Sonic Foundry is negotiating to sell parts of the company

[BJ_M]

http://www.madison.com/wisconsinstatejournal/special/38918.php

Sonic Foundry is negotiating to sell parts of the company to erase its debt, chairman and chief executive officer Rimas Buinevicius said Tuesday.

It's too soon to release details, he said, but the Madison headquarters of the company, which develops software for audio and video editing and Internet streaming, will undergo changes to be announced within 60 days.

"Absolutely, it's going to affect Madison operations - but I can't tell you how," Buinevicius said in a telephone interview after a conference call about Sonic Foundry's quarterly earnings report.

"My intent is not to be cagey; the reality is we're dealing with a wide spectrum of opportunities that have been presented to us," he said. "We intend to do what's best for the company and employees."

His comments came as Sonic reported a net loss of $4 million or 14 cents a share for the fourth fiscal quarter on $6.4 million in revenue. That's an improvement from the $11.4 million net loss, or 51 cents a share, on $5.4 million in sales for the 2001 fourth quarter.

For the 2002 fiscal year, Sonic had a $56.7 million net loss, or $2.12 a share, on $26.2 million in revenues. The loss included $44.7 million in non-cash accounting charges. Last year, the company had a $49.9 million net loss, or $2.25 a share, on $26.3 million in revenues.

Sonic has made recent belt-tightening moves, Buinevicius said. They include cutting about 25 of the company's 225 employees - some through attrition - and subletting office space. Part of the building Sonic leases at 1617 Sherman Ave. is being sublet to nPoint, a nanotechnology company.

Buinevicius did not sound concerned about prospects that Sonic Foundry stock will be dropped from the Nasdaq Stock Market listing.

The shares, which peaked at $129.94 in early 2000 before a 2-for-1 split, have closed below $1 since early September. Unless the stock closes at $1 a share or more for at least 10 consecutive trading days by Jan. 14, it will no longer qualify to be listed on Nasdaq.

If that happened, Buinevicius said, the stock would likely move to the Nasdaq small cap market. "All it does is perhaps limit institutions from buying the stock, but in this market ... they haven't been buying anyway." Sonic is in discussions with Nasdaq officials. Buinevicius said there's been at least one offer to buy the entire company, but Sonic's parts are worth more than its whole, at the current market capitalization of $13.6 million. "Our piecewise analysis determines that the company is worth more than $50 million" and possibly as much as $100 million, he said.

Sonic will use money from the asset sales to pay off $6 million to $7 million owed from a convertible debt and a bridge loan.

Ray Unger, president of Unger Capital Management in Madison and a Sonic shareholder, thinks the company will sell the audio and video editing software that started the business in 1991. "That appears to be the low end of the totem pole," he said.

Buinevicius said Sonic's MediaSite Live, designed to facilitate presentations over the Internet, is gaining interest. Introduced over the summer, the technology should produce $5 million in revenue within a year, he said.

Sonic also is trying to land a federal homeland security con ?

[kitty]

If they would reduce their prices to match those of Ulead they would have much more business

[Nolonemo]

Looks like Sony is selling VideoFactoryand light versions of Acid and Sound Forge. Don't know what's happening to the high-end versions and Vegas

[BJ_M]

If they would reduce their prices to match those of Ulead they would have much more business

soundforge , acid and vegas video smoke anything ulead has to offer .. not even in same ball park ..

but ulead 's marketing , packaging , trade show marketing is way way better .. ulead price vs. performance is very good also ..

vegas video compares against 800$ +++ products ..

read one of the many reviews :
http://www.abcdv.com/article/articleview/41/1/72
http://www.digitalvideoediting.com/2001/12_dec/reviews/cw_vegasvid3.htm

[Lamont Cranston]

[soundforge , acid and vegas video smoke anything ulead has to offer .. not even in same ball park ..

but ulead 's marketing , packaging , trade show marketing is way way better .. ulead price vs. performance is very good also ..

vegas video compares against 800$ +++ products ..

read one of the many reviews :
http://www.abcdv.com/article/articleview/41/1/72
http://www.digitalvideoediting.com/2001/12_dec/reviews/cw_vegasvid3.htm

IMHO I think Kitty's point is well taken. If Sonic's software is superior then why is Sonic in deep financial trouble? Adobe has laid off ~500 of it's 3500 workforce in the last year. There is a limit on what you can charge for a product, no matter how good it is, and still sell it.

