Protectionism in Tech is not what’s needed

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This morning I woke up to an opinion piece by local (Ottawa) tech guru Adam Chowaniec in the G&M.

The article entitled “How do we stop loosing tech companies?” Adam goes on at length to speak about how the American SEC rules give Public Companies more leeway than Canadian companies, and that we should change the rules etc etc. 

Now Adam does have an axe to grind here.

He was Chairman of two companies that were both “bought” before they had ‘time to prove’ their turnaround strategies, Zarlink & Tundra. The problem was that both of these companies were perennial underperformers. Talk technology all you want, the companies underperformed on the public markets making them targets for a buyout, they just didn’t have the metrics their competitors did. One will note that Mos-Aid was taken out after being put ‘into play’ by WiLan, but yet again that situation was a result of an inability to grow shareholder value. Like the rest their stock was an underperformer too.

These companies shouldn’t be looked at as small tech companies that need protection from greedy buyout operators, almost all of them sported huge valuations in their pasts. In all cases were nearly 30 years old. They were hardly on the cutting edge of tech as they were when founded and they didn’t employee all that many people (Ottawa headcounts provided).  

  • Zarlink – was founded in 1978 as Mitel Semiconductor (it was spun out and renamed in 2000). 140 employees at buyout
  • Tundra – was founded in 1981 as Calmos Systems (it was acquired by Newbridge, and spun out as Tundra in 1995), 55 ottawa staff at buyout.
  • Mos-Aid – founded in 1975 is the only that retained its name and ownership from beginning to end. 50 employees at buyout.

The truth is that these businesses were at a transition point in their businesses and that’s usually a great point to buy them out. Adam would have you believe that there were side benefits to having them in Ottawa, there were some, but not that many in this case. That said their deaths have been a boon to startups in the semiconductors space, I should know

The odd thing about the article was the comments it brought about, almost no one spoke about protecting big lumbering tech companies that had watched investor value decline. They all spoke of the need to help startups get more financing to build newer better tech companies… I think that’s probably a more apt description of what’s needed in Canada.

 

 

The Author

Hi. My name is Matt Roberts, you can find me at www.mattroberts.com.

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