calif., where he runs the Bennett Valley Group sales and marketing consultancy. LoyaltyMatch CEO Brad Ball is also affiliated with Goodwin's consulting business and the two used to work together at Hewlett-Packard. Goodwin was with H-P for more than 20 years.
NTT DoCoMo, Japan's largest mobile network operator, has temporarily stopped selling the BlackBerry Bold after receiving complaints from about 30 customers that the devices were overheating while recharging. RIM is looking into the problem and has ruled out a flaw in the battery.
But it was a merry Christmas for RIM, as the number of new BlackBerry subscribers in the quarter ended February 28 were at least 20% higher than the 2.9 million it forecast. Even with the extra sales, RIM says its revenue numbers for the quarter will be near the mid-point of its forecasted range. Final results for the quarter will be announced in April.
Things weren't as rosy at Arise, which warned investors that its sales in the quarter ended December 31 will fall about $3 million below forecasts. The company will also be taking a $2.8 million asset writedown in the quarter. It is reviewing all planned expenditures and says that some projects may be put on hold or cancelled. Full results will be announced next week.
Descartes has acquired the logistics business of Montreal's Oceanwide in an all-cash deal for $10.4 million. The business employs 45 people in Montreal and Miami. Oceanwide's COO has become SVP of compliance solutions at Descartes.
Arius Software announced the launch of its DocumentAdvantage document imaging and management software for the financial services industry.
The Sioux Lookout Diabetes Program launched a new website using technology from Kitchener's MedManager.

Waterloo Tech Digest - February 3, 2009

2009-02-03T00:27:00.002-05:00

Compiled and written by
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.

Waterloo Tech Digest - January 13, 2009

2009-01-13T01:01:00.002-05:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

2008: Stormy end to an otherwise encouraging year
More funding for Metranome, AideRSS
Icera shuts Waterloo office; ON Semiconductor announces layoffs
RIM makes hostile $66M bid for Certicom
RIM misses targets, but reports 66% growth
Com Dev sales continue to climb
STOCK REPORT: Best month in two years for Com Dev shares
Miscellaneous tidbits from Open Text, Navtech, Coreworx, ATS, Arise, Covarity

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

GO BEYOND STAFFING
For almost 40 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.

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
2008: Stormy end to an otherwise encouraging year

The financial crisis was the big story of 2008, but -- nearly four months in -- it's still difficult to see what the impact will be on local tech companies. Stock prices and valuations have gone down since September, and a lot of wealth has been erased, but so far companies seem to be pulling through.

Looking at our public companies, while RIM had a rare miss in its September-to-November quarter, it's forecasting strong revenue growth in the current quarter. Open Text is hiring 200 people in Waterloo and is coming off another strong year. Com Dev is working on a near-record level order backlog. Sandvine is selling its next-generation product to Comcast, the customer that put it on the high-growth map. Dalsa has cut its one money-losing business. Arise is announcing big deals ... and just needs to show that it can make money on them. MKS and Descartes seem to be doing fine, but have only reported one month's worth of results since the meltdown.

Several local startups are coming off strong months at the end of the year, although there is some concern that startups may find angel funding harder to come by over the next year.

But in 2008, the investment money continued to flow, following a record year in 2007. Companies that closed new rounds of funding included Primal Fusion, AideRSS, Avvasi, Metranome, Well.ca, Igloo, J2Play, and Medicalis.

During the year, Arise opened a manufacturing plant in Germany while Com Dev opened a U.S. facility and Dalsa got rid of one, after pulling the plug on its digital movie camera business.

Patent infringement suits were back in the news, as Desire2Learn was successfully sued for infringement by its main U.S. competitor. As in the RIM-NTP suit, Desire2Learn was ordered to pay millions of dollars by the court, even though the U.S. patent office doubted that the disputed patent should ever have been issued. The dispute has now gone to the court of appeals.

RIM launched a hostile takeover while Virtek fended one off and avoided another before being acquired by a board-approved suitor. Coreworx and Spicer were acquired, with Spicer becoming part of Open Text. Sirific was acquired and later shut down (see below).

While the stock market had its worst year in the past decade, for public tech companies in the area, the drop in 2008 wasn't nearly as bad as what we saw in 2001 -- or even 2002 -- as measured by median performance. It was worse than any year since then.

Stock performance for 2008:

Open Text [TSX: OTC] +18%
===============================
ATS [TSX: ATA] -4%
MKS [TSX: MKX] -11%
Com Dev [TSX: CDV] -13%
Descartes [TSX: DSG] -14%
Dalsa [TSX: DSA] -16%
--S&P TSX COMPOSITE INDEX -35%
TurboSonic [OTCBB: TSTA] -47%
Biorem [TSXV: BRM] -55%
RIM [TSX: RIM] -56%
RDM [TSX: RC] -68%
--S&P TSX VENTURE INDEX -72%
Sandvine [TSX: SVC] -79% (78.8)
Arise [TSX: APV] -79% (79.1)

Arise and Sandvine had become two of the area's most valuable tech companies in 2007 -- and they still are, just not at the levels of a year ago. The 79% drops for Arise and Sandvine shares were the biggest calendar year loss of any company followed here since 2001, when Com Dev shares lost 80% of their value and the shares of a couple of other companies that few people will remember did even worse.

Mathematically, Arise gets the bottom spot for 2008 only because Sandvine's shares went up by a penny in December while Arise's had no change. It was last year's top performer, and becomes the first "first-to-worst" performer in the years we've been following local tech stocks. And Virtek, which was at the bottom of last year's list, would have gone from worst-to-first if it had still been listed at year-end. It was acquired at a per-share price that was 150% above its 2007 close.

But the top performer of 2008 was Open Text stock, which showed impressive gains for the third year in a row and was the only company to get out of the year with its shares showing a gain. At 18%, it was easily the lowest annual gain to top the year-end list in the last decade. In fact, this was the first year that at least one company didn't double its stock price.

Year-end market capitalization
in millions, using outstanding shares
(year-over-year change in parentheses):

1. RIM ----- $28,017 (-$35,129)
2. Open Text ----- 1,918 (+323)
3. ATS ----- 386 (-13)
4. Com Dev ----- 215 (-32)
5. Descartes ----- 189 (-31)
6. Dalsa ----- 129 (-30)
7. Sandvine ----- 110 (-413)
8. Arise ----- 67 (-185)
9. MKS ----- 56 (-13)
10. RDM ----- 18 (-38)
11. TurboSonic ----- 8 (-4)
12. Biorem ----- 5 (-7)

RIM's $35 billion drop in market capitalization in 2008 was almost exactly the same as its gains in 2007.

[2]---------------------------------------------------------------
More funding for Metranome, AideRSS
December 12 & 23, 2008

Two more investment deals were announced in December, both involving Tech Capital Partners.

Metranome, co-founded by former Tech Capital entrepreneur-in-residence Dave Kruis, closed a $1.5 million round, bringing the total invested in the company in the last year to over $2 million. The first version of Metranome's Poptiq mobile video software for iPod Touch and the iPhone was released in the summer.

AideRSS closed a second round of funding from Tech Capital. No financial details were disclosed. The deal came almost exactly one year after Tech Capital and some local angel investors provided a seed round of funding to the company.

And since I never mentioned it here, Tech Capital also invested in Avvasi a few months back, but the deal was never announced. Celtic House added Avvasi to their portfolio list in June without making an announcement and Tech Capital -- which invested with Celtic House -- did the same a few months later. According to the Ottawa-based lawyer who acted for the investors, it was a preferred share deal.

[3]---------------------------------------------------------------
Icera shuts Waterloo office; ON Semiconductor announces layoffs
December 2008

Waterloo's semiconductor industry is looking weaker following two announcements of job cuts in December.

First, UK-based Icera announced that it is closing its Waterloo office, acquired in May when it bought Sirific Wireless. Icera announced in December that it has raised US$70 million in funding ($60 million equity and $10 million debt, including money from Toronto's MMV Financial), but that was much less than it originally said it wanted to raise -- before the stock market collapse. At the same time, it announced job cuts, which included the Waterloo site.

Sirific was founded in 2000 by Taj Manku, who was then associate professor of electrical engineering at UW. The company raised more than $50 million in venture capital (see March digest for historical notes).

And Arizona's ON Semiconductor, the company that last year acquired the company that had acquired Waterloo's Dspfactory in 2004 (see December 2007 digest) announced that it is cutting staff. The number of employees being let go in Waterloo hasn't been announced. It wouldn't be surprising if ON decided to sell off its DSP business -- it certainly doesn't give it a prominent placement on its website, and the business doesn't fit very well with the other markets that ON is targetting. But that's what I thought a year ago and nothing happened.

[4]---------------------------------------------------------------
RIM makes hostile $66M bid for Certicom
December 3, 2008

RIM has made a $66 million -- $1.50 a share -- hostile bid for Mississauga-based Certicom, a company formed in 1985 to commercialize research from the University of Waterloo.

According to RIM, discussions about an acquisition began nearly two years ago when Certicom shares were trading in the $5-6 range. By the time RIM gave up on discussions with Certicom's board and publicly announced its intention to make an offer, Certicom shares had fallen to just 85 cents -- only about 10 cents above its cash per share.

In the quarter ended October 31, Certicom lost US$2.6 million on sales of US$6.6 million. But it had US$33.2 million in cash and securities on its balance sheet and not much debt, so it wouldn't be a very expensive acquisition for RIM.

Investors clearly don't expect that this will be the final offer for the company, as Certicom's shares jumped to more than $1.80 by the end of December.

As with many hostile takeover targets, Certicom's board went racing to the courts and the Ontario Securities Commission to try to block their shareholders from doing what they want with their stock, accusing RIM of violating confidentiality agreements in putting its bid together and of failing to disclose that it had confidential information in the circular it sent to Certicom shareholders.

The board rejected the bid as significantly undervaluing the company, although it was 76% above the price Certicom shares had been trading just before the offer was made. SEDI records show only one Certicom insider making any purchases of Certicom shares on the open market in the last six months. Before RIM's offer, Certicom shares hadn't closed above $1.50 a share since September 17. So far, there have been no other offers for the company.

Certicom was founded in 1985 as Cryptech Systems and later changed its name to Mobius Encryption before becoming Certicom in 1995. Its core product was based on research from UW's Data Encryption Group (now the Centre for Applied Cryptographic Research), and co-founder and UW professor Scott Vanstone remains a director of Certicom, as well as the company's EVP of strategic technology. It was created during the Bob Nally era at UW and Nally's investment company later said it had invested $2.5 million in Certicom and sold its shares for $34.0 million between 1996 and 1998. Certicom went public with a TSX listing in 1995 and followed that with a Nasdaq listing in 2000.

Certicom became of Canada's great bubble-propelled moonshots in 2000, when its shares peaked at what would today be $125 (adjusted for a stock split) in March of that year. When the bubble burst, it took Certicom with it. By June 2001 its stock was under $5 and a year after that, it was below $1 and the company lost its Nasdaq listing. There have been occasional signs of life since then, but Certicom shares fell 69% in 2007 and began 2008 at $1.58.

Less contentiously, RIM also announced that it is acquiring Vancouver's Chalk Media Corp. for $23 million in cash. The deal must still be approved by Chalk shareholders and is expected to close in February. Chalk is the developer of the Mobile Chalkboard platform used to push multimedia content to BlackBerrys.

[5]---------------------------------------------------------------
RIM misses targets, but reports 66% growth
December 18, 2008

A rare subpar quarter for RIM -- which, in its case, means sales were only up 66% from the previous year -- with sales and profits falling below the company's forecasts. Not a big surprise, since the forecasts were made before the start of the economic collapse in September. In the period ended November 29 (Q3 09), it reported earnings of US$396.3 million on sales of US$2.78 billion, falling short of its targets of US$510-550 million and US$2.95-3.10 billion, respectively. The company issued an earnings warning on December 2 and followed with full results a couple of weeks later.

According to RIM, about a third of the shortfall was caused by the higher U.S. dollar (RIM reports its results in U.S. dollars). The 2.6 million new BlackBerry subscribers in the quarter fell 300,000 below the company's expectations.

The current quarter will include results from the holiday buying season in December, and RIM says it had a strong start to the period. It is forecasting sales of US$3.3-3.5 billion in Q4 with earnings of US$475-520 million and 2.9 million new BlackBerry subscribers.

RIM ended the quarter with US$2.49 billion in cash, up US$249.0 million from the end of Q2.

RIM disclosed just one new patent infringement suit brought against it in the quarter, along with two complaints to the U.S. International Trade Commission alleging infringement. And RIM filed its own suit in November seeking judgment of non-infringement, invalidity or unenforceability of four Kodak patents.

[6]---------------------------------------------------------------
Com Dev sales continue to climb
December 11, 2008

Com Dev ended its fiscal year with another good quarter, earning $4.3 million on sales of $59.8 million in the period ended October 31 (Q4 08). Sales were up 16% from last quarter and 38% from a year ago, and margins were up significantly from Q3, but so were expenses. The bottom line was a $500,000 improvement from the previous quarter. For the year, sales climbed 28% to $210.3 million with earnings of $12.4 million.

Com Dev received $60 million in new orders in the quarter and ended the year with an order backlog of $158 million. Com Dev USA contributed $6.5 million in sales in Q4, up from $3.6 million in Q3. Operations generated $11.3 million in cash, leaving Com Dev with $16.1 million in cash at year-end.