[kitty]

Ok, say if Sonic's products are 50 % better - why are the prices so much as to exclude the hobbyists like us. There are only so many professionals but millions of wannabees like me. Price it above Ulead, sure but NOT THAT MUCH. Or do what many companies do - give away copies for free then charge for upgrades.

[BJ_M]

get a copy of thier finacial report -- the above three apps - are profitable and made up 96% of the total earnings (gross) ..

they are into many areas -- a lot of which are gov contracts and media asset distrubution , media transfer and storage and streaming. also they bought a lot of companies like International image service, SVT , mediasite, sonic foundry systems group , media collective .. etc ...

well they spent 46million last year and 13 million the year before buying companies .. they have never been profitable since inception .. but because of only those three product lines they are worth between 50 and 100 million if sold via piece meal ... as far as i can tell - the 60 million purchasing companies hasnt turned a dime...

http://www.sonicfoundry.com/corporate/annual.asp
http://www.sonicfoundry.com/corporate/overview.asp
http://www.sonicfoundry.com/investors/ShowRelease.asp?ReleaseID=498&CatID=

[Lamont Cranston]

I have no sympathy for the financial dilemma of software companies in general. Sonic, Adobe and every other premier software company sets aside the 'Implied Warranty of Merchantability' for every software product they sell. In laymen's terms this means the software does not have to do anything and there is nothing you can do about it. Read the appends on this and other forums from end users who spend many hundreds of dollars for software that does not work and get little or no help from the (not all) software companies. There is no doubt in my mind that Scenarist, the top of the line Sonic authoring program at ~$20,000, carries with it a disclaimer on the implied warranty of merchantability. Do you wnat to spend $20,000 and hope Sonic will fix any problems?

[BJ_M]

Ok, say if Sonic's products are 50 % better - why are the prices so much as to exclude the hobbyists like us. There are only so many professionals but millions of wannabees like me. Price it above Ulead, sure but NOT THAT MUCH. Or do what many companies do - give away copies for free then charge for upgrades.

that is why they introduced video factory and soundforge XP , both fairly low cost ...

you could say the same about in-sync , who make the great video app speedrazor , they came out with a cheaper product called Blade , i dare say it hasnt been a smoking success.. then look at AVID , they also introduced a cheaper product (DV 3.5 ) and its been a great seller ..

sonic foundry isnt trying to compete in the low low end market .. (maybe they should -- not up to me) ..

they are clearly competing with adobe , insync , EDIT*, AVID , media100 , final cut pro , dps and targa solutions etc etc .

i am certainly not defending the company as a whole -- but just saying feature and quality and such .. in comparisons to ulead products .. it (vegas) is worth more .. Maybe they were selling TO CHEAP even ....

read some of the reviews and also talk to people who use vegas daily in a pro capacity .. i mean use it in studios and commercial use only .. not prosummer or home ..

anyway -- everyone has a opinion and i respect that ..

[patrickm]

part of the reason sonic foundry products aren't as popular with consumers is marketing, but even among more educated consumers there was a problem until recently. MPEG quality. i've had videofactory since it came out, and consider upgrading to vegas every so often, but until this year i could never bring myself to do it since it was all Ligos GoMotion based MPEG. i've done some fairly sophisticated productions based on footage from some robotics classes in grad school, but for the SVCD/DVD versions i exported tens of gigs of AVI from Videofactory and sent it to TMPG. the editing and little stuff, like realmedia/wmv for web use was fine, but for a $400 program, vegas should come with a more serious codec, and much more control over its parameters. i don't want to just pick from "DVD medium" and "DVD high". now that they go to the mainconcept codec, which i've heard is better but have little experience with, it's an add-on to the consumer level videofactory.

the other mistake they're making is pricing even serious hobbyists out of the 5.1 / AC3 plugins for their programs. if everyone who plunked down $400-600 for editing/production software could burn true surround sound on their new DVD-R home movies rendered in passable MPEG-2, it'd sell like wildfire. but right now, vegas won't even accept the dolby plugin, you need to buy $400 Acid 4.0 and $400 plugin just to do the audio.

i know dolby is probably charging them and arm and a leg for licensing, but at least option it to vegas at whatever price. even if they allowed vegas owners to buy the AC3 plugin at cost or minimal profit, it'd vastly increase vegas sales just from people who wanted a full video and surround encoding package. and let's be honest- there doesn't seem to be too much money going into improving the vegas interface, which has been pretty much the same for 3-4 years now. so that part of the program is basically a sunk cost already, and for all intents and purposes costs them noting.

