Amid the teeth-gnashing and the hand-wringing over Wi-LAN’s fall from grace as one of the darlings of high tech, there is one constant — the patient, steadfast and indefatigable Hatim Zaghloul.
You can sock Zaghloul with a devastating 90 per cent share-price drop, put him in the ring with an industry giant in a lawsuit that may dictate the company’s future and test his chin with a balance sheet showing $18.1 in annual net losses, but you can’t get the chief executive officer to flinch.
If Wi-LAN’s challenges are testing his mettle, Zaghloul won’t tip his hand. He calmly reclines in his office chair while discussing the prospects for the Calgary-based wireless communications company that specializes in high-speed Internet access.
“I believe that 2001 is going to be a defining year and 2002 is when we will see our potential in a big way,” Zaghloul says in an interview with the Edge. “By defining year, I mean that a lot of our products are coming out of the pipe in 2001. Once we have the products, then it’s purely a sales exercise. We are putting together a phenomenal sales team that will be able to sell those wonderful products.”
Last March, Wi-LAN’s stock price rocketed to $94 before crashing during the tech wreck last fall. It recently traded in the $8 range.
Asked about the pressure of running a company with a dwindling stock price, Zaghloul shrugs and smiles.
“It’s sort of an ethical pressure but it’s nothing other than that,” says the 44-year-old native of Cairo, Egypt, whose family owns about 3.5 million of 21 million outstanding shares. “So I sleep my beauty sleep — seven to eight hours every night. I can sleep knowing there was nothing else I could have done that day.”
“Our responsibility right now is to unlock the potential of Wi-LAN and, until we demonstrate that potential in a serious way, we have not locked the true value for the shareholders.
“Of course, I’m worried about every investor, but I can’t work on a day-to-day basis. Wi-Lan has always been a long story, a long-term investment. My advice to people is that if you’ve invested in the company, just leave it if you can afford to. Come back in two years and hopefully you’ll be pleasantly surprised.”
Zaghloul points out that stock options for Wi-LAN employees have been repriced at $14 “so they don’t have those pressures . . . but the senior officers, like myself, and the directors haven’t repriced our options. We are living and dying by our actions.”
Wi-LAN’s prospects brightened considerably in January when the firm raised $16.3 million in a tough economic climate through a public offering in which a syndicate of underwriters, led by Research Capital Corporation, paid $7.75 per unit for 2.1 million units.
However, the stock took another hit last week on the company’s financials, showing net losses for the year ending Oct. 31, 2000 of $18.1 million, a quadrupling from the previous year.
The company also reported a 970-per-cent gain in annual revenue, although most of that increase — $48.9 million of a total $63.4 million — resulted from acquisitions of two companies, Digital Transmission systems and Telcom Communications. Wi-LAN is forecasting broadband revenue of $50 million for the current year.
But analysts emphasize that the lawsuit over alleged patent infringement will be critical in defining Wi-LAN’s goals of becoming a world leader in high-speed wireless communications.
Wi-LAN is seeking more than $780 million against U.S.-based Radiata Communications Inc., alleging patent infringement. Essentially, it’s a faceoff against the largest U.S. networking company, Cisco Systems, which is in the process of acquiring Radiata.
In a statement of claim filed Nov. 16 in the Federal Court of Canada, Wi-LAN alleges that Radiata violated Wi-LAN’s Canadian patent on its OFDM (Orthogonal Frequency Division Multiplexing) technology, otherwise known as IEEE 802.11a standard.
“They (Radiata) have played a very strange manoeuvre,” says Zaghloul. “They have filed an affidavit that they have not ever sold (products) in Canada and don’t plan to sell in Canada. That is bound to get the judge to say: ‘Wi-LAN, why are you suing these guys? I’ll drop the case because they’re promising not to sell.’
“That’s a PR manoeuvre and a legal manoeuvre. If the judge drops the case, of course they’ll say they won. But they didn’t win because they have given us what we wanted. We may go to court and say: ‘Every single thing is what we want, so just put on their Web site that they won’t sell in Canada.’
“ . . . if they go to court and show a very strong hand and try to scare us, they may scare the shareholders. But they definitely don’t scare us from a legal point of view. We believe we’re right and we believe we’ll win.”
Asked about his vision for Wi-LAN for 2005, a confident Zaghloul says: “We would like it to grow to be the biggest player in high-speed wireless communications. I hope by then we will be a multi-billion-dollar or at least a billion-dollar company in sales.”