Com Dev is forecasting revenue growth of at least 10% in fiscal 2009.

The company also announced that CEO John Keating has joined its board of directors. Late in the month it was reported that Com Dev is one of a few companies working on a Canadian-designed lunar rover. New Hamburg's Ontario Drive and Gear is also involved.

[7]---------------------------------------------------------------
STOCK REPORT: Best month in two years for Com Dev shares
December 2008

We saw some stability in the markets in December, with only three declining stocks -- and one of them was just down a penny. It was the first time since August that there were more gainers than losers. Only two stocks had more than a 10% shift in December, and even one of those gets an asterisk.

For the month of December:

TurboSonic [OTCBB: TSTA] +120%
Com Dev [TSX: CDV] +19%
Descartes [TSX: DSG] +8%
Dalsa [TSX: DSA] +8%
RDM [TSX: RC] +5%
--S&P TSX VENTURE INDEX +4%
Open Text [TSX: OTC] +4%
Sandvine [TSX: SVC] +1%
Arise [TSX: APV] 0%
ATS [TSX: ATA] 0%
===============================
Biorem [TSXV: BRM] -2%
--S&P TSX COMPOSITE INDEX -3%
MKS [TSX: MKX] -8%
RIM [TSX: RIM] -9%

Com Dev shares had a strong month, although the jump wasn't an immediate response to the company's financial results. It was about two weeks after the results were announced that the stock started to take off. After a big October and a terrible November, December ended up being the best month for Com Dev shares since a 23% gain in July 2006.

TurboSonic shares had the same trading range in December as in November, but in November it closed at the bottom of the range (and was on the bottom of last month's list) and in December it closed at the top, giving the appearance of a huge gain.

Shares of Biorem, RDM, RIM, Sandvine, and TurboSonic all hit their low mark for the year in intra-month trading in December -- with RDM and Sandvine bouncing back before the end of the month.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +16%
McAfee [NYSE: MFE] +14%
Oracle [Nasdaq: ORCL] +10%
Google [Nasdaq: GOOG] +5%
Sybase [NYSE: SY] +1%
===================================
Ansys [Nasdaq: ANSS] -3%
Blue Coat [Nasdaq: BCSI] -6%
NCR [NYSE: NCR] -7%
Adobe [Nasdaq: ADBE] -8%
Agfa-Gevaert [Brussels: AGFA] -21%
Acorn Energy [Nasdaq: ACFN] -30%

[8]---------------------------------------------------------------
Miscellaneous Tidbits

Open Text is looking to hire about 200 people in Waterloo over the next few months. It held a recruitment open house in December. Open Text has 3,500 employees worldwide, but only about 15% of them are in Waterloo. With this round of hiring, the Waterloo office will grow to around 700 people.
David Strucke has left Navtech, where he had been CEO for seven years. He joined the company in 1999, initially in financial roles, becoming CFO before being appointed CEO.
Coreworx announced that it recently signed three contracts with a total value of $3.1 million. Specific customers were not disclosed, but the company also issued a news release discussing its work with CITC Pacific Mining on a project in Australia -- a big contract that Coreworx won in 2007.
ATS is raising $50 million through a bought deal share offering that it expects will close this week. Under the terms of the deal, the company will sell 10 million shares at $5 each. If the underwriters exercise their full overallotment option, it would provide an additional $7.5 million in gross proceeds.
Arise has signed a four-year PV cell supply deal that it says will be worth about $200 million if all cells are taken by the buyer. The deal is with Germany's Asola Advanced and Automotive Solar Systems GmbH.
Covarity announced a multi-year deal to provide its commercial loan management software to BMO. The software will be used at more than 900 Bank of Montreal branches across Canada.

SR&ED changes don't seem as dramatic as feared

2008-12-03T12:58:00.004-05:00

Lots of discussion lately about changes made by the Canada Revenue Agency to the federal scientific research and experimental development (SR&ED) tax credit. The Canadian Advanced Technology Alliance (CATA) is concerned about the impact of the changes on the high-tech industry, and I think all the national accounting firms have published reports on the modifications to the program.

I read the reports and the information released by CRA and reached two conclusions: 1) most of the changes just make it easier for companies applying for SR&ED to give CRA the information it always wanted (which I'll focus on in just a second), and 2) the SR&ED application process is -- and apparently always has been -- tied to chiched notions of science and discovery having little to do with how companies conduct R&D (particularly in the ICT world), making the application process both burdensome and artificial.

That's been an eye-onener. While I've worked with companies for the last 10 years that received SR&ED refunds, the process was always just some black box to me since I've never been the one filling out the forms. I've filled out applications for government funding that felt like I was playing a game of "let's pretend" but I never realized how much I had in common with the folks doing the SR&ED forms.

Having said that, I have a hard time seeing how CRA's changes to SR&ED make things any worse. In fact, at least provisionally, I'll have to agree with their claim that these changes could be considered an improvement. (The one exception would be for those few companies that submit more than 20 projects a year. Previously, they were given a break and were only required to detail their top 20 projects. Now they have to fill in applications for every project. That doesn't seem unreasonable to me, and it's not something that will have an effect on startups.)

Changes to the form, not to the law

The first thing to keep in mind is that there has been no change to the legislation underlying the SR&ED tax credit. Whatever money you were entitled to in the past, you're entitled to now.

What has changed is the form and, for the most part, the form has been changed so that 1) there are explicit sections for information CRA had already been asking for and 2) companies have to be as concise in their descriptions as CRA had already been asking them to be (CRA had already been saying that most projects could be described within four pages, so the new word limits just enforce direction that CRA had already been providing).

For example, you now have to specify on the form whether your project was scientific research or experimental development. But CRA had always distinguished between them, and even said right on the form in previous years that there were different eligibility requirements between the two. There's nothing new about projects being classified as either scientific research or experimental development, the only change is that there's now a box on the form.

One more example: now you're required to specify (from a long list) the area of science that your project involves. But CRA had already asked applicants "To what field of science or technology would the advance contribute?" so, again, it's hard to see this as a big change.

And there are a lot of examples like that.

Obstacles vs. uncertainties

The new form also refers to technical "obstacles" instead of "uncertainties." Somehow, CATA reached the conclusion that this is less precise. It's not. Obstacles is a better word, but I don't think that a bit of wordsmithing -- even to make an improvement -- was worth throwing people into a panic over what the change really means. The new guide even refers to "technological obstacles/uncertainties" and, from looking at the term in the context CRA uses it, I think it's really grasping at straws to stir up FUD around the change.

Too early to know effect on audits

I think the real concern, though, is about audits. Nobody likes to be audited, obviously, and the form is what CRA has in its hands when it decides which applicants to audit. It sounds like some companies are concerned that they won't be able to avoid audits without being able to submit 15-page project descriptions -- which CRA had already said it didn't want.

Right now, we don't know if the new form will lead to more or fewer questions from CRA examiners. We know that CRA is hiring more auditors, so you could interpret that as a effort to speed up the process or as an ominous sign that there will be more audits in the future. We'll see.

But, overall, I don't see the changes to the SR&ED program having any significant impact on startups. The process won't be any less of a pain, but to me, the new form looks like a very small improvement.

Waterloo Tech Digest - December 2, 2008

2008-12-02T00:42:00.001-05:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Arise revenue jumps, but losses continue
MKS sales climb 19%
Coreworx looks to cut costs after lowering sales forecasts
Descartes quarterly profits top US$2M
RDM ends poor year with stronger quarterly sales
STOCK REPORT: Com Dev not immune to market woes
Miscellaneous tidbits from Crez, Well.ca, Tangam, IMS, LoyaltyMatch, Com Dev, RIM, ATS, Biorem, TurboSonic, Desire2Learn

Software from CREZ Basketball Systems will be used to manage all league statistics for the Premier Basketball League's 2009 season. The league consists of teams in 16 cities, including Montreal, Quebec City, and Halifax, as well as Buffalo, Rochester, and 11 other U.S. cities. (There was supposed to be a Toronto team this season, but it never happened.)
Well.ca was named one of Canada's top 10 angel-backed companies at the National Angel Capital Organization's Canadian Co-investment Summit in Toronto. Well.ca was the first company listed on the news release, but the NACO didn't say if the order on the release matched the ranking of the companies. At the event, 25 angel-backed companies made pitches for another round of funding.
Tangam Systems announced a partnership with Las Vegas-based Shuffle Master, a Nasdaq-listed company. Shuffle Master will help Tangam to promote its products to casinos and the two companies are looking at working together to develop new products.
IMS says that Bell Mobility has agreed to help distribute iLane in Canada. iLane, which IMS unveiled in 2006, is a Bluetooth device that uses voice commands and text-to-voice technology to give drivers hands-free access to their e-mail.
LoyaltyMatch has partnered with Palo Alto-based UpTake, a VC-backed search site for travel deals and information. UpTake will provide links to the LoyaltyMatch site to help its users convert frequent flier and other points into cash.
Com Dev finished the review of its past stock option grants and found that 635,779 options awarded in 2006 and 433,400 options awarded in 1999 had been improperly priced. None of the 2006 options had been exercised, so the company has just adjusted the exercise price from $4.44 a share to $5.14. Of the 1999 options, only 70,130 were exercised and the rest expired. The company decided not to take any action on those. It also provided an explanation for the pricing of 350,000 additional options granted in 1999. Com Dev says the OSC sent letters to the company and to chairman Keith Ainsworth admonishing them for their practices, but it intends no further action. Com Dev also said that Ainsworth will take the director's education program offered by the Institute of Corporate Directors.
RIM announced that there were over 400,000 downloads of its MySpace for BlackBerry application in the first week after its launch on November 13.
ATS saw its sales in the quarter ended September 30 jump 49% from a weak quarter last year and 4% from the previous quarter to $219,536. Earnings were $9.3 million.
Biorem earned $144,000 on sales of $4.1 million in the quarter ended September 30 (Q3 08). Over the first nine months of the year, its sales are up 49% over last year.
TurboSonic earned US$30,000 on sales of US$5.0 million in the quarter ended September 30. Sales were up 55% from a year ago.
Blackboard -- the U.S. company that successfully sued Desire2Learn for patent infringement -- has now filed suit against the U.S. Patent & Trademark Office, complaining that the USPTO should have stopped its reexamination of Blackboard's patent.

Waterloo Tech Digest - November 4, 2008

2008-11-04T00:09:00.001-05:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Gerber acquires Virtek
STOCK REPORT: Markets plunge, Com Dev jumps
Dalsa calls it a wrap on digital cinema
Open Text plans job cuts after acquiring Captaris
Sandvine reports loss, improved international sales
Miscellaneous tidbits from Coreworx, Biorem, Arise, LiveHive, AideRSS, RIM, Aimetis

////////////////////////////////////////////////////////////
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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.

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[1]---------------------------------------------------------------
Gerber acquires Virtek
October 24, 2008

Gerber Scientific's $1.05-a-share offer for Virtek (see August digest) was successful, with about 88% of Virtek shares being tendered. The offer was extended to the end of trading yesterday for remaining Virtek shareholders to agree to sell their shares.

Once Gerber has all of Virtek's shares, it will delist the company from the TSX. Virtek and FOBA are already included on the website for Gerber Technology.

The $1.12 a share offer from Jaguar Financial (see last month's digest) never did materialize and it announced on October 9 that it would sell the Virtek shares it owned to Gerber.

[2]---------------------------------------------------------------
STOCK REPORT: Markets plunge, Com Dev jumps
October 2008

The big story internationally was the collapse of the stock markets, but apparently no one told Com Dev investors. Shares in the company had their biggest one-month gain in over two years, climbing 16% in a month where the TSX composite fell 24%. Com Dev didn't even release any significant news during the time its stock was rising.

Thanks to the Gerber Scientific acquisition offer, Virtek shares also stayed steady during the month, gaining two cents to match the Gerber offer of $1.05 a share.

And that was it for good news. Shares of Sandvine, Biorem, and ATS all fell to all-time lows, with ATS stock dropping 42% in October, making it the month's worst performer. Dalsa shares fell to a seven-year low while MKS and Arise both lost a third of their value -- the second straight month where that happened at Arise. Arise shares have now fallen 74% over the last six months.

