Certicom foresees decades of dominance
Canadian Press
Thursday, September 21, 2006
Toronto — Certicom Corp. is in the “prime sweet spot” to exploit decades of future data-security spending as information technology adopts cryptography in which it is “the undisputed world leader,” the company's CEO said Thursday.
Elliptic curve cryptography — ECC — an encoding technique based on the algebraic structure of elliptic curves, is benefiting from “an evolutionary generational shift” away from RSA, a long-dominant public key cryptography standard named from the initials of its developers and based on mathematical manipulation of prime numbers, Ian McKinnon told Certicom's annual meeting.
The U.S. National Security Agency last year established ECC as the standard for protecting unclassified government data, following its earlier adoption for classified information, McKinnon noted.
“We're already seeing this watershed decision drive adoption in the private sector,” he said, adding that it “will help ensure ECC adoption and Certicom's growth for many decades to come.”
Certicom predicts a $6-billion ECC-related market over the next five years, in operating systems, routers, databases and browsers as well as newer applications such as mobile devices, sheltering video and other media content, and securing factory-automation networks.
“When we say ECC is everywhere, we really mean it,” Mr. McKinnon said.
The Mississauga, Ont.-based company has more than 350 patents and files 15 to 20 new ones annually, Mr. McKinnon said, and “it's very, very difficult to implement and deploy an ECC-based solution without using technology that Certicom has been fortunate to have in its portfolio.”
Asked why the company remains unprofitable — it lost $1.2-million (U.S.) on revenue of $4.7-million in the May-July quarter — he cited a strategic decision to avoid “lumpy” one-time deals.
“We could make this company profitable on any given quarter by taking a large one-time royalty buyout,” he said.
Instead, multi-year recurring-revenue contracts, along with time-consuming product licensing design for specific customers, “will provide more consistent and predictable revenue.”
Certicom, with no debt and $42 million in cash after an equity issue in August, is looking for acquisitions in the “very highly fragmented” data security industry, Mr. McKinnon said.
Management is also aware that Certicom could be vulnerable to a takeover bid based on its current share value “versus the value of where we believe we can take the company over the next few years,” he said.
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