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Gold/Mining/Energy : Linmor: managing voice & data networks -- Ignore unavailable to you. Want to Upgrade?

To: Marc who wrote (170)	9/5/2000 1:08:51 PM
From: sPD	Read Replies (1) \| Respond to of 177

"Linmor on rise stage of roller coaster" Larry MacDonald Citizen Special - Monday, September 4, 2000 ottawacitizen.com Practitioners of technical analysis might have felt their pulses quicken at the sight of trading activity in the shares of Linmor Inc. (LIR/CDNX) in August. The jump in share price on heavy volume was likely a buy signal for them. Technical analysts might have also been encouraged by the fact that the upleg started from a low that was higher than the previous low established last fall. A pattern of successively higher basing periods is usually seen as a bullish sign, an indication that the underlying uptrend is still intact. Although the recent appreciation in share price is a welcome respite for Linmor investors, they must be feeling like they have been on a roller-coaster ride over the past 12 months. Last winter, the price of Linmor shares soared from $0.40 to $3.00, but then slid back to $0.75 by the middle of summer. With the recent breakout, the share price is above a dollar. Ottawa-based Linmor provides performance management software that allows telecommunication firms and network service providers to monitor their data networks. Linmor's flagship product is NEBULA, which checks and reports on the speed, throughput and other performance aspects of core networks including Internet Protocol, ATM and frame relay. NEBULA also monitors the performance of access networks such as Digital Subscriber Line (DSL), wireless Internet and Internet over cable. NEBULA allows network managers to respond proactively to problems. It is unique in providing this capability at the carrier level. Most performance management systems have their origins in enterprise networks and are hard-pressed to meet scalability and real-time surveillance requirements at the carrier level. Not NEBULA. It can also monitor performance regardless of the technology or manufacturer behind the various components comprising a network. Supplying products used in conjunction with the Internet, Linmor seems well positioned for rapid growth. As president and chairman John Farrell stated in a letter to investors: "Due to the phenomenal growth of the Internet, network service providers are seeing that their data network services are now surpassing their voice network services. This increased demand for data network services means increased demand for our NEBULA products." Market research firm Yankee Group agrees with the favorable outlook. They estimate that the performance management software market in the United States will be worth $1.3 billion U.S. by 2003, compared with about $500 million in 1999. Given the positive news coming out of the company recently, it is little wonder that Linmor shares are now regaining some lustre. A big boost was the Aug. 22 announcement that TELUS Communications Inc., Canada's second-largest telecommunications company, had selected NEBULA to manage the performance of its ATM core and access networks. This order came two weeks after Linmor landed a $300,000 U.S. order from another service provider. The TELUS contract is another addition to Linmor's growing list of blue-chip clients. As a result of deals signed in the last fiscal year, the company's software is presently being used by AT&T Corp., MCI WorldCom Inc., NEXTLINK Communications Inc., and Cable & Wireless HKT Ltd. This customer base is set to expand and deliver a dominant market position according to the Aug. 22 press release, which states: "With other announcements on the way, Linmor's NEBULA product is rapidly establishing market leadership." There was another good news item Aug. 8, when Linmor released its results for the quarter ending June 30. Revenues rose over the corresponding quarter of last year by 64 per cent, to more than $500,000. Net loss for the quarter was more than $2.5 million, primarily due to staff increases in sales & marketing (100 per cent) and research (54 per cent). During the quarter, an equity financing of $15 million was closed, and convertible debentures were converted into common shares (leaving the balance sheet debt free, and removing $750,000 interest expense from the income statement). During the quarter, a partnership was arranged with IPmobile Inc., a wireless router company (which Cisco Systems Inc. recently acquired). In co-operation with IPmobile, Linmor announced the availability of the first real-time performance management system for wireless Internet access networks. Linmor also declared that its NEBULA product would provide reporting modules for Hyperchip Inc.'s petabit carrier-class routers. For the fiscal year ended March 31, 2000, revenue was $3 million, an increase of 225 per cent over fiscal 1999. With the company still in rebuilding mode, the loss for fiscal 2000 was $3.3 million, compared with $4.6 million in fiscal 1999. Although Linmor is currently experiencing large losses, it is going through a corporate repositioning that may be on the verge of paying off. Strong revenue growth in fiscal 2000 and the first quarter of fiscal 2000, in particular, is indicative. "The market for our highly scalable, real-time performance monitoring system for managing the Internet network infrastructure has truly arrived," says Mr. Farrell. "The momentum from major customer wins, the enhancements to our technology and the strengthening of our corporate infrastructure mean that Linmor is poised for even greater success in fiscal 2001." Larry MacDonald is author of Outperforming the Market: A Case Study Approach. He can be reached at larrymacdonald@hotmail.com.