For the month of October:

Com Dev [TSX: CDV] +16%
Virtek [TSX: VRK] +2%
===============================
Open Text [TSX: OTC] -13%
Biorem [TSXV: BRM] -14%
RIM [TSX: RIM] -15%
TurboSonic [OTCBB: TSTA] -15%
RDM [TSX: RC] -15%
Descartes [TSX: DSG] -16%
Dalsa [TSX: DSA] -23%
Sandvine [TSX: SVC] -24%
--S&P TSX COMPOSITE INDEX -24%
Arise [TSX: APV] -33%
MKS [TSX: MKX] -36%
ATS [TSX: ATA] -42%
--S&P TSX VENTURE INDEX -48%

Last month where the shares closed at a lower price:

Com Dev - [Highest since May 2008]
Virtek - [Highest since December 2006]
Open Text - October 2007
RIM - May 2007
Arise - December 2006
RDM - December 2005
Descartes - November 2005
Turbosonic - May 2005
MKS - October 2004
Dalsa - October 2001
Sandvine - all-time low
Biorem - all-time low
ATS - all-time low

Companies with core operations outside the area:

===================================
McAfee [NYSE: MFE] -4%
Blue Coat [Nasdaq: BCSI] -5%
Google [Nasdaq: GOOG] -10%
Sybase [NYSE: SY] -13%
NCR [NYSE: NCR] -17%
Ansys [Nasdaq: ANSS] -24%
ON Semiconductor [Nasdaq: ONNN] -24%
Oracle [Nasdaq: ORCL] -25%
Agfa-Gevaert [Brussels: AGFA] -27%
Adobe [Nasdaq: ADBE] -33%
Acorn Energy [Nasdaq: ACFN] -43%

[3]---------------------------------------------------------------
Dalsa calls it a wrap on digital cinema
October 30, 2008

Dalsa is throwing in the towel on its digital cinema business more than 10 years after it started development of its digital movie camera. It has signed a letter of intent to sell assets of the business to Germany's ARRI, which describes itself as "the world's largest manufacturer and distributor of motion picture cameras, digital intermediate and lighting technologies." Financial details have not yet been disclosed.

Dalsa will continue to develop CCD image sensors for the ARRI cameras, but will no longer be in the camera business.

Four years ago, when Dalsa acquired a Los Angeles-based rental outlet, the company forecast $12 million in digital cinema revenue in 2005 and $30 million in 2006, with the business operating at a break-even level in the first year. The actual numbers never got remotely close to those forecasts and four years later the business was still losing about $2 million a quarter with very little revenue coming from rentals of Dalsa's camera. Founder and former CEO Savvas Chamberlain had been a big supporter of the digital cinema business, but shortly after the Eric Rosenfeld-led shakeup in Dalsa's board earlier this year (see February digest), the company said it was looking for partners to carry some of the digital cinema load.

Dalsa invested tens of millions of dollars in digital cinema -- including millions of federal tax dollars provided through the former TPC program. As of June 30, the digital cinema business has reported assets of $32.8 million and Dalsa will only be able to recover a small percentage of that. In the quarter ended September 30 (Q3 08), Dalsa reported a $21.7 million writedown to "reduce assets sold to net realizable value."

With that writedown, as well as another $3.2 million in provisions related to the discontinuation of the digital cinema business, Dalsa reported a Q3 loss of $20.6 million on sales of $52.6 million. Sales were flat from a strong Q2 and net income from continuing operations of $6.0 million is about what it would have been in Q2 excluding the digital cinema losses.

Continuing operations contributed $5.0 million in cash in the quarter, although most of that was absorbed by digital cinema. In addition, Dalsa spent $3.2 million to repurchase shares and another $3.7 million on property and equipment. It finished Q3 with $12.2 million in cash and securities, down $6.8 million from the start of the quarter.

[4]---------------------------------------------------------------
Open Text plans job cuts after acquiring Captaris
November 3, 2008

Open Text says it's cutting 10% of its workforce -- about 350 jobs -- following its acquisition of Bellevue, Washington-based Captaris (see August digest).

Captaris shareholders approved the deal last Friday and the acquisition added nearly 500 employees to Open Text's total.

With the cuts, Open Text expects to take a US$20 million restructuring charge.

In the quarter ended September 30, Open Text reported earnings of US$14.7 million on sales of US$182.6 million. Sales were down 9% from the previous quarter but up 11% from last year.

Operations generated US$24.8 million in cash and Open Text used US$10.8 million in its acquisition of Spicer in the quarter, as well as US$3.6 million on its eMotion acquisition. It ended the quarter with US$250.1 million in cash.

While Open Text is cutting jobs overall, AustralianIT reported that the company has gone on a "hiring spree" in Australia and New Zealand.

[5]---------------------------------------------------------------
Sandvine reports loss, improved international sales
October 8, 2008

Sandvine reported a loss of $6.3 million on sales of $13.1 million in the quarter ended August 31 (Q3 08). Sales were up 18% from the previous quarter but down 38% from last year. Loss from operations of $5.6 million was a small improvement from Q2.

Sales to North America were down, but all other regions showed gains, with 38% of revenue coming from Europe/Middle East/Africa. Indirect sales accounted for more than a quarter of all revenue.

Sandvine added 15 new customers in the quarter, 11 of which were DSL providers. Four of the new customers came through resellers.

In the biggest non-news, the not-so-mysterious "Customer A" of previous quarterly reports was finally acknowledged to be Comcast. As was the case in the previous two quarters, there wasn't much revenue from Comcast in Q3, but that will likely change in Q4. Five customers accounted for 59% of sales, which is a better mix than in Q2, when four customers provided 62% of revenue.

Sandvine ended the quarter with $96.1 million in cash and securities, or 71 cents a share -- not much less than its October-ending stock price of 80 cents.

[6]---------------------------------------------------------------
Miscellaneous Tidbits

J. Paul Haynes is now COO at Coreworx. He is the former CEO of MedShare and Ever America and the founder of JPH International.
Biorem has closed a $3 million round of venture debt funding from Toronto's Wellington Financial. Biorem has had a rough ride with investors. After going public in 2005, the company's stock fell 56% in 2006 and 29% in 2007, and is down 40% so far this year.
Arise announced that its sales of PV cells in the quarter ended September 30 exceeded the $15 million it had forecast. The company will announce its full results next week. Arise has not said what level of sales it expects it will need to become profitable. The company also announced that it had signed a 10-year lease on a 68,000 square-foot building in the Huron industrial park in Kitchener where it will place its polysilicon pilot plant.
LiveHive signed a two-year agreement with Rogers Sportsnet that will see its NanoGaming platform used for Sportsnet's "Game in the Game" prediction and trivia games during regional NHL telecasts.
AideRSS is now putting its PostRank trademark front and centre, changing its website to focus on the PostRank name. During the month, it launched PostRank 2.0, which offers keyword filtering among other new features.
RIM plans to open an online store for BlackBerry applications in March. Developers can begin submitting their apps next month. RIM also says it will be introducing a suite of tools to help developers create BlackBerry applications.
RIM's BlackBerry Pearl Flip -- its first flip phone -- is now available in Canada.
Aimetis received Frost & Sullivan's 2008 Global Video Analytics Product Innovation of the Year Award for its Aimetis Symphony video surveillance product.

Waterloo Tech Digest - October 6, 2008

2008-10-06T01:36:00.002-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Virtek prepares to receive another takeover bid
Virtek reports loss on acquisition offer expenses
RIM sales climb 88%; now 19M BlackBerry users
STOCK REPORT: RIM shares lose half their value
Tungle raises $5M
Com Dev reports record new orders
Miscellaneous tidbits from IMS, Primal Fusion, Sandvine, Descartes, Atria, IGLOO, ATS, Xylotek

It's Entrepreneur Week -- see the list of events and sign up through the Entrepreneur Week website.

--Gary Will

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

IT SEARCH AND PLACEMENT SERVICES
Procom is currently ranked as the 4th largest IT professional services firm in Canada. (Branham 300, Financial Post, April 2007). Recently awarded one of Canada's 50 Best Managed Companies, Procom is a proud, Canadian-owned, privately-held company. Our local KW office provides IT, development and technology personnel on either a contract or permanent basis. We are the largest provider of IT staffing and recruiting services in Canada. Phone: 519.885.4331

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Virtek prepares to receive another takeover bid
September 15, 2008

Shortly after formally endorsing Gerber Scientific's $1.05-a-share takeover bid (see previous digest), Virtek received word from Toronto's Jaguar Financial that it intended to make a cash offer of $1.12-a-share for all the outstanding shares of Virtek that it does not already own. Jaguar has become Virtek's largest shareholder, holding about 20% of the company's shares.

Jaguar said it expected to make its offer "on or about September 30, 2008," but as of October 5, no offer has been made. On September 24, Virtek announced that Jaguar hadn't followed through on its request to review non-public information from Virtek, which Virtek says it invited Jaguar to do on September 18.

Jaguar would have to pay about $30 million for the remaining Virtek shares. Jaguar told the Record that it's only interested in Virtek's marking and engraving business and that it would want to sell the imaging and templating business. In August, MiTek had offered $26.5 million just for Virtek's imaging and templating business -- an offer that was trumped by Gerber's.

Gerber's offer for Virtek ends on October 21.

Jaguar calls itself a merchant bank investing in undervalued companies. Its largest shareholder is Northern Financial (which had boasted two years ago of the returns it received investing in RDM) and the two companies have the same CEO.

It's MO seems to be that it buys shares in takeover targets in the open market and then makes an offer for controlling interest or, in Virtek's case, all outstanding shares. It tried this earlier in the year with Toronto-based Telehop Communications, but Telehop instead accepted an offer from Globalive (Jim Estill became a significant investor in Telehop following the failure of the Jaguar offer -- the number of shares he bought was nearly identical to the number that Jaguar previously said it held).

Since then, Jaguar has offered to buy controlling interest in Toronto's Royal Laser Corp. Royal's board has recommended that shareholders reject the offer, which is due to expire this week.

Jaguar trades on the TSX with a market value of about $13 million. Its assets consist primarily of investments in other companies. It carries little cash on its balance sheet and says it has arranged for $30 million in credit to complete the Virtek acquisition.

[2]---------------------------------------------------------------
Virtek reports loss on acquisition offer expenses
September 11, 2008

Virtek also reported quarterly results that, in other circumstances, would have been considered promising. They may end up being the last results Virtek reports as a public company (its next quarter-end is October 31, so there may be one more depending on how events unfold this month).

In the period ended July 31 (Q2 09), Virtek reported operating income of $995,000 on sales of $13.7 million. Revenue was up 13% from the previous quarter and 16% from a year ago, while an improvement in margins bumped gross profits 21% sequentially.

Special charges of $1.3 million -- including fees paid to legal and financial advisors to evaluate the StockerYale takeover bid -- took the company to a net loss of $479,000 in the quarter.

Virtek ended the quarter with net cash of $8.3 million, which put the Gerber Scientific takeover offer at about one-half of run-rate annual revenue, net of cash on hand.

[3]---------------------------------------------------------------
RIM sales climb 88%; now 19M BlackBerry users
September 25, 2008

RIM reported earnings of US$495.5 million on sales of US$2.58 billion in the quarter ended August 30 (Q2 09). Sales were up 15% from the previous quarter and 88% from a year ago. Both revenue and earnings fell within the range RIM had forecast.

There were 2.6 million new BlackBerry subscribers in the quarter, matching RIM's forecast. That brought the total number of BlackBerry users to 19 million.

RIM ended the quarter with US$2.24 billion in cash.

The company disclosed four new patent infringement lawsuits brought against it in the quarter. One filed by Wi-LAN was settled in August and the two companies signed a licensing agreement.

For the current quarter, RIM is forecasting sales of US$2.55-2.65 billion, which is a sequential growth rate equal to what it forecast three months ago for Q2. It's looking for earnings to go above the half-billion-dollar mark to US$510-555 million. Those forecasts may sound pretty solid, but among investors they triggered a wave of selling that led to the biggest one-month decline in RIM's share price in more than eight years (see below).

RIM also introduced the first BlackBerry flip phone in September, and announced partnerships with TiVo, Microsoft, and MySpace. EE Times reported that RIM opened an R&D facility in Bochum, Germany on the campus of Ruhr University Bochum. The site has 140 employees and is expected to grow to 500.

[4]---------------------------------------------------------------
STOCK REPORT: RIM shares lose half their value
September 2008

A stormy month on the stock markets, particularly for RIM investors, who -- on paper, anyway -- collectively lost $36 billion dollars. The company's market value was cut in half from $73 billion to $37 billion as of Friday's close. According to globeinvestor.com charts, RIM now ranks sixth on the list of Canada's most valuable corporations.

The closing price of RIM shares in September was their lowest month-end since July 2007 (which really isn't that long ago and just shows how RIM's value had skyrocketed in the last year). It was their worst calendar month performance since a 59% drop in April 2000.

Shares of three companies managed to buck the trend in September and report an increase: Virtek, thanks to the acquisition offer, MKS, and Descartes. Descartes shares has since given back their September gains.

For the month of September:

MKS [TSX: MKX] +17%
Virtek [TSX: VRK] +16%
Descartes [TSX: DSG] +9%
===============================
Biorem [TSXV: BRM] -1%
Com Dev [TSX: CDV] -3%
TurboSonic [OTCBB: TSTA] -6%
Open Text [TSX: OTC] -6%
Sandvine [TSX: SVC] -8%
--S&P TSX COMPOSITE INDEX -8%
RDM [TSX: RC] -12%
Dalsa [TSX: DSA] -18%
--S&P TSX VENTURE INDEX -22%
ATS [TSX: ATA] -28%
Arise [TSX: APV] -33%
RIM [TSX: RIM] -45%

Companies with core operations outside the area:

===================================
Oracle [Nasdaq: ORCL] -7%
Adobe [Nasdaq: ADBE] -8%
Acorn Energy [Nasdaq: ACFN] -11%
Sybase [NYSE: SY] -11%
Google [Nasdaq: GOOG] -14%
McAfee [NYSE: MFE] -14%
Ansys [Nasdaq: ANSS] -15%
NCR [NYSE: NCR] -17%
Agfa-Gevaert [Brussels: AGFA] -18%
Blue Coat [Nasdaq: BCSI] -24%
ON Semiconductor [Nasdaq: ONNN] -29%

Three-quarters of the way through 2008, here's how the market capitalization of local tech companies compares to their levels three months ago:

Market capitalization at October 3
in millions, using outstanding shares
(Change since June 30 in parentheses):

1. RIM ----- $37,331 (-$32,618)
2. Open Text ----- 1,770 (+101)
3. ATS ----- 399 (-173)
4. Com Dev ----- 233 (+8)
5. Descartes ----- 189 (+8)
6. Dalsa ----- 153 (-89)
7. Sandvine ----- 134 (-59)
8. Arise ----- 101 (-96)
9. MKS ----- 86 (+8)
10. Virtek ----- 34 (+16)
11. RDM ----- 21 (-12)
12. TurboSonic ----- 11 (+3)
13. Biorem ----- 8 (-3)

With three months left in the year, Virtek, MKS, and Open Text are the only companies that have seen their share price go up in 2008. The biggest decliners so far this year are Sandvine (-74%), Arise (-68%) and RDM (-62%).

