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Nancy Knowlton is president and CEO of Calgary-based Smart Technologies, which created the world's first interactive white board in 1991. (Chris Bolin For The Globe and Mail/Chris Bolin For The Globe and Mail)
Nancy Knowlton is president and CEO of Calgary-based Smart Technologies, which created the world's first interactive white board in 1991. (Chris Bolin For The Globe and Mail/Chris Bolin For The Globe and Mail)

Streetwise

After $17 IPO, Smart Technologies trades at $3 Add to ...

The past year and a half has been rough for Calgary-based Smart Technologies , which makes electronic smart boards that are used in classrooms in boardrooms. After going public at $17 (U.S.), the stock tanked in its first year of trading, falling to about $5.50 per share.

In the months since, the situation has only become more grave. As of Tuesday morning, the shares had fallen to about $3 each -- a loss of over 80 per cent since the IPO.

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The problem is quite simple: U.S. school boards just don’t have the money to invest in new technology -- something some observers worried about at the time of the IPO. The budget shortfalls drastically hurt Smart because until very recently, education sales accounted for 90 per cent of its revenue (though the company does sell to non-U.S. schools)

To boost its bottom line, Smart is now changing gears and paying more attention to the business market, which as of last quarter had ticked up to about 15 per cent of revenue.

“It would appear that it’s a more recent strategy,” chief executive officer Nancy Knowlton said in an interview, but “we had [enterprise]as a fundamental part of business, it’s just that education took off really, really rapidly.” And it’s not as though the company didn’t have a good track record when it went public. Smart Technologies has been around since the late 1980s.

The emphasis on business sales could help not only because there appears to be more room for growth, but also because margins in the corporate space are juicier that in education. Plus, behemoths like Apple are starting to encroach on Smart’s classroom strength. (As anecdotal evidence, a Globe reporter recently mentioned that her son’s teacher, at an elementary public school in Toronto, is asking that all parents get their kids iPads for classroom instruction.)

Smart’s focus on business sales started to ramp up in August 2010, when the firm hired its first sales person to target the enterprise market in the U.S. Since then, the company has doubled down by recruiting re-sellers with connections into the corporate world.

Even if the plan is successful, the transition will take a while to play out. And Ms. Knowlton doesn’t sugarcoat the difficult market her company faces, even though she said she is optimistic.

“There is no question: we are in the midst of very challenging times,” she said.

 
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