Financial Post headliner!Tuesday, November 02, 1999
Rosy outlook sends Wi-Lan higher
Shares up $4.50: Deal on wireless standard uses similar technology
Carol Howes
Financial Post, with files from Reuters
CALGARY - Wi-Lan Inc., a seven-year-old Calgary company, is soaring on speculation that its patented wireless technology is about to become the foundation for the next generation of high-speed Internet access.
Shares of Wi-Lan rose $4.50 to close at $23.75 yesterday in Toronto. Wi-Lan's technology was given a major boost with an announcement last Tuesday that Cisco Systems Inc. and several other companies are joining together to develop a standard for high-speed wireless Internet services based on technology similar to Wi-Lan's.
Since last Tuesday's close of $13.20, Wi-Lan shares are up 80% on speculation that Cisco will have to license Wi-Lan's technology. Yesterday's close gives Wi-Lan a stock-market value of $487-million.
At the same time as the stock is jumping, Wi-Lan is preparing to take on Cisco if the networking giant does not bring Wi-Lan into the fold.
Hatim Zaghloul, president and CEO, said yesterday that Wi-Lan has launched an internal investigation to determine if Cisco is preparing to infringe on Wi-Lan's patent.
He said Cisco told Wi-Lan in January that the two would talk after a rollout of Cisco's plans. Wi-Lan has yet to hear back.
Cisco has declined comment with the media on the matter.
"If we deserve royalties -- and we don't know today that we do, we're investigating that -- then we should get it peacefully. If we don't, then we'll get it through court," Mr. Zaghloul said.
"We are going to be very shrewd and very fierce in implementing our patent," he said.
Michael Fattouche, Wi-Lan's co-founder, said not only did Cisco's announcement validate Wi-Lan's technology, but the scope of the deal with 10 other partners came as a surprise, even to Wi-Lan.
"It's impossible to get high-speed wireless data without this technology," he said.
"When we invented this 10 years ago, we didn't know it would be the only technology 10 years later. There's no competition."
A decade ago, Mr. Zaghloul was an employee of Alberta Government Telephones and Mr. Fattouche was an engineering professor at the University of Calgary.
Rob Millham, analyst at Research Capital Corp. in Vancouver, said he does not expect Cisco to fight Wi-Lan over its patent, and will likely resolve the matter more peacefully. He said Wi-Lan stands to gain because of its strength as a potential takeover target.
He upgraded Wi-Lan's share target to $30 yesterday from $15.
"It's one of the best acquisition targets we've ever seen," said Barry Richards, a Toronto analyst with Sprott Securities Ltd. "It's a small company in a very, very large market."
Wi-Lan's stock began trading in March, 1998, at $2.50 a share on the Alberta Stock Exchange.
Wi-Lan's patented technology, known as orthogonal frequency division multiplexing technology (OFDM), has drawn interest because it allows wireless networks to carry more data and send it faster on radio frequencies.
Wi-Lan's customers include Telia GlobalCast, a Swedish carrier, and Tele2 U.K. Ltd., a subsidiary of Millicom International Cellular SA.
Last month Wi-Lan struck a licensing deal with the Philips Electronics unit Philips Semiconductor to include its technology in a set-top box microchip that is being developed.