[5]---------------------------------------------------------------
Tungle raises $5M
September 30, 2008

Tungle, which is based in Montreal but does R&D in Waterloo, has raised $5 million in a round led by Commonwealth Capital Ventures of Waltham, Mass.

It is calling this its Series A funding after raising $1.5 million in 2007 from JLA Ventures and Desjardins Venture Capital, as well as funding from a U.S. based angel investor.

[6]---------------------------------------------------------------
Com Dev reports record new orders
September 11, 2008

Another good quarter for Com Dev, which reported earnings of $4.3 million on sales of $51.5 million in the quarter ended July 31 (Q3 08). Although sales were down 5% from the previous quarter (but up 20% from last year), Com Dev booked a record $95.1 million in new orders in Q3, taking its order backlog to $161 million at quarter-end, also a new record.

Even with the sequential drop in sales, an improvement in margins meant that gross profits were just slightly below those in Q2, while operating expenses fell by 21%. That enabled Com Dev to record earnings that were more than double the $2.0 million it had in Q2.

It was the first quarter that the company had significant revenue from its new U.S. office in California. The El Segundo-based Com Dev USA contributed $3.5 million in revenue.

Operations generated cash of $2.2 million and Com Dev ended the quarter with $11.1 million in cash.

[6]---------------------------------------------------------------
Miscellaneous Tidbits

IMS' controlling shareholders have paid $14.7 million for the former site of Conestoga College in Waterloo, a property that extends from King to Weber. IMS will request that the 70,000 square foot former college building be rezoned from institutional to commercial and plans to renovate it to include a "world-class high-tech centre" capable of providing space to several tenants. The site had been purchased by Loblaws which planned to build a Real Canadian Superstore on the property -- plans that were opposed by city council.
Primal Fusion CEO Yvan Couture pulled the wraps off his company during the month, discussing its concept of a "thought network" developed by Primal Fusion founder and CTO Peter Sweeney (who, at the same time, discussed the concept on the company's blog. Couture also publicly disclosed for the first time that the company had raised $3 million through a convertible debenture deal earlier this year.
After months of obfuscation and denials, Comcast finally came clean -- under FCC orders -- and disclosed how it had used Sandvine technology to implement network management policies that the FCC ruled were improper. It was the first time that Comcast acknowledged being a Sandvine customer. With that out of the way, Sandvine announced that Comcast would be using Sandvine's new "congestion management" product -- designed to avoid the issues the FCC had with the previous approach -- with deployment expected to begin before the end of the year.
Descartes has acquired Dexx, a Belgian customs filing and logistics messaging provider. Purchase price was approximately $2 million.
Atria Networks has made another acquisition, this time buying the telecom assets of Peterborough Utilities.
The David Suzuki Foundation used IGLOO Software's platform to create the Vote Environment 2008 website.
ATS is selling its component manufacturing business -- the Precision Components Group -- to a group led by the PCG management team. PCG has 300 employees worldwide with manufacturing facilities in Cambridge, Stratford, and Shaghai.
Kitchener's Xylotek Solutions was named one of the Profit Hot 50, a ranking determined by revenue growth between 2005 and 2007 among companies founded in 2004 or 2005 (with sales of at least $500,000 in 2007). Over that period, Xylotek sales climbed to $1.8 million, with $2.4 million expected this year.
Sandvine (#7), RIM (#16), Desire2Learn (#23), and Navtech (#38) were among the companies on the 2008 Deloitte Technology Fast 50 ranking, listing Canadian companies with the highest percentage of revenue growth in the last five years.
Canadian Business' Andrew Wahl wrote about the Waterloo-Guelph area as one of Canada's best places to do business. Thumbs up for his use of "Waterloo-Guelph" rather than the inaccurate "Kitchener-Waterloo" (which the headline writer put in anyway). As for the line about startups raising $300 million in 14 months ... well, ignore that part. The rest is good.
While I'm at it: no, Waterloo Region doesn't come remotely close to accounting for three-quarters of all tech startups in Canada. That comment was attributed to the president of the Conference Board of Canada in a story in the Record. Maybe she was misheard, because that one's way out there.

Narrow view of innovation drives proposed Ontario law

2008-10-03T14:11:00.001-04:00

The Ontario government introduced its "Ideas For the Future Act" last week—following through on its pledge earlier this year to provide a refund of provincial income tax to university spinoff companies over their first 10 years in business.

The refund would only be available to companies incorporated after March 24, 2008 and only to companies whose sole purpose—in the opinion of the Ministry of Research and Innovation—is selling/licensing:

1) Software created by university employees or students "in the course of" their employment at the university or their academic studies. The software must constitute "a technological advancement" in the opinion of the Ministry of Research and Innovation.

2) Computer/communications/semiconductor/electronics equipment, health technology, or bioeconomy products "an essential element of which" is a patented technology wholly developed by university employees or students "in the course of" their employment at the university or academic studies. The patent doesn't have to have been issued before the company can qualify, but it must be issued within the company's first 10 years.

There's some flexibility given to both the Ministry of Finance and the Ministry of Research and Innovation in deciding exactly what qualifies, but if your company falls into one of those two categories, there's a good chance that it will qualify. If it doesn't, I suspect you'll have a hard time getting approval.

You won't know for sure if you qualify until after the end of each year when you ask the Ministry of Research and Innovation to provide you with a certificate of eligibility. If your company is certified, you can then ask the Ministry of Finance for a refund of your provincial income tax.

The bill is only at first reading stage, so there will be opportunities to make changes before it becomes law—which is good, because there are a lot of ways that the act should be improved.

Unfortunately, the act would do nothing for the majority of our most innovative companies, most of which wouldn't qualify. It certainly won't do anything to encourage startup creation—in the 10 years I've worked with new tech companies, provincial income tax has never been raised as an issue by any entrepreneur. At best, it's like a nice Christmas bonus, which makes its overly-restrictive eligibility rules even more of a disappointment.

If the goal is to cultivate Ontario's economic future, shouldn't we be supporting all of our innovative startups? Why is a tech company started by a 22-year-old student more worthy of support than a startup created by a 26-year-old graduate ... or a 46-year-old who isn't a university employee, or anyone else?

The cardboard version of innovation driving this legislation goes something like this: research occurs at universities and labs and leads to patents which are then pushed out into the business world and commercialized, creating the innovative tech companies that the economic future of the province depends upon.

In the real world, the links between research and economic prosperity—and the two are certainly connected—follow many different routes. Unfortunately, policymakers have obsessed over one patent-centric path at the expense of others that have more impact on our economy. As Mike Lazaridis pointed out years ago, if you want to see the economic impact of research, you need to look more at students and less at patents. Few innovative companies are created to commercialize university-created patents, but almost all of them have university- or college-educated people driving them. RIM itself wasn't created to commercialize a particular university-created innovation. In fact, Lazaridis has said that over RIM's first 20 years in business it licensed just two technologies from universities.

The government should expand the eligibility for the tax refund so it includes all innovative startups—all of which make use of ideas and knowledge that flowed from research—and not just the small percentage of those companies that were created to commercialize a specific university-based invention.

Waterloo Tech Digest - September 9, 2008

2008-09-09T00:28:00.001-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Virtek board endorses $35M takeover offer
Medicalis raises $7M
Arise reports first PV cell sales, forecasts $45M by year-end
Open Text continues to report solid profits, cash flow
Open Text to acquire document capture firm for US$131M
MKS starts fiscal 09 with profitable quarter
Descartes sales up 20%
STOCK REPORT: Dalsa falls to multi-year low; ATS soars
Miscellaneous tidbits from Coreworx, Metranome, ATS, RIM, ANSYS, Desire2Learn

////////////////////////////////////////////////////////////
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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.

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////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Virtek board endorses $35M takeover offer
September 2, 2008

Another month, another acquisition offer for Virtek, but this one looks like it might actually happen. Connecticut-based Gerber Scientific has made an all-cash offer of $1.05 a share -- about $35 million in total -- for all of Virtek's outstanding shares. The offer has the support of Virtek's board. Gerber trades on the New York Stock Exchange with a market value of about $200 million.

Last month, MiTek offered $26.5 million just for Virtek's imaging and templating business and, as part of that plan, Virtek was going to raise $3 million at $0.85 a share and buy back $26 million in its own shares -- about 75% of its outstanding shares -- at a price between $0.85 and $1. So, while in theory the Gerber offer would only be superior to MiTek's if you put a value of $8.5 million or less on Virtek's marking and engraving business, under the Gerber offer most shareholders would get more than they would have received under the MiTek offer. MiTek had the right to match the Gerber offer but chose not to. It will receive $927,500 in termination fees plus an additional $250,000 as an "expense reimbursement fee."

StockerYale -- the company that got all this started with a $22 million bid in May -- essentially disappeared from the picture after the MiTek offer was announced. It didn't change its final bid of $27 million and its offer expired without the necessary number of shares being tendered. The Gerber offer is nearly 60% higher than StockerYale's initial bid -- the one that was immediately accepted by the Toronto investment firm that was then Virtek's largest shareholder.

Gerber -- like MiTek -- has a history of working with Virtek. In fact, if the deal goes through it won't be the first time that Gerber has made a Virtek-related acquisition: in 1999 it bought the rights to Virtek's leather nesting software.

Assuming that no other offers are received, it will now be up to Virtek shareholders to decide whether to accept the Gerber deal. If they do, Virtek will vanish as a public company. The circular for the takeover bid is expected to be sent to shareholders next week. Nothing has been said about what Gerber would do with Virtek's Waterloo office and its employees.

[2]---------------------------------------------------------------
Medicalis raises $7M
August 18, 2008

Medicalis has closed a $7 million round of funding. Leading the deal was Boston-based HLM Venture Partners, which specializes in medical/health care technologies.

This is Medicalis' Series B round of funding. It began as a spinoff from Waterloo's Mitra (now part of Agfa) in 1999.

[3]---------------------------------------------------------------
Arise reports first PV cell sales, forecasts $45M by year-end
August 11, 2008

In the quarter ended June 30 (Q2 08), Arise recoded the first sales of PV cells made at its new manufacturing plant in Germany. It was only $461,000 from a few weeks of shipments, but the company expects that to grow to about $15 million this quarter and $30 million in Q4 as it ramps up production and improves efficiencies.

With the plant just starting production, there were significant costs associated with cells breaking or failing to meet performance requirements and that led to negative gross profits of $1.3 million. Arise expects it will be able to sell some of its scrap material from the quarter and recover part of those expenses.

Net loss for the quarter was $6.5 million, bringing the company's accumulated deficit to $35.1 million.

At the end of the period, Arise had $46.1 million in cash, mostly raised through a share offering in May. In July, it made prepayments of $20.1 million for silicon wafers and had $21.7 million in cash as of August 8.

The company also announced that it will not be building a polysilicon pilot plant at the University of Waterloo Research & Technology Park. Arise had signed a letter of intent in 2006 to build at the R&T Park but said that requirements of the university and the city for "design, appearance, and size and use ratio" would have added too many unnecessary costs for a manufacturing plant. It now expects to place the plant in an existing building in Waterloo Region.

Arise held its first quarterly results conference call following the announcement of its Q2 results. Empathizing with investors, CEO Bart Tichelman said the company was disappointed with the price of Arise shares, which have fallen 41% over the last four months.

[4]---------------------------------------------------------------
Open Text continues to report solid profits, cash flow
August 19, 2008

Open Text earned US$27.3 million on sales of US$200.3 million in the quarter ended June 30 (Q4 08). Sales were up 12% from the previous quarter, when the company earned US$7.3 million, and 14% from last year.

Operations generated US$44.6 million in cash in the quarter and US$166.0 million over the full year. Open Text ended the period with US$255 million in cash. At year-end, it had US$308 million in long-term debt on the balance sheet -- mostly from the Hummingbird acquisition.

For the year, Open Text had sales of US$725.5 million, up 22% from 2007. Net income was US$53.0 million.

[5]---------------------------------------------------------------
Open Text to acquire document capture firm for US$131M
September 4, 2008

Open Text also announced that it will acquire Bellevue, Washington-based Captaris for US$131 million. Captaris is a Nasdaq-listed company that has developed software for the digital capture of paper documents. Earlier this year, it acquired Germany's Océ Document Technologies which specialized in document capture and text recognition software. Captaris has several other products, including fax servers, which may not have a long life as part of Open Text.

