Company Logo Wednesday, March 14, 2001

Local high-tech firms thriving

Kevin Crowley, Record staff

Waterloo Region's high-tech industry is showing no sign of slowing down despite the stock-market turmoil that's causing many tech companies elsewhere to slash jobs.

In fact, some of the biggest high-tech companies in the area plan to continue hiring more employees.

Research In Motion, Descartes Systems Group, Open Text and Mortice Kern Systems all plan to bolster their workforces in the year ahead.

Waterloo has escaped the dot-com backlash because many of its high-tech employers make "real" products, said Jim Balsillie, RIM's chairman and co-chief executive officer.

"We are very, very fortunate as both a company and a community that we did not get on that bubble stuff," he said.

RIM has more than doubled its workforce in the past year. It employs between 1,400 and 1,500 people, most of whom work in Waterloo.

The company, which is best known for its wireless e-mail pagers, will continue to hire "as fast as we can" to keep ahead of competitors, Balsillie said.

The stock-market turmoil has had little impact on RIM because of the huge war chest it amassed through a series of stock offerings.

RIM has $1.2 billion in cash in the bank.

"It's there to grow our business," Balsillie said. "We're very fortunate that our course is not being affected by the availability of capital at this time."

Other high-tech executives say the day-to-day swings in the stock market cloud the fact that their businesses are strong and growing.

Descartes Systems, for example, recently reported a 53 per cent increase in annual revenues and its first annual operating profit.

The Internet-logistics company has added 80 employees in the past seven months through acquisitions and individual hires. It employs 550 people worldwide, 150 of them at its Waterloo headquarters.

"Our business is growing and we need to fuel growth by bringing in additional good folks," said Paul Laufert, executive vice-president of corporate development for Descartes.

Another Waterloo company, Open Text Corp., is in the process of hiring 400 people. It now employs 1,100 people worldwide, including 250 people at its Waterloo headquarters.

Last week, the chief executive of Mortice Kern Systems Inc. told analysts in a conference call that the Waterloo-based software maker plans to add to the 230 people it now employs.

"We're hiring fairly aggressively in R&D (research and development), somewhat more selectively in sales, and we'll probably make a couple of management additions over the next few months," Philip Deck said.

There's no word yet on whether U.S.-based Cisco Systems plans to cut any of the 170 people who work at its Waterloo office, which was known as PixStream until Cisco bought it last fall.

The giant Internet-infrastructure company said last week that it plans to cut about 10 per cent of its 44,000 full-time employees, and more than half of its 4,000 temporary employees.

"We are presently evaluating our situation in Canada in light of recent corporate announcements and local market conditions," said Cisco spokeswoman Willa Black.

While the K-W area has a number of publicly traded technology companies, most local high-tech businesses are still privately held.

Private companies are not directly affected by stock-market volatility. But they can suffer from a general downturn in the economy, Waterloo-based venture capitalist Andrew Abouchar said.

Private companies will be checking their cash balances to see if they have enough money to survive the current tightening of private financing, he said.

The slumping economy might also cut into their revenue forecasts, which play a big role in the valuations placed on private companies by investors.

Valuations, in turn, affect how much money a private company can raise in the future.

Abouchar said the economic slump has lowered valuations and forced venture capitalists to be more selective.

But now is a good time for private companies to groom themselves for going public when the market rebounds, he said.

"Just because the economy has slowed down doesn't mean that technology isn't going to march forward," he said. "We're still in business and there's still an awful lot of venture money around."

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