[mp3superfreak]

the other mistake they're making is pricing even serious hobbyists out of the 5.1 / AC3 plugins for their programs. if everyone who plunked down $400-600 for editing/production software could burn true surround sound on their new DVD-R home movies rendered in passable MPEG-2, it'd sell like wildfire. but right now, vegas won't even accept the dolby plugin, you need to buy $400 Acid 4.0 and $400 plugin just to do the audio.

I agree on this point. Reading Sonic's forums, it is rumored that the plug in will work with Vegas Video 4, which is said to be coming Q1 2003.

VV4 AC3 plug in

I realize that their financial problems may affect if/when they release VV4, but after using VV3 for a year, I am crossing my fingers that Vegas remains one of their products.

Like BJ_M stated, Vegas is priced well below any of it's competitors. You can get Videofactory for $69, then upgrade to Vegas for only $199. IMHO, nothing twice it's price can touch it's abilities. Long live Vegas!

[EricB]

If you qualify for an educational discount (highschool, college student, teacher, etc) you can get great prices on many software products. Look at www.journeyed.com where Video Vegas 3.0 is $169.98

[mp3superfreak]

If you qualify for an educational discount (highschool, college student, teacher, etc) you can get great prices on many software products. Look at www.journeyed.com where Video Vegas 3.0 is $169.98

Academic Superstore Vegas Video $149.99

True, you can find it cheaper in academic versions. However, these are only for personal use and may not be used to resell your work. If you are planning on making any money w/ the software, it's best just to shell out the extra $$ for the retail version.

[Xesdeeni]

I can't speak for everyone, but I can tell you the reasons I won't be buying any Sonic Foundry software in the near future:

1. Product registration. Your opinion may be different, but I hate this invasive approach to software protection. "Oh yeah, you thought you bought our software, but you can't use it until you register with us. And we'll need your name, address, etc." Sure, and when I upgrade my machine and re-install Windows (and/or am forced to by an unstable system), I have to register again. "Are you a pirate?" (This is also one of the reasons I refuse to use Windows XP.) And of course, if Sonic Foundry goes under, the next time I upgrade my machine (or do a re-install), I lose the software completely!

The package I bought was <$100 for goodness sake! They're certainly not helped financially by paying for a registration line (I once heard that if 1 in 100 customers called a help line, the profit for all 100 was burned up, so these things aren't cheap).

If they really need copy protection, start with the >$200 titles, and then use a dongle. I used to hate them, and they have their own issues, but dongles do solve all the issues above (especially the last one, given the price of their stock).

2. Cost. Yes, they make quality stuff. But there has to be a more creative way of marketing it. They certainly have reasonable prices for professionals. In fact they are probably too low. But for personal use, they are never getting my money. Soundforge is a great thing to use for a variety of things I do. But I'm not going to make back the $400 they want for it. It's just for personal use. I'll pirate it, or go without, before they get that money from me.

Sure, they finally came out with a stripped down version for the masses. But that's just it, it was stripped down. I won't use the big features as often as a professional, but I will use them.

It's too bad they couldn't have just created a dual licensing model. If you are a company, you get lots of technical support and the right to distibute the results for commercial purposes. If you are an individual, you get very limited technical support and you can only use the results for private uses. Sure, some small companies might abuse this. But they are the same companies that would use a pirated version. Besides, if the commercial venture is really worth anything, would any sane company put the profits in jeopardy by using unlicensed (or incorrectly licensed) software!?

3. Removal of free downloads. They used to have a couple of helper applications on their site that you could download for free (audio and video capture programs). They weren't much, but I'm sure they were a marketing boon, that got people aquainted with their company. Of course, then those same people found out that they couldn't afford the cost of the full-fledged programs (see 2 above), but it "made friends and influenced people." Then they pulled the programs. I don't know why, but when I referred a friend to them and they were gone, I had another reason to be annoyed with them.

Xesdeeni