The company was founded in 1982 and was previously known as Applied Voice Technology. Its shares were trading at US$3.70 when the Open Text offer was announced. Open Text will pay US$4.80 a share, or 30% above what was the market price. The deal is expected to close before the end of the year.

[6]---------------------------------------------------------------
MKS starts fiscal 09 with profitable quarter
September 3, 2008

MKS earned US$619,000 on sales of US$15.4 million in the quarter ended July 31 (Q1 09). Sales were up 13% from last year and down 27% from the company's blow-away results in the previous quarter.

Operations provided US$702,000 in cash and MKS spent US$1.1 million to repurchase 707,000 shares in the quarter, along with its usual US$1.0 million in dividends. It ended the quarter with US$11.5 million in cash, down US$1.4 million from the end of Q4.

At the AGM on August 26, MKS shareholders narrowly approved the company's poison pill plan with 53% of the votes in favour and 47% opposed. The margin of victory was much smaller than the number of shares held by MKS directors and executives.

And nearly a quarter of voting shareholders opposed the extension of the expiry date of the stock options awarded to president Michael Harris when he was hired in 2002. At that time, Harris was granted 1.2 million options with an exercise price of $1.35 and a seven year expiry period. With shareholder approval, that has now been extended to 10 years.

The circular for MKS' AGM disclosed that Harris was paid a $531,514 bonus in fiscal 2008, bringing is total compensation (excluding options) to $881,514. But he wasn't the company's top-paid executive: Thomas Hornek, managing director for central and southern Europe, received $1.05 million. CEO Phil Deck was paid $763,403.

[7]---------------------------------------------------------------
Descartes sales up 20%
September 4, 2008

Descartes earned US$1.4 million on sales of US$17.1 million in the quarter ended July 31 (Q2 09). Revenue was up 5% from the previous quarter and 20% from a year ago.

Operations generated cash of US$4.6 million and Descartes ended with period with US$50.533 million in cash.

[8]---------------------------------------------------------------
STOCK REPORT: Dalsa falls to multi-year low; ATS soars
August 2008

It's not reflected on the list below, since it happened in the first few days of September, but Dalsa shares went on a nosedive last week -- losing almost a quarter of their value in one day, despite the fact that the company has put together two strong quarters back-to-back.

According to the Globe & Mail, the selloff was triggered by Corning's warning that there was a glut of LCD panels on the market. Part of Dalsa's business is supplying flat panel inspection systems for LCD monitor manufacturers and, as far as some investors were concerned, that was apparently enough of a connection to send the stock into freefall. The drop took Dalsa shares to their lowest point since December 2001, although they came back a bit before the end of last week. The company, which was overtaken in market capitalization by Com Dev last month, has now also been passed by Descartes with Arise and Sandvine just slightly behind.

At their peak in April, Dalsa shares had nearly doubled in value since the beginning of the year. They're now down about 6% in 2008.

For the month of August:

ATS [TSX: ATA] +63%
Virtek [TSX: VRK] +31%
RDM [TSX: RC] +24%
TurboSonic [OTCBB: TSTA] +23%
Sandvine [TSX: SVC] +20%
Open Text [TSX: OTC] +18%
MKS [TSX: MKX] +11%
RIM [TSX: RIM] +3%
Descartes [TSX: DSG] +2%
--S&P TSX COMPOSITE INDEX +1%
Com Dev [TSX: CDV] +1%
===============================
Dalsa [TSX: DSA] -3%
--S&P TSX VENTURE INDEX -11%
Arise [TSX: APV] -13%
Biorem [TSXV: BRM] -25%

Investors are regaining confidence in ATS, which reported quarterly results in August. Its shares had their best month-end price in a year-and-a-half. Shares of RDM and Sandvine bounced back after plummeting in July. Virtek shares are up 178% since the end of March.

Companies with core operations outside the area:

Blue Coat [Nasdaq: BCSI] +28%
McAfee [NYSE: MFE] +21%
Agfa-Gevaert [Brussels: AGFA] +14%
Adobe [Nasdaq: ADBE] +4%
Sybase [NYSE: SY] +2%
Oracle [Nasdaq: ORCL] +2%
ON Semiconductor [Nasdaq: ONNN] +1%
===================================
NCR [NYSE: NCR] -1%
Google [Nasdaq: GOOG] -2%
Ansys [Nasdaq: ANSS] -3%

[9]---------------------------------------------------------------
Miscellaneous Tidbits

Acorn Energy completed its acquisition of Coreworx -- the former Software Innovation (see March digest). Acorn says it issued 287,500 common shares -- worth about US$1.3 million at the time -- to pay for Coreworx. Part of that payment will be held in escrow for one year. It also "contributed to the capital of Coreworx" US$2.5 million in cash and US$3.4 million in 8% one-year promissory notes that were given to Coreworx's debenture holders in full payment of principal and outstanding accrued interest on their debentures.
Metranome has launched its Poptiq service, delivering personalized, recommended videos to users' iPod Touch devices and iPhones.
ATS reported strong results from both its Automated Systems Group -- sales up 32% from last year -- and from its Photowatt Technologies division -- sales up 45% from last year to $69.3 million. The company recorded a $3.2 million gain on the sale of the Spheral Solar building to RIM. ATS is completing a strategic review of its ASG divisions in the current quarter.
According to research firm Strategy Analytics, 10% of all cellphones purchased on the U.S. in the second quarter of 2008 were BlackBerrys. It was the first time that RIM hit 10% market share.
The Waterloo office of ANSYS was mentioned in some media reports about the high-tech Speedo swimsuits worn at the Beijing Olympics. Speedo hired ANSYS to develop software to simulate the flow of water around the suit and a swimmer.
The U.S. Patent & Trademark Office rejected Blackboard's attempts to halt the reexamination of its patent that was at the centre of Blackboard's successful infringement lawsuit against Desire2Learn.

Waterloo Tech Digest - August 5, 2008

2008-08-05T01:19:00.001-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Virtek plans to sell imaging & templating business for $26.5M
Dalsa reports another strong quarter
Sandvine withdraws revenue guidance after another weak quarter
RDM sales continue to fall well below forecasts
STOCK REPORT: Falling prices for RDM, Sandvine ... and Dalsa
Miscellaneous tidbits from J2Play, LiveHive, AideRSS, Desire2Learn, RIM, Open Text, Christie

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

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.

IT SEARCH AND PLACEMENT SERVICES
Procom is currently ranked as the 4th largest IT professional services firm in Canada. (Branham 300, Financial Post, April 2007). Recently awarded one of Canada's 50 Best Managed Companies, Procom is a proud, Canadian-owned, privately-held company. Our local KW office provides IT, development and technology personnel on either a contract or permanent basis. We are the largest provider of IT staffing and recruiting services in Canada. Phone: 519.885.4331

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.

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.

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Virtek plans to sell imaging & templating business for $26.5M
August 4, 2008

Virtek announced Monday night that it plans to sell its imaging and templating business -- its main business for the last 10+ years -- to Missouri-based MiTek Holdings for $26.5 million. That's just slightly less than the amount StockerYale was offering for the entire company. Shareholders will be asked to approve the sale at a meeting on September 10. The deal requires the support of two-thirds of Virtek's shareholders. If it closes, Virtek would strictly be in the marking and engraving business, which it had said for some time was its best hope for future growth.

Virtek has also arranged a $3 million private placement at $0.85 a share with Royal Capital Management. It will take the net proceeds of the sale to MiTek and the private placement and use $26 million to buy back shares in the company through a Dutch auction process at a price per share between $0.85 and $1.00. At that price range, Virtek would be able to repurchase and cancel 70-80% of its outstanding shares. Both the private placement and the repurchase would require shareholder approval at the September 10 meeting, although only a simple majority of votes would be needed.

Virtek can still back out of the MiTek deal -- under the terms of the agreement, the company has the rest of this week to seek other proposals and can consider unsolicited proposals even after that point. If no better offer comes forward, Virtek expects the sale to MiTek to close around September 12. If Virtek decided to go with a different offer, it would have to pay MiTek $927,500 plus expenses. The company expects to net about $23.6 million upon closing with an additional $1.3 million being placed in escrow for one year.

In fiscal 2008, imaging and templating contributed $24.8 million in revenue, or 47% of Virtek's sales. It also accounted for all of Virtek's profits, as the marking and engraving business operated at a loss. In the first quarter of the current fiscal year, the I&T business provided just 42% of total revenue but was still the source of all earnings.

Virtek got into the marking and engraving business through its majority acquisition of Germany's FOBA in 2003. It became 100% owner last year. It has moved parts of the business to Waterloo last year and parted ways with the German-based GM of the business in October. In its news release yesterday, Virtek listed "streamlining German operations" as one of the steps it plans to take to grow the M&E business.

Up until Monday's announcement, it wasn't looking good for Virtek, as the hostile acquisition offer from New Hampshire-based StockerYale had been sweetened to 80 cents a share in cash -- 70 cents at closing an the remaining 10 cents to be paid within 60 days of StockerYale acquiring all of Virtek's common shares. That brought the price of the acquisition up to about $27 million -- $5 million more than the initial stock & cash deal StockerYale offered in May.

The revised offer is more than 80% above the level Virtek shares were trading when the offer was made, and that would have been hard for shareholders to resist. Once they cashed out, it would have made little difference to them that Virtek would have been in the hands of a debt-ridden, chronic money loser offering few apparent synergies with Virtek, operating under a questionable management team (the company and its CEO were accused of fraud by the U.S. Securities and Exchange Commission in 2005; the CEO was ordered to pay a $120,000 penalty plus US$788,000 in gains improperly received through the sale of StockerYale shares after the company issued a false news release).

The deadline for shareholders to accept StockerYale's offer was extended to the end of the day on August 14. Virtek's board formally rejected StockerYale's previous offer on July 11 and StockerYale -- which has very little money of its own -- later raised its offer to 70+10 cents a share.

Virtek was founded in 1986 by UW professors Andrew Wong and Mohamed Kamel with Bob Nally -- who remains on the company's board -- and Tom King. Initially, the name was said to be an acronym for Vision Intelligence Robotics Technology. It was created to commercialize algorithms developed at UW's Pattern Analysis and Machine Intelligence lab. Virtek shares first traded on the over-the-counter market in 1994 and moved to the Toronto Stock Exchange in 1999. The stock hit an all-time high of $7.75 a share in November 2000. Its average month-end price was $1.11 in 2006 and $0.73 in 2007, and it fell to an all-time low of $0.31 in January of this year.

[2]---------------------------------------------------------------
Dalsa reports another strong quarter
July 31, 2008

Back-to-back good quarters for Dalsa, which reported earnings of $4.0 million on sales of $53.4 million in the period ended June 30 (Q2 08). Sales were up 12% from a year ago and down slightly from a strong Q1. However, improvements in margins led to a 4% sequential increase in gross margins.

Dalsa's digital imaging and semiconductor businesses were both profitable, each with sales about at the same level as Q1. The digital cinema business lost $2.0 million on revenue of $450,000. Dalsa has never disclosed how much revenue it receives from the rental of its movie camera, but the implication is that it's a small percentage of total digital cinema sales. In June, it demonstrated a smaller movie camera which is expected to be ready for commercial release this quarter.

Operations provided $9.3 million in cash and the company spent $1.0 million in April to acquire the 22% of Santa Clara-based Rad-icon Imaging that it didn't already own. It had been a part-owner of Rad-icon for several years and became majority owner in 2003. Dalsa ended the quarter with $19.0 million in cash.

The company announced that it will start paying a quarterly dividend this month. Shareholders will receive $0.05 per share, which adds up to a total cash payment of about $945,000 this quarter.

During the quarter, Dalsa also completed the sale of what was left of its Colorado Springs-based X-ray imaging business. The remaining assets were sold at book value with no significant gain or loss. Over the next five years, Dalsa is entitled to a 10% royalty on sales of products related to the assets it sold.

Early in the month, there had been a lot of buzz around a new 50 megapixel sensor from Kodak -- a Dalsa competitor -- but Denmark's Phase One quickly followed with the announcement of a new camera that features a 60.5 megapixel sensor from Dalsa.

[3]---------------------------------------------------------------
Sandvine withdraws revenue guidance after another weak quarter
July 8, 2008

It was an improvement from the previous quarter, but sales of $11.1 million in the period ended May 31 (Q2 08) still fell far enough below Sandvine's expectations that the company withdrew its revenue forecasts for the year. The company had said in March -- and reiterated in April -- that it expected annual revenue to fall in the $80-85 million range, if certain assumptions held true. They didn't, and with sales of $19.4 million at the mid-way point for the fiscal year, Sandvine would have needed revenue of $30 million a quarter for the rest of the year just to hit the low end of its forecast.

Sales were up 34% from a disastrous Q1 but down 45% from last year. Sandvine lost $4.6 million -- a $2.6 million improvement from the previous quarter -- with a loss from operations of $5.6 million.

Operations used $5.1 million in cash in Q2 with an additional $752,000 spent to repurchase shares in the company. Sandvine ended the quarter with $99.7 million in cash -- a $6.9 million reduction from the end of Q1.

