Good article on Dalsa;
Dalsa leads industrial imaging shift
Due North
June 15, 2000
by Bob Beaty
When does a computer need eyes?
More often than you'd think, whether it's to sort mail by postal code or to
ensure that a computer chip is up to spec.
These tasks are accomplished with a technology called image capture, the
bread-and-butter of Ontario, Canada-based Dalsa Corp. (DSA). Using a suite
of proprietary imaging products based on its Charge-Coupled Device (CCD)
technology, Dalsa can scan and sort printed material moving at 1100 feet per
minute, helping doctors detect abnormal cells or semiconductor companies
quickly inspect chips.
The technology can even be used to check the integrity of baby bottles on a
production line. Is that low-tech? Sure, but it's just as important -- if not more
so -- than many higher-tech applications.
Ambitious financial goals
Dalsa's stated goal is to deliver revenues of C$100 million by 2002. Fiscal
1999 revenue was C$38million, so a 40 percent growth rate must be achieved
annually to meet its goal.
First quarter 2000 revenue came in at C$10 million versus C$7.2 million for the
same period 1999. The company lost C$0.215 cents a share in the quarter due
to two 1999 acquisitions, of complimentary imaging company Silicon
Mountain Designs for US$11.5 million and medical imager MedOptic for
US$4.5 million.
Operating earnings for the quarter were C$0.13 with those acquisitions
stripped out. Operating earnings for fiscal 1999, pre-Silicon Mountain, were
C$0.47 cents. The company's market cap is C$100 million based on the
stock's Wednesday closing price of C$9.
Semiconductor analyst Byron Berry of Yorkton Securities in Toronto sees
Dalsa as sharply undervalued and rates the shares as a "strong buy" with a
12-18 month target of C$13.
His earnings projection for 2000 is C$0.65, which translates into a
price-earnings ratio of 14 with the current C$9 stock price. Berry sees Dalsa
as a consolidator in the scanning and sensor market, which he projects will
be worth US$1.4 billion by 2004.
With Dalsa's extensive CCD product line and upcoming Complimentary
Metal Oxide Semiconductor (CMOS) imager technology, the company not
only sells the product, but also the scanning and sensor solutions that can
be tailored to any technology.
That's why it is best described as a services/consulting company that just
happens to make its own hardware.
The client list includes OEMs all over the world including IBM (IBM), Kodak
(EK), Boeing (BA) and Hewlett-Packard (HWP).
Snazzy cameras generate excitement
Dalsa has been developing CMOS technology for the last decade. The
company has refined the technology, which has been hampered by
image-quality problems, into a line of high-resolution cameras and sensors to
be rolled out in the second half of 2000.
The first of these, the 2000x5100 TL-50 camera, can be used for industrial
applications similar to those of the company's CCD technology and will
allow users to conduct field inspections of remote sites (manufacturing lines
and facilities, for example) over the Internet.
Good buyout choices
Dalsa made good choices for its acquisitions. Silicon Mountain brought
complimentary technical expertise and an expanded customer list. MedOptic
contributed the development of a new digital X-ray camera for
mammography biopsy applications without the need for film that can be
retrofitted to the more than 10,000 existing biopsy systems. Once FDA
approval is secured -- scheduled for the fourth quarter 2000 -- the camera will
be in full production.
Dalsa's strength lies in the explosive need for industrial quality control,
remote sensing and cutting-edge imagery in key areas such as medical
diagnosis. The new competitive paradigm dictates that cost control and
efficiency are just as important to the bottom line as sales.
Dalsa appears to be a leader in that shift. |
