Monday, July 16, 2007

Reflections on DataMirror

I’ve never quite understood what data-automation firm DataMirror Corp. does. But I’ve always admired its CEO, Nigel Stokes.

Before the age of 40, he had built a database consulting company, Nidak Associates, taken it to the PROFIT 100 list of Canada’s Fastest-Growing Companies, and then sold it (to Ottawa tech giant SHL Systemhouse). He then founded Markham, Ont.-based DataMirror, which produces software that integrates inventory, point-of-sale and other commercial data. The company now has more than 2,200 customers, including Tiffany & Co., Ricoh and Imperial Tobacco.*

I often thought about investing in DataMirror, not because I understand it, but because I think Nigel Stokes is 10 years ahead of everyone else.

Shoulda, woulda, coulda…

Today IBM announced an agreement to buy DataMirror Corp. for $170 million. Its $27- a-share bid amounts to a premium of nearly 20% over the shares' recent price of $22.61.

IBM says the combination of DataMirror technology and IBM's information-management software will “help customers bring real-time data analysis closer to actual business processes, allowing them to be more competitive and to generate more value from their information.”

You'll get no hand-wringing about evil foreign takeovers from me. This is how the system works. Entrepreneurs create innovation, work out all the bugs, then sell out to bigger firms that can create more value with that asset because they can disseminate the technology more easily.

Better still, it frees up the entrepreneur to go out and start another business, thereby beginning the cycle again. Except that this time, he or she has more money to do it with. (Stokes, who is still only 52, will receive some $53 million for his DataMirror shares.)

Congratulations, Nigel, and good luck. We’ll be watching. Even if we don’t always understand…

* DataMirror itself says: "Our solutions encompass virtually every kind of data integration technology—spanning mainframes, midrange servers, and mobile devices—allowing organizations to provide real-time data integration between all systems that create and store data." I hope that helps.

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