The company won 12 new customers in the quarter. Most revenue continued to come from just a few customers, but it was a little more distributed this quarter with four customers accounting for 62% of sales. The infamous "Customer A" -- the one generally believed to be Comcast -- provided just $1.25 million in revenue, down from $9.5 million a year ago and $2.0 million in Q1. One of the four major customers in the quarter was a reseller. Sales to Europe/Middle East/Africa rebounded from a Q1 slump and accounted for a quarter of all revenue.

Sandvine added eight people to its sales and marketing team in the quarter, including six sales reps.

[4]---------------------------------------------------------------
RDM sales continue to fall well below forecasts
July 31, 2008

Another very disappointing quarter for RDM, which has been way below its forecasts each quarter this year. The company lost $298,000 on sales of $5.2 million in the period ended June 30 (Q3 08). The loss would have been worse, except RDM recognized a $559,000 accounting gain on its sale of Xign from last year after it received the balance of the acquisition price -- which had been held in escrow. Sales were down 23% from both Q2 and last year.

It's been a brutal year for the company's revenue forecasts. It began the year predicting that revenue would grow in line with the levels of the pervious two years -- 39% in 2007 and 25% in 2006. After Q1 was a dud, RDM said it would still see annual growth of 10-15%, which would have required 40% year-over-year growth over the remaining three quarters of the year. Then Q2 fell way below expectations and RDM said sales would be flat year-over-year, which again would have required 40% growth in the last two quarters of the year. Now, with Q3 well below last year's numbers, the company says it expects Q4 will be an improvement, but still below last year's levels. It now expects annual revenue to decline about 23% for the year.

In Q3, operations used $1.5 million in cash, which was partly offset by the $1.1 million RDM received for Xign (now JPMorgan Xign). The company still has plenty of cash, holding $17.1 million, down $743,000 from the end of Q2.

Volume on RDM's ITMS image & transaction system increased to 2.8 million items a week, up from 2.5 million in the previous quarter. The company shipped 7,500 scanners in the quarter, down from 10,300 in Q2.

[5]---------------------------------------------------------------
STOCK REPORT: Falling prices for RDM, Sandvine ... and Dalsa
June 2008

Last month's rebound in Sandvine shares was short-lived as the stock had its second-worst month ever in July, falling as low as 87 cents at one point. It closed Friday at $1.02. Sandvine has 73 cents per share in cash, so its business is being assigned very little value by investors -- a big change from the days 11 months ago when investors thought Sandvine was a billion-dollar company. Sandvine shares are down 73% this year and 86% over the last 10 months.

The biggest decliner in July was RDM stock, which fell below $1 for the first time in over two-and-a-half years and finished the month at $1.01. That wasn't a shock, given the company's financial results, but it was surprising to see Dalsa shares record their worst month in three years. The results were good, and the declines all came before the financials were released on July 31, but there was very little pop for the stock on August 1 once the numbers were in.

For the month of July:

Virtek [TSX: VRK] +24%
Biorem [TSXV: BRM] +6%
RIM [TSX: RIM] +5%
Descartes [TSX: DSG] +3%
===============================
TurboSonic [OTCBB: TSTA] -2%
Open Text [TSX: OTC] -2%
Com Dev [TSX: CDV] -3%
Arise [TSX: APV] -3%
--S&P TSX COMPOSITE INDEX -6%
MKS [TSX: MKX] -8%
--S&P TSX VENTURE INDEX -16%
Dalsa [TSX: DSA] -22%
ATS [TSX: ATA] -28%
Sandvine [TSX: SVC] -33%
RDM [TSX: RC] -35%

Virtek shares have climbed in line with StockerYale's increased bid, and jumped an additional 10% on Friday after Virtek announced that it would not use its recently-created poison pill to try to thwart or delay StockerYale's offer.

On the market capitalization list, Dalsa fell below Com Dev and is now just slightly above Descartes and Arise. Virtek pulled a little ahead of RDM -- the two had similar valuations for a long time until RDM pulled way ahead a couple of years ago. RDM stock has now given back all those gains, while the StockerYale offer has pumped some life into Virtek's shares. RDM's market value was down to $23 million at month-end.

Companies with core operations outside the area:

Agfa-Gevaert [Brussels: AGFA] +16%
Sybase [NYSE: SY] +14%
NCR [NYSE: NCR] +7%
Adobe [Nasdaq: ADBE] +5%
Blue Coat [Nasdaq: BCSI] +3%
Oracle [Nasdaq: ORCL] +3%
ON Semiconductor [Nasdaq: ONNN] +2%
===================================
Ansys [Nasdaq: ANSS] -3%
McAfee [NYSE: MFE] -4%
Google [Nasdaq: GOOG] -10%

[6]---------------------------------------------------------------
Miscellaneous Tidbits

Waterloo's J2Play was awarded $250,000 from Facebook's fbFund. It was one of 10 recipients announced during the Facebook f8 Conference in San Francisco. J2Play's technology enables game developers to publish to all major social networking sites and makes it easier for users to discover the games and play with other users on different platforms.
LiveHive's NanoGaming platform will be used at NBCOlympics.com starting this Friday, providing its usual array of prediction games, trivia questions, and other interactive content to complement NBC's broadcast coverage of the Olympics. LiveHive also announced the launch of its tvClickr Facebook application, providing a real-time, Internet-based add-on for viewers of dozens of TV shows
AideRSS has made its PostRank "social engagement analysis" technology -- the algorithms it uses to rank blog posts -- available as an API, allowing other developers to integrate it with new applications. Aurora-based NSC also announced that it has included PostRank technology in its new FetchIt news reader for Windows Mobile devices.
Blackboard's attempt to have Desire2Learn held in contempt of court was rejected by the judge in Texas. Blackboard claimed that the changes Desire2Learn made to its product were not enough to avoid infringing on Blackboard's hanging-by-a-few-threads patent. The judge had placed an injunction against sales of the infringing product. Desire2Learn then upgraded its U.S. customers to a revised product which it says no longer infringes. Blackboard has threatened to sue Desire2Learn for patent infringement all over again.
The Record reported that RIM was the buyer of the former Spheral Solar plant in Cambridge. ATS said in June that it had sold the 193,000 square-foot building -- located near the 401 below the Toyota plant -- for $16 million. The site was also listed as the principal office of Photowatt when ATS was trying to spin that business out through an IPO.
Open Text has acquired Seattle's eMotion from Corbis Corp. for about $5 million. It will become part of Open Text's Artesia group, which develops products for managing digital marketing assets. eMotion had been acquired by Corbis in 2005.
The new video wall at the Nasdaq stock exchange in New York, featuring dozens of projectors from Christie Digital, was unveiled in July. Gerry Remers was among a group that rang the opening bell at the exchange on July 21.

Waterloo Tech Digest - July 7, 2008

2008-07-07T01:29:00.003-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Virtek shareholders asked to support hostile takeover
Virtek remains profitable on sluggish sales
Open Text acquires Spicer
Com Dev sales jump 40%
RIM quarterly sales top $2B
MKS reports record-setting quarter
STOCK REPORT: Sandvine rebounds; Dalsa tops for '08 at mid-point
Miscellaneous tidbits from Avvasi, Zoomii, ProductWiki, Well.ca, Dalsa, LiveHive, HighJump, LoyaltyMatch

////////////////////////////////////////////////////////////
A D V E R T I S E M E N T S

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.

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 us at 519-783-3210, Tim Sinnott (tsinnott@bereskinparr.com) for more information.

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.

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.

IT SEARCH AND PLACEMENT SERVICES
Procom is currently ranked as the 4th largest IT professional services firm in Canada. (Branham 300, Financial Post, April 2007). Recently awarded one of Canada's 50 Best Managed Companies, Procom is a proud, Canadian-owned, privately-held company. Our local KW office provides IT, development and technology personnel on either a contract or permanent basis. We are the largest provider of IT staffing and recruiting services in Canada. Phone: 519.885.4331

////////////////////////////////////////////////////////////

[1]---------------------------------------------------------------
Virtek shareholders asked to support hostile takeover
June 16, 2008

Virtek is now the target of a hostile takeover bid, after its board rejected the initial acquisition offer from New Hampshire's StockerYale (see previous digest). StockerYale has taken its offer to Virtek's shareholders with a deadline for acceptance of August 1.

StockerYale slightly improved its offer to an all-cash deal of 65 cents a share (or 70 cents a share in cash and StockerYale shares, if Virtek's board agrees to the deal). The initial offer was for 65 cents a share to be paid about three-quarters in cash and the balance in StockerYale shares. Virtek's board has not responded to the revised offer, but the company said it has hired Genuity Capital to assist in assessing the offer and has created a special committee of independent directors to evaluate the bid.

Virtek's largest shareholder -- Toronto-based Howson Tattersall Investment Counsel -- didn't wait for the board's response and immediately pledged its support for StockerYale. The firm holds about 13% of Virtek's outstanding shares. (Howson Tattersall was also listed as Dalsa's second largest shareholder at the time of the company's AGM in February.) MMCAP International, which owns about 4% of Virtek, is also supporting the StockerYale offer. For its bid to proceed, StockerYale needs to get the holders of two-thirds of Virtek shares to sell their stock.

According to StockerYale's prospectus, it was Robert Tattersall who initiated the talks between StockerYale and Virtek after he met the StockerYale CEO at an investor conference in April. StockerYale says it sent the offer to Virtek's board on May 13, at a time when Virtek shares were trading around 44 cents. It says it became concerned about the trading activity two days later -- a day that Virtek shares briefly traded at 64 cents, their highest level in months. At that point, the offer from StockerYale had not yet been announced. Virtek shares closed Friday at 59 cents.

From a business perspective, it's not obvious what synergies would be achieved through the deal, since StockerYale doesn't seem to have any expertise in Virtek's markets. Together, it looks like they'd become a company with little cash and plenty of debt, with operations spread across very different markets on different continents, all under a management team with very little experience in the businesses where most of its gross profits would be generated.

StockerYale is a struggling company itself, with a loss of US$9.0 million over the last 12 months and an accumulated deficit of US$95.4 million. Its stock has dropped 65% over the last year and has been outperformed by Virtek shares over the past year, three years, and five years. The company is now facing a delisting from Nasdaq since its shares have closed under a dollar ever day since November. StockerYale seems to be planning a reverse split to get its shares back over the floor price required by Nasdaq.

At last report, StockerYale only had US$2.4 million in cash on its balance sheet and working capital of just US$1.1 million. It would use debt to finance the deal, and is already carrying US$13 million in debt on its books. This deal could add another $22 million to the total.

[2]---------------------------------------------------------------
Virtek remains profitable on sluggish sales
June 12, 2008

Virtek also announced its latest quarterly results during the month. For the period ended April 30 (Q1 09), it earned $481,000 on sales of $12.2 million. Sales were down 8% from the previous quarter and 9% from last year.

Sales from Virtek's imaging and templating sales segment down 26% sequentially and 16% from last year, but the business accounted for all of the profits in the quarter. The marking and engraving business showed a small drop in sales from Q4 but a 13% gain from last year and provided nearly 58% of all revenue in the quarter, while losing $105,000.

Virtek ended the quarter with $7.7 million in net cash, up $400,000 from the end of Q4.

[3]---------------------------------------------------------------
Open Text acquires Spicer
July 3, 2008

Open Text has acquired the assets of Spicer Corporation for $12 million. About 30 Spicer employees will join Open Text and form the core of the company's new content viewer solutions group.

Spicer Corporation had operated as a division of PrinterOn since 2000. The company traces its history back to 1983 when Steve Spicer -- who died a year ago (see July 2007 digest) -- founded a one-person software company while he was a mechanical engineering student at UW. It became Spicer Corporation in 1987. Spicer founded PrinterOn in 2000 and Spicer Corporation was folded into the new company when it closed its initial round of funding.

PrinterOn will continue with its mobile printing business.

[4]---------------------------------------------------------------
Com Dev sales jump 40%
June 12, 2008

A strong quarter for Com Dev, with sales of $54.2 million in the period ended April 30 (Q2 08). Sales were up 21% from the previous quarter and 40% from a year ago. Net income in the quarter was $2.0 million.

Com Dev booked $42 million in new orders in Q2 -- up from $33 million last quarter -- and ended the period with an order backlog of $120 million.

Operations used $1.9 million in cash and the company spent an additional $2.7 million on capital assets. It ended the quarter with $8.9 million in cash, down $5.4 million from the end of Q1.

Total R&D spending of $4.6 million was up 67% from a lull in the last quarter and back to the levels seen in the previous fiscal year. Gross margins of 22% were consistent with Q1 and the company expects to see them return to the 25-29 percent range.

Com Dev also announced that it is expanding its business and has started a $7 million program to enter the microsatellite business. The company says it will design and manufacture microsatellites (150 kg or less) that can be used in such applications as surveillance, security, environmental monitoring, scientific analysis and communications.

And the company has hired two new division presidents after reorganizing into four operating divisions on February 1. George Cwynar is now president of Ottawa-based Com Dev Canada. He was previously CEO of Mosaid Technologies. Michael Williams, who has been with Com Dev for 15 years, was named president of Com Dev International Products, based in Cambridge. Com Dev USA and Com Dev Europe are the other two divisions. COO Michael Pley oversees all four divisions.

