| Canadian High Tech |
Dateline: 8/17/98
Now that I'm back from our family vacation, let's get back into the swing of things again. This column marks the one year anniversary of the Investing (Canada) website at Mining Co. It's been an interesting learning experience for me and, hopefully, entetaining and useful for you as well. Thank you all for your interest and support.
Over the past year I've covered a wide range of topics, including investment fundamentals, mutual funds, taxation and RRSPs, bear markets, precious metals, book reviews and recently, high tech. The coming year will see much of the same, although there will be some shift in focus.
As readers of this column know, my favorite investment vehicle is mutual funds and I've included a monthly column on the topic. Recently I was "discovered", so to speak, and invited to do another investing web page. By special agreement with Mining Co., I accepted the offer and am now doing a weekly page devoted exclusively to mutual funds for Investor 1. It is updated Fridays.
I'll still do my monthly mutual fund feature here, along with my monthly charts, but the focus for the other weeks in the month will start taking a closer look at the stock market, particularly I'll start looking at various sectors in greater detail and will review individual stocks of interest. I started along this path recently with my feature on ATI Technologies.
This week's feature follows up on that with an overview of the Canadian High Tech industry, which is extensive.
Canada is a big, big country covering half a continent. It is the second largest country in area after Russia and spans over 5000 kilometres from east to west and over 4500 kilometres from north to south. Canada is larger than all of Europe combined.
No wonder then, that communications takes on such vast importance in this country. Canadians have long been the greatest per capita users of telephones in the world. And now they are also the greatest per capita users of the Internet.
Not surprsingly, the inventor of the telephone was Alexander Graham Bell, an expatriate Canadian. And not surprisingly, Canadian companies play a significant role in modern technolgy. Some of the biggest names in High Tech are Canadian. The aforementioned ATI Technologies is the world leader in graphics accelerators and related hardware. Newbridge Networks, Northern Telecom and Corel are other world class Canadian High tech firms.
But there are also many other less well know companies. This overview can't begin to cover them all, but will look at some of the major players and some websites covering the industry.
The best known players in Canadian High Tech (besides ATI Technologies) are Nothern Telecom, Newbridge Networks, Corel, Hummingbird Communications, and Cognos Inc. Here's a short note on each.
Northern Telecom, also known as Nortel, is a world leader in telecommunications networks. It produces infrastructure for both wired and wireless telephone and related systems, including the Intermnet. Nortel recently announced plans to acquire Bay Networks, a competitor to Cisco Systems. It's major international competitor is Lucent. In its publication of the Canaccord 100 for June 1998, Canaccord Capital rates Nortel as hold or reduce because of a huge runup in share value. At the time it was trading at $93.40. Friday it was trading at $79.60 so may be worth revisiting. Its listed on the TSE as NTL and on the NYSE as NT. Financials
Newbridge is powerhouse in the networking field, especially in ATM networks. Its primary competition is Cisco Systems, Lucent and Nortel. Its share price took a major hit in the first half of 1998 when it announced reduced revenues and earnings projections. Canccord looked for a decline from its then price of $44.25 to $35.00. It's currently trading at $33.80 having traded as low as $26.75. May be worth revisiting as well. Trades on the TSE as NNC and on the NYSE as NN. Financials
Corel is a well known international software manufacturer based in Ottawa. It's best know for its graphics programs like Corel Paint, as well as WordPerfect and related programs. (It's also the sponsor of the Corel Center where the Ottawa Senators hockey team plays.) The company has faced some hard times because of stiff competition from giants like Microsoft. Its share price is currently $2.20, near its low for the year of $2.05 which was reached intraday on Friday. Its high for the year was $9.05. It has made significant progress in reducing its losses since last year, but is still in the red. Stand clear for now, but if it moves back into the black, re-evaluate. It trades on the TSE as COR. Financials
This company, a leader in business connectivity solutions, is repositioning itself to compete in the much larger data warehousing market according to Canaccord. Its merger with Andyne moved it in this direction and reflects a shift from business connectivity to business intelligence tools. Canaccord rates it a buy in its June report when it was trading at $45.80. It's currently at $30.00 with a low P/E of 16.5. Investor Info
Cognos is another software manufacturer specializing in business intelligence tools. And this one is also based in Ottawa (often referred to as Silicon Valley North). Recommended as a buy by Canaccord when it was trading at $39.95, it is now trading at $33.00. It trades on the TSE as CSN and on NASDAQ as COGNF. Financials
These are just a few of the High Tech firms in Canada. There are many, many more ranging from Vancouver's Sideware Systems which makes a computer version of the sticky note to Alberta's Telus Corporation, the result of privatizing Alberta Government Telephones in 1990 to computer giant Geac. I can't go into all of them in this short space, but may do another visit to Canada's High Tech industry in the furure. Meanwhile, all the companies mentioned here are listed under the High Tech category of Net Links.
The Resources
There are a few excellent resources for investors trying to find out more about Canada's High Tech industry. They include the tabloid newspaper Silicon Valley North, which comes in three editions, one each for Ottawa, Toronto and Alberta. As can be discerned from the links, each edition has a website as well.
The Pacific Technology Network reports on news from the Pacific Northwest, including B.C., Alberta, Washington and Oregon. It includes information on technology categorized by sector (e.g. computing, biotechnology, aerospace, etc.) and a discussion forum.
Of course traditional resources like the Financial Post also have their high tech sections. The Computer Paper contains a wealth of news on the computer industry and recently added a section on Tech Enterprise which looks at companies in the field. The current issue features and article on ATI Technologies among other things.
For an American perspective on Canadian high tech, check out an article on "Upstart Canada" in the October 3, 1997 Red Herring. I recently picked up a copy of the mag on the news stand and its a good read - very informative.
These links should whet your appetite. Look for more to be added periodically to my High Tech links section.
Investing (Canada) Notes:
Thanks to all who participated in my survey the last two weeks. Although only seven people did the survey, two of whom sent me an email as well, the feedback will help me in setting priorities for this site. I'll include more surveys as part of these pages from time to time.