From SH and Calgary Herald:
Web frenzy hits close to home
Several Calgary firms vying for success on the 'Net
Charles Frank, Calgary Herald
Calgary Herald / Jim Perry, President and CEO of Global Thermoelectric.
Calgary Herald / Hatim Zaghloul chairman of Wi-Lan Inc.
Calgary Herald / Art Price is President and CEO of Axia NetMedia Corporation.
Calgary investors who want to get in on the information, Internet and technology craze sweeping North American markets can find an intriguing cross-section of small and mid-sized investment prospects right in their own backyard.
"If you go back about 20 years, you can trace the genesis of these companies to the first round of serious downsizings in the oil and gas industry," says Brian Pow of Acumen Capital Partners.
"A lot of people took their entrepreneurial attitude and their severance packages and began looking for ways to develop different ideas and products."
Some failed. But others succeeded, setting the scene for what Pow calls today's Third Wave of companies.
Included in that wave are firms like wireless technology developer Wi-Lan Inc., business to business internet service provider Burntsand Inc., language processing computer firm Zi Corp., internet multi-media conglomerate Axia NetMedia Corp. and internet information manager Net Shepherd.
Also included are new age industrial technology companies like fuel cell developer Global Thermoelectric and surge protection manufacturer Circa Enterprises Inc.
All have been making their presence felt in international business markets and on North American stock markets.
Wi-Lan, for example, has been one of Canada's most talked about technology issues since its shares began trading on the Toronto Stock Exchange last November. The company, which began trading on the Alberta Stock Exchange in March 1998, closed at $16.47 after its first day of trading on the TSE, and hasn't looked back since, hitting a high of $69 this week before closing Friday at $60.
So far this year, its shares have climbed 73 per cent.
And Wi-Lan chairman and chief executive Hatim Zaghloul says the company intends to continue through 2000 the aggressive acquisition and development policy that captured investor interest last year.
A similar path is being forged at Axia by former Husky Oil president Art Price, who has guided the internet information provider's shares to more than $18, an increase of 95 per cent since Jan. 1.
Global Thermoelectric, which is the world's largest manufacturer of remote power generators and is busy developing a solid oxide fuel cell that could power automobiles, has seen its shares jump from 95 cents in April 1999 to more than $25 this week.
And company president Jim Perry recently announced the successful testing of a solid oxide fuel cell that he believes could one day be used to create electricity and heat in residences.
Zi Corp., which makes linguistic software for the Internet, has seen its share prices soar from $1.50 in July 1999 to more than $57.
Little known Circa, which has been around for 17 years and has two per cent of the North American surge protection market, saw its shares almost double this week.
Burntsand which is aiming to capitalize on the exploding $1 trillion market for business to business has jumped 94 per cent since the start of the year, while internet information manager Net Shepherd has seen its shares increase by 17 per cent.
"A number of factors have come together for these companies," says Pow.
"First off, investors in Western Canada have become more savvy. When they weren't getting the returns they wanted in more traditional sectors like oil and gas, they put their money into these companies."
When those investments proved successful, investors took some of their profits and re-invested in other new companies, says Pow.
He also says the Alberta Stock Exchange's highly successful junior capital pool program helped funnel badly needed investment dollars into startup businesses, and the Canadian Venture Exchange, created by the merger of the ASE and the Vancouver Stock Exchange last November, has further heightened investor interest in Canada's burgeoning technology industry.
In particular, investors across North America, looking to find knowledge-based investment opportunities but unwilling to pay the premium accorded higher flying big cap stocks, have taken an interest in Calgary's bumper crop of emerging small cap companies.
Small cap companies are generally considered to have share floats of between $500 million and $1 billion in value.
"I've had calls from investors in San Francisco, New York, Florida and Texas, looking for information about local companies," says Pow. "As the stories about these companies get out, people come looking."
Martin Ferguson of Mawer Investment Management points out that a Calgary address is irrelevant to the new generation of knowledge-based companies that are essentially "selling to the world."
"That's the nature of the new economy."
The fact that U.S. brokerage houses like industry giant Merrill Lynch are now covering -- and in some cases recommending -- more Canadian information and technology companies has also helped fan the flames of investor interest, says Ferguson.
He also says that in popular market sectors, when mainstream companies become too pricey, investors eventually begin pursuing smaller, sometimes riskier prospects.
That begs the question of how long investors -- who are notoriously fickle when markets are volatile -- will continue to chase information and technology issues.
"I think we're closer to the end than the beginning," says Ferguson. "But I don't think anyone has any idea when it will end."
Pow, however, suggests that the so-called high tech fever gripping North American markets could continue for another five years.
"We are seeing a fundamental shift to technology in the North American economy and companies that are first to market with ideas or products will be in continuous demand ," he argues.
"Keep in mind that the Internet didn't really explode until 1997-1998 and that the projected market for business-to-business services over the Internet, a market that is still evolving, is projected to be more than one trillion dollars."
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A cadre of Calgary high tech, Internet and industrial companies, offering a wide variety of products and services, have been making their mark on North American stock markets in the first six weeks of 2000. It's no surprise, given the city's burgeoning information age industry, say analysts.
Company / Stock symbol / Friday close / % Gain from Jan. 1, 2000
Axia Net Media / AXX / 18.10 / 95.6
Burntsand Inc. / BRT / 8.45 / 94.2
Circa Enterprises Inc. / CTO / 1.07 / 48.6
Global Thermo-electric / GLE / 24.00 / 84.6
Net Shepherd / WEB / 4.00 / 17.6
Wi-Lan Inc. / WIN / 60.00 / 73.4
Zi Corp. / ZIC / 57.30 / 89.7 |