Com Dev also reported that the special committee formed to review the company's historical stock option granting processes found that "certain directors, officers and employees" had received backdated options, or options that were priced lower than the market rate on the actual date they were granted. The committee said the option granting process was "characterized by informality and by a lack of definitive documentation" especially during the period of rapid growth following the company's IPO.

If that sounds familiar, it's because it was lifted verbatim from the report last year by RIM's committee that looked into that company's option granting practices (actually, the Com Dev committee inserted an additional "by"). But unlike RIM, which had to restate its historical earnings by US$250 million, Com Dev says that it will not require any restatements.

[5]---------------------------------------------------------------
RIM quarterly sales top $2B
June 25, 2008

RIM reported earnings of US$482.5 million on sales of US$2.2 billion in the quarter ended May 31 (Q1 09). Sales were up 19% from the previous quarter and 107% from last year.

There were 2.3 million new BlackBerry subscribers in the quarter, bringing the total to over 16 million. RIM shipped 5.4 million devices and says it will cross the 40 million mark this quarter.

It ended the quarter with US$2.1 billion in cash.

RIM is forecasting sales of US$2.55-2.65 billion in the current quarter with a projected 2.6 million new BlackBerry users. It expects earnings to be around US$490-520 million.

RIM is involved in five new patent infringement suits filed in the quarter. The litigation section of its quarterly report is nearly five pages long.

[6]---------------------------------------------------------------
MKS reports record-setting quarter
June 3, 2008

It was only MKS' second profitable quarter in the last two years, but it erased a lot of the losses that preceded it, as the company reported earnings of US$4.7 million on sales of US$21.2 million in the period ended April 30 (Q4 08). Revenue was in line with the company's pre-announcement last month (see previous digest).

Sales were up 65% from Q3 and 67% from last year. On top of US$4.1 million in operating income, MKS' return to profitability also triggered an income tax recovery during the quarter.

Revenue for the quarter included the $5 million licensing deal that MKS announced in March with an existing automotive customer. MKS had 19 deals over $100,000 in the quarter, compared to seven in Q3.

For the 2008 fiscal year, MKS had record sales of $61.2 million, up 27% from 2007. On the strength of Q4, it was able to report earnings of US$3.8 million for the year.

It ended the year with US$12.9 million in cash, up US$2.3 million from the end of Q3, and the current quarter should be a good one for cash flow, since MKS ended the year with an abnormally high level of receivables (because of the high level of Q4 sales), which it says has now been reduced to normal levels. In Q4, operations provided US$3.2 million in cash and, as usual, MKS spent US$1.0 million on dividends.

[7]---------------------------------------------------------------
STOCK REPORT: Sandvine rebounds; Dalsa tops for '08 at mid-point
June 2008

After spending most of the last six months at the bottom of our stock performance list, shares of Sandvine finally rebounded in June ... bouncing all the way to the top of the list. It was the first time since September that Sandvine's stock price showed a monthly gain. As of Friday's close, the stock was up another 9% so far in July.

For the month of June:

Sandvine [TSX: SVC] +21%
ATS [TSX: ATA] +20%
RDM [TSX: RC] +13%
Virtek [TSX: VRK] +2%
Biorem [TSXV: BRM] 0%
===============================
--S&P TSX VENTURE INDEX -1%
--S&P TSX COMPOSITE INDEX -2%
MKS [TSX: MKX] -3%
Dalsa [TSX: DSA] -8%
Open Text [TSX: OTC] -8%
Com Dev [TSX: CDV] -10%
Descartes [TSX: DSG] -11%
TurboSonic [OTCBB: TSTA] -12%
RIM [TSX: RIM] -13%
Arise [TSX: APV] -21%

With the gains, Sandvine jumped ahead of Descartes on the market capitalization list (see below).

RDM shares, which have also been off to a terrible start in 2008, had their best month in nearly a year and a half.

Investors didn't respond well to RIM's quarterly results and forecasts, even with the company expecting about a half-billion dollars in profits this quarter. The drop came after four consecutive months of gains, over which the price of RIM shares jumped by 46%.

There were no gainers among companies with core operations outside the area:

===================================
Ansys [Nasdaq: ANSS] -0%
NCR [NYSE: NCR] -5%
McAfee [NYSE: MFE] -6%
ON Semiconductor [Nasdaq: ONNN] -7%
Oracle [Nasdaq: ORCL] -8%
Sybase [NYSE: SY] -8%
Google [Nasdaq: GOOG] -10%
Adobe [Nasdaq: ADBE] -11%
Agfa-Gevaert [Brussels: AGFA] -16%
Blue Coat [Nasdaq: BCSI] -22%

We've reached the half-way point of 2008, and here's how the shares of local companies have fared so far this year:

Dalsa [TSX: DSA] +51%
ATS [TSX: ATA] +43%
Virtek [TSX: VRK] +31%
MKS [TSX: MKX] +14%
RIM [TSX: RIM] +6%
--S&P TSX COMPOSITE INDEX +5%
Open Text [TSX: OTC] +4%
===============================
--S&P TSX VENTURE INDEX -7%
Com Dev [TSX: CDV] -9%
Biorem [TSXV: BRM] -10%
Descartes [TSX: DSG] -18%
TurboSonic [OTCBB: TSTA] -35%
Arise [TSX: APV] -39%
RDM [TSX: RC] -42%
Sandvine [TSX: SVC] -63%

Even with a good June, Sandvine shares were easily the worst performer over the first half of the year. They were on the top of this list a year ago, followed by Arise, but neither stock was able to keep its momentum into 2008. Shares of Dalsa, ATS, and Virtek all had a rough year in 2007 and have started to bounce back.

Market capitalization at June 30
in millions, using outstanding shares
(Year-to-date change in parentheses):

1. RIM ----- $69,949 (+$6,803)
2. Open Text ----- 1,669 (+74)
3. ATS ----- 572 (+173)
4. Dalsa ----- 242 (+83)
5. Com Dev ----- 225 (-22)
6. Arise ----- 197 (-55)
7. Sandvine ----- 193 (-330)
8. Descartes ----- 181 (-39)
9. MKS ----- 78 (+9)
10. RDM ----- 33 (-23)
11. Virtek ----- 18 (+4)
12. Biorem ----- 11 (-1)
13. TurboSonic ----- 8 (-4)

[8]---------------------------------------------------------------
Miscellaneous Tidbits

It hasn't exactly been announced yet, but Avvasi apparently closed its first round of funding, with Celtic House among the investors. Celtic House added Avvasi to its portfolio list during the month.
Zoomii had its official launch in June. The online bookstore features a real-world bookstore user interface that links to Amazon for order processing. It's been impressing audiences at BarCamps and other events over the last year. Zoomii was founded by Chris Thiessen, who previously worked for Intellitactics and AdExact. http://zoomii.ca and http://zoomii.com
The three founders of ProductWiki -- the brother-sister/wife-husband team of Omar Ismail, Amanie Ismail and Erik Kalviainen -- are finalists for the young entrepreneur award at the Ernst & Young-sponsored Ontario Entrepreneur Of The Year Awards. They are the only nominees from this area for any of the nine awards. In fact, 80% of the finalists are from the GTA. Winners will be announced in October.
Well.ca founder Ali Asaria was named one of the Guelph Mercury's "forty under forty -- people making a difference."
Dalsa founder, chairman, and CTO Savvas Chamberlain was inducted as a fellow of the Canadian Academy of Engineering at an awards ceremony in Montreal.
Adel Sedra, dean of engineering at UW, has become a director of Dalsa. He succeeds Doug Barber, co-founder of Gennum, who had been on the board since 2005.
LiveHive has partnered with Nissan to create "Nissan Make the Call" interactive games that will run online during CFL broadcasts through the season.
HighJump Software is apparently cutting the size of its Waterloo office as part of a company-wide reorganization, following its acquisition by a VC/PE firm based in the Boston area. The company came to town through the acquisition of Waterloo's Global Beverage Group in 2006. At that time HighJump was part of 3M, which sold the business to Battery Ventures in May. Global Beverage Group was spun out of Descartes in 2000 after Descartes decided to recast itself as a pure web services business. According to the Minneapolis Star Tribune, HighJump plans to cut as much as a quarter of its workforce. The report says the company will focus on acquisitions for new products rather than creating them internally.
LoyaltyMatch was featured in a story in the New York Times travel section. The story was about two companies with websites that allow users to use loyalty program points in new ways. I'm not sure the writer realized that both companies are from Southern Ontario. LoyaltyMatch was identified as a Waterloo company, and the other -- Points.com -- is based in Toronto.

Proposed copyright amendments fall far short

2008-06-24T20:00:00.001-04:00

It's been a couple of weeks since the federal government introduced its long-awaited—or dreaded—amendments to the Copyright Act. As was feared, the bill is inconsistent and leaves Canadians vulnerable to pay outrageous damages for activities that no one could reasonably confuse with piracy.

To give one example, you come home with a new CD and a new DVD. You load them both on to your spacious hard drive to play them on your computer or to transfer them to an iPod or other mobile device. Under the proposed new law, you're probably okay with transferring the CD, at least for most CDs now in stores (record companies could decide at any time to change that—it would now be entirely up to them). With the DVD, on the other hand, you could face a lawsuit for at least $20,000 in damages, and possibly several times that, depending on who sues you. And those are just statutory damages—there could be punitive damages as well. Even the tools you used to copy your DVD to your hard drive or mobile device would be banned under bill C-61. And if record companies decide they don't want you putting music on your iPod, with a simple change on their end, you could face a $20,000 lawsuit there as well.

There's no shortage of scenarios online illustrating dire consequences of the proposed legislation—even for legitimate personal use. Larry Borsato has some observations here, Alec Saunders gives his own example here, and, of course, Michael Geist's blog and Howard Knopf's blog are chock full of comments.

Even putting those scenarios aside, C-61 is a failure. All along, we were told by the government that that amendments were needed to bring Canadian copyright law into the 21st century. But C-61 focuses on 20th century technologies—ones that will still be with us for a while, but whose days are numbered. At the same time, it either ignores the networked technologies on the horizon or explicitly removes them from the exemptions contained in the bill.

At best, this is copyright legislation for the last decade, not for the future. The government chose to avoid any serious rethinking of what copyright law should look like and will need to look like. And it's understandable that they wouldn't want to take that on—it wouldn't be easy. But what we got instead was superficial tinkering. I don't know if it's even paving the cow paths so much as throwing some gravel onto them. We're going to have to go through this all over again before too long.

Copyright law is a minefield at the best of times. One of the challenges is that these laws have been violated by nearly everyone, and we didn't need digital technology to get to that point. Photocopiers, tape recorders, and VCRs have been used for decades in ways that were not Copyright Act-approved. Canada has never even had laws that allow people to tape TV shows to watch at another time—something that is only now being introduced with C-61 ... now that people have been time shifting for more than 20 years.

But copyright laws are like speed limits—we seem to be okay with having them on the books as long as their enforcement is less than zealous. While it was never spelled out in the Copyright Act that you wouldn't get in hot water for time shifting or many other copyright violations, it was commonly understood that there was almost no chance that you would face prosecution or a lawsuit.

Unfortunately, we now have industries with outdated business models chomping at the bit to sue as many people as they can for as much as possible. That's the danger of tinkering around with copyright law at this time. Imagine how life would be if an industry association could file suit against you every time they thought they had evidence that you'd gone above the speed limit. If the government was determined to go ahead and cross this minefield, it owed it to Canadians to be very careful about what acts would be allowed or disallowed under its proposed reforms, but C-61 just isn't well thought out or precisely worded.

In the U.S., more than 20,000 people have already been sued by the recording industry. One woman was recently ordered to pay nearly a quarter-million dollars in damages for having about two CDs worth of songs in a shared folder on her computer. It looks like the government was trying to avoid these kind of situations for Canadians when it created a $500 statutory damages cap for personal use infringement. And that would be great. Unfortunately, the current language of the bill is too convoluted to provide any comfort that this would be a real cap. If that's the government's intention, then it should be easy to clarify the language through amendments.

With any contentious legislation, you have to make decisions around whose advice you're going to ignore. The problem here is that the government chose to ignore—or at least give less priority to—what was best for Canadians and brought forth legislation that only please a small number of industry groups (CRIA, CMPDA) while trying to placate Canadians with a few soundbites—throwing them a couple of bones around format shifting and time shifting, which has been an everyday practise for decades, even if it was never formally supported by legislation.

Yes, this bill could have been worse, but it should have been much better. If the government wasn't willing to tackle the deeper issues around copyright law, it should have just left the whole thing alone. But the U.S. lobbyists weren't going to let that happen, so we got what you'd expect from a half-assed process and a desire to appease the lobbyists—even if it was at the expense of Canadians.

Instead of spending his time tinkering around with copyright laws, I wish Industry Minister Jim Prentice had focused on providing more resources for IRAP. It's one of the most important programs in Canada for bringing our economy into the innovation era—and has been a great help to startups in Waterloo Region. Unfortunately, the program has run out of money just two months into its fiscal year. If Prentice really wants to do something that will benefit Canadians, he can let C-61 die on the order paper and put his support behind IRAP.

Why start a startup?

2008-06-03T17:20:00.002-04:00

The third StartupCampWaterloo will be starting soon—kicking off with a panel discussion of "why start a startup?" Maybe some startup founders will say that they needed some convincing on that question, but I suspect that if it's something you need to have answered, then maybe creating a startup isn't the best thing for you.

