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Sonic Foundry's troubles continue


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Sonic Foundry's troubles continue Appeal sought in Nasdaq delist ruling By Lynn Welch January 22, 2003 Sonic Foundry Inc. will appeal a Jan. 15 ruling that would remove its stock from the Nasdaq National Market. Within 45 days, executives at the Madison software and digital media firm will need to convince a hearing panel that it has a sound plan to meet requirements that would get its stock above the $1 minimum bid price for the long run. A date for the hearing has not been set. If the Nasdaq Hearing Panel of independent business representatives turns down the appeal, the company plans to apply to transfer its listing to the Nasdaq SmallCap Market, request shareholder approval for a reverse stock split, or both. Meanwhile, industry watchers and investors wait at the edge of their seats to hear what Sonic Foundry will do to raise cash. Calls to Sonic Foundry officials were not returned this week. The firm continues to consider offers to sell parts of the business to erase debt. It needs to eliminate $7.2 million in convertible debt as well as a $1 million bridge loan given to the company last November from chairman and CEO Rimas Buinevicius' brother. This loan is backed by nearly all the assets of the company and is due, with $250,000 in interest, by March. "I think we're all waiting on pins and needles to find out what this partial sale of assets will produce," said investor Ray Unger, of Unger Capital Management Inc. "As an investor, obviously, I would like to see them clear up this convertible issue they have and end up with cash on the balance sheet. That's the most important thing that would give people the confidence that Sonic is going to be an ongoing company for the duration." Selling pieces of the firm could bring in between $50 million and $100 million, Buinevicius has said, more than the current $15.7 million market value. But Ernst & Young, the company's independent auditors, recently released an opinion that raised doubