Dalsa Looking For A Digital Cinema Partner

May 1 2008

Source: Dalsa Digital Cinema, The Record

Dalsa Corp. is looking for a partner to help seek out strategic partnership opportunities for its digital-cinema division.

The Waterloo company announced yesterday during the release of its quarterly financial results that it will seek a "well-positioned strategic partner" with some financial and industry muscle to "enhance the adoption rate of Dalsa's product offerings" in the digital-cinema market.

Dalsa had high hopes for its digital-cinema camera, named the Origin, when it first began working on the project seven years ago. But Hollywood and the movie industry have been slow to adopt the camera despite its sharper images and more than $40 million in investment by Dalsa in the project.

During the first quarter of 2008, which ended March 31, Dalsa's digital-cinema division produced revenues of just $400,000 US as rentals of the Origin and other digital equipment were slowed by the Hollywood writers strike, the company said. One bright spot was the use of the Origin camera in an upcoming James Bond film.

During a conference call, analysts pressed Dalsa chief executive Brian Doody on whether the company would settle for a minority position in such a partnership, or if it is looking to sell the division outright.

Doody said it's "premature to forecast" or to "narrow the field" as to who the company is seeking as a partner.

"Our objective is to maximize the value for our shareholders and we feel that the way to do that is by bringing an industry partner to the table that can accelerate the adoption (of the digital camera) and provide support in terms of industry presence and finances," Doody said.

While uncertainty over digital cinema cast a pall over proceedings, the picture was considerably brighter for Dalsa's overall performance.

Revenues for the quarter were a record $54.6 million US, the first time the company has cracked the $50-million mark. Sales were up 20.6 per cent from the $45.3 million earned in the same quarter last year, and exceeded the $47.3 million earned during the last quarter.

Net income was $3.8 million or 20 cents a share, a sharp increase over the $200,000 earned during the same period last year.

Noting that he is "very happy" with the results, Doody said the company has made a "strong comeback" over the past two quarters after making changes midway through 2007 to return Dalsa to traditional levels of profitability in its core operations. Revenues in its digital-imaging division were up 32.1 per cent to a record $31.7 million, and sales in semiconductors were up 9.1 per cent to $22.5 million.

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