It's always going to be easier being employee #57 or #5,700 where you can have your job description and be given tasks to perform—maybe in a skillful way, but within a framework that is planned and managed by others. Every two weeks, money gets deposited in your bank account, even if you've been in a rut and have only been moderately productive. Want to go to a business event? Feel too sick to work? That's fine, you still get paid your full salary—no money comes out of your pocket. On top of that, you're guaranteed a paid vacation every year and probably have at least a basic benefits package.

It's a pretty good deal and one that most people are happy to take.

Forget all of that with a startup, at least at the beginning. But that's a big part of the appeal. You don't have a job description (or, if you do, it's pretty fuzzy) and you get to do things that no one in their right mind would hire you to do—developing a lot of new skills. You don't have to write a resume and go on job interviews to be asked silly questions hoping that someone will recognize your talents. You work with people you want to work with on the products of your choosing (preferably with a lot of market input) where you get to decide the strategy and how you'll execute. And you never have to stare at the clock and wish it was 5pm.

It's not for everyone, and if your startup grows into a bigger company, some of the freedom of the early days goes away, but for many people who have been there, there's no going back to being employee #57.

Waterloo Tech Digest - June 2, 2008

2008-06-02T00:47:00.007-04:00

Compiled and written by
Gary Will
gary@garywill.com

In this issue:

Funding for Igloo & Arius; details about Well.ca
RIM creates $150M investment fund
Virtek receives acquisition offer from U.S. firm
MKS quarterly sales jump 67%
Descartes sales continue at steady pace
Arise reports $5M loss, plans to spend $16M on Waterloo site
STOCK REPORT: Virtek, Sandvine repeat as best/worst performers
Miscellaneous tidbits from Google, NDI, Com Dev

Advertising note: For people who have asked about advertising in the Tech Digest -- spots only become available once or twice a year, and this is one of those times. If you want to get a message in front of 5,000 people with an interest in the Waterloo tech community, and don't compete with any existing sponsors, just send me an e-mail and I'll give you more information. I think all but one of the sponsors we've ever had have renewed, some of them for years.

--Gary Will

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[1]---------------------------------------------------------------
Funding for Igloo & Arius; details about Well.ca
April 23, May 8, 23, 2008

Two new fundings were disclosed in May, along with details about Well.ca's previously-announced funding:

Igloo Inc. -- a spinoff from the Centre for International Governance Innovation (CIGI), which became a for-profit corporation in March -- has received $4 million from RBC Venture Partners. Joining Igloo's board is Kevin Talbot, managing director of RBC Venture Partners. Jim Balsillie is also a director. According to Igloo, its platform is now being used to support more than 550 online communities.
Arius Software raised $570,000 from 12 investors on April 28, according to OSC reports. No details were announced by the company.
Details about the Well.ca reported in the last digest: according to the OSC, the company raised $2 million from two common share investors in April and followed with another $425,000 from six preferred share investors on May 23. Well.ca has said that the number reported by the OSC for April is innaccurate.

[2]---------------------------------------------------------------
RIM creates $150M investment fund for mobile apps
May 12, 2008

RIM, in partnership with Thomson Reuters and RBC, has created the $150 million BlackBerry Partners Fund. The fund will be managed by Toronto's JLA Ventures and RBC Venture Partners and will invest in a variety of mobile applications and services. It will not limit its investments to applications that run on the BlackBerry.

The fund is looking to make investments in companies anywhere in the world that are developing applications for "mobile commerce (payments, advertising, retailing, banking), enterprise applications, communications, social networking, location-based services (navigation and mapping), media and entertainment, and lifestyle and personal productivity applications."

[3]---------------------------------------------------------------
Virtek receives acquisition offer from U.S. firm
May 13, 2008

New Hampshire-based photonics company StockerYale has made an offer to acquire Virtek for about $22 million. That's nearly 50% above the level that Virtek stock was trading a month ago and is about where the company was valued last September. StockerYale says it made the offer on May 13 and Virtek announced it three days later.

StockerYale proposes to pay Virtek shareholders 7.8 million shares of StockerYale stock (just under 20% of the company) with the balance of the price -- about $16.5 million -- to be paid in cash.

StockerYale shares trade on Nasdaq and the company has a market capitalization of about US$27 million. It has a Canadian office in Montreal. Over the last twelve months, it lost US$9.0 million on sales of US$30.5 million. StockerYale only had US$2.4 million in cash as of March 31, but it says it has a "non-binding indication of interest" from a lender to provide the funds for the acquisition.

Virtek said its board would meet during the week of Victoria Day to decide what action it would take in response to StockerYale's offer. So far, there has been no further announcement from either company.

[4]---------------------------------------------------------------
MKS quarterly sales jump 67%
May 6, 2008

MKS announced that it will be reporting sales of about US$21 million in the quarter ended April 30 (Q4 08) -- a 64% jump from the previous quarter and a 67% improvement from last year. It expects to report income before taxes of US$4 million, up from a loss of US$762,000 in Q3.

Part of the revenue jump was a $5 million licensing deal that the company announced in March and which was fully recognized in the quarter. Full Q4 results will be announced on Tuesday.

[5]---------------------------------------------------------------
Descartes sales continue at steady pace
May 29, 2008

Descartes reported earnings of US$1.1 million on sales of US$16.3 million in the quarter ended April 30 (Q1 09). Sales were up 2% from the previous quarter and -- driven by acquisitions made over the last 12 months -- up 23% from last year.

The company ended the quarter with US$46.9 million in cash, up US$2.8 million from the end of Q1. Operations provided US$3.4 million in cash in the quarter.

[6]---------------------------------------------------------------
Arise reports $5M loss, plans to spend $16M on Waterloo site
May 15, 2008

In its final quarter before its PV cell manufacturing facility opened in April, Arise reported a loss of $5.4 million in the quarter ended March 31 (Q1 08). Accumulated deficit stands at $28.6 million.

Arise now has $27.5 million in inventory on its books after paying about $26 million for silicon wafers in March.

It finished the quarter with $6.6 million in cash, but has since raised gross proceeds of $45.1 million through a share offering that close in May (see previous digest). Arise says it will spend about $20 million of those funds on additional silicon wafers and will spend $16 million on a new silicon manufacturing facility that will be built in Waterloo.

[7]---------------------------------------------------------------
STOCK REPORT: Virtek, Sandvine repeat as best/worst performers
May 2008

MKS must be wondering if anyone reads its news releases. It announces a huge quarter and the company's stock actually falls by one cent on the day the announcement is made. So the news was sent out again the next day, this time to better results, but MKS stock was still down slightly for the month. This comes after the company's announcement of its $5 million licensing deal in March which got no response from investors for over two weeks (and when the stock did finally jump, it was fuelled by insider buying).

The Virtek acquisition proposal helped push the company's shares to the top of our list for the second straight month. Virtek stock is now up 46% over the last two months.

For the month of May:

Virtek [TSX: VRK] +23%
RIM [TSX: RIM] +12%
--S&P TSX VENTURE INDEX +8%
--S&P TSX COMPOSITE INDEX +6%
Descartes [TSX: DSG] +1%
Com Dev [TSX: CDV] +1%
Biorem [TSXV: BRM] 0%
===============================
MKS [TSX: MKX] -1%
TurboSonic [OTCBB: TSTA] -3%
Open Text [TSX: OTC] -5%
RDM [TSX: RC] -9%
Dalsa [TSX: DSA] -10%
Arise [TSX: APV] -11%
ATS [TSX: ATA] -11%
Sandvine [TSX: SVC] -16%

It was another bad month for Sandvine shares, which finished at the bottom of the list for the fourth month in a row and the fifth time in the last six months.

RIM ended the month with a market value of $77.5 billion, adding the equivalent of an ATS plus Dalsa plus Com Dev plus Arise plus Descartes plus Sandvine to the total in May.

Companies with core operations outside the area:

ON Semiconductor [Nasdaq: ONNN] +32%
Adobe [Nasdaq: ADBE] +18%
Ansys [Nasdaq: ANSS] +18%
Oracle [Nasdaq: ORCL] +10%
McAfee [NYSE: MFE] +9%
Sybase [NYSE: SY] +9%
NCR [NYSE: NCR] +7%
Agfa-Gevaert [Brussels: AGFA] +4%
Google [Nasdaq: GOOG] +2%
===================================
Blue Coat [Nasdaq: BCSI] -14%

That's two months in a row of 32% gains for ON Semiconductor.

[8]---------------------------------------------------------------
Miscellaneous Tidbits

Roger Skubowius has left Google, three years after the company acquired Reqwireless, which Skubowius founded in 2001.
Jamie Fraser is the new CEO of NDI. He succeeds David Crouch who announced his plans to retire from the position when NDI was acquired by Audax Group in December. Fraser had been SVP at Connecticut's Amphenol Corporation, an $8 billion, Nasdaq-listed company. He had been with Amphenol for more than 10 years.
Com Dev completed its US$12.2 million acquisition of the passive microwave devices product line from L-3 Communications (see February digest).

Waterloo startups finding money close to home

2008-05-21T18:23:00.001-04:00

Toronto lawyer Suzanne Dingwall Williams wrote a piece for the CVCA blog this week lamenting how often the startups she works with choose to seek investment from American VCs over their Canadian counterparts.

If that's the case, it sounds like another significant difference between the Toronto and Waterloo startup communities. In these parts, if you go much farther than Toronto to look for early stage capital you risk being accused of being exotic. It happens, but not often. Of the six seven-figure seed/early-stage deals we saw last year, I think only one involved a foreign investor. That seems to be consistent with the national statistics, which saw most foreign investment being put into later stage deals.

In the same post, Dingwall Williams also writes about the reputation of Canadian VCs being tarred by American brushes, but from a Waterloo perspective, I'd be shocked if one startup founder in ten here knows anything about Blackstone and Stephen Schwarzmann, to use the example she cites. Actually, my guess is that's true in Toronto as well. Some may be aware that VCs have been very well paid and that -- with some exceptions -- they haven't come close to delivering results consistent with that compensation. But that's made-in-Canada tar. The CVCA and others have published rates of return for Canadian VCs and the numbers don't paint a flattering portrait of the industry. There may have been an emperor-has-no-clothes epiphany on the part of LPs and entrepreneurs toward Canadian VCs but, from what I've seen, this has had more of an effect on LPs than on startup founders.

From any perspective, I don't agree with her view that startups should feel a "moral imperative" to get funding from Canadian VCs. That's straight out of "buy Canadian" campaigns that encourage you to buy products that you would otherwise avoid just because it might help keep people employed and extend the amount of time they spend making second-rate products. If that's the best pitch we can make for Canadian VCs we might as well just shut the whole industry down now. [Actually, with Canadian VCs collectively showing almost zero rates of return, from a strictly economic perspective it would have been better if we had let American VCs make those investments and put our money to more productive use. I wouldn't recommend that either. :-)]

Startup entrepreneurs should go where they can get the best deal for their companies. Fortunately, that will often be with a Canadian VC. What we do seem to be seeing, though, is that a greater percentage of startups today are companies where bootstapping or sub-VC funding are all that's needed to get a product to market, and often to get companies to a point where they are acquired (usually by American firms; at that point you don't hear many complaints about foreign ownership). Of those six deals from 2007 I referred to, only one of them involved a VC, and even that also included angels.

For that reason, there has been the disconnect between startups and VCs that Dingwall Williams refers to. But that's okay. Not all promising startups need VC funding. That was really an artifact of the boom years. As long as companies get the funding they need, I'm not going to lament that a shrinking percentage of startups are paired with a VC.

Unfortunately for the Canadian VC industry, many of its current problems are linked to matters of history that can't be rewritten with better mission statements and promotional campaigns (although, on the subject of marketing, I think Rick Segal has done an amazing job of both getting himself over and improving the reputation of the entire Canadian VC industry). But the message from startup entrepreneurs I'm hearing in Waterloo is more that they often don't see the need to work with VCs, not that they are avoiding Canadian VCs in favour of American investors.

BlackBerry fund looks to startups for innovation

2008-05-19T15:14:00.002-04:00

With the new BlackBerry Partners Fund, RIM is putting its money and brand behind an initiative to look for innovation in the entrepreneurial world of startups, helping fund new companies that will create and develop innovative technologies and products.

RIM is Canada's largest company by market value and is now one of the 10 most valuable companies on Nasdaq—a list headed by Microsoft and Google in the top two positions. With its size and resources, it could have pursued any approach to innovation that it wanted, and it chose to put its support behind startups.

It could have allocated the money to university professors and told them to stop what they were working on and focus their efforts on coming up with a bunch of patents ... which RIM might then incorporate into its products.

Or it could have invited companies to rummage through RIM's patents—particularly any that aren't being used—to see if there was something there that they'd like to try to commercialize.

But it didn't do either, and there's a lesson there, particularly for government. While government policies and programs for high-tech startups have improved significantly over the last few years, there is still a tendency to think that "innovation" is something that primarily happens at universities and research labs, and that these institutions should be focusing on generating patents while the government helps create an infrastructure to push institutionally-created intellectual property into the business realm.

With the BlackBerry Partners Fund, RIM again shows that it understands that innovation isn't just something that is transferred to startups, it is something created by startups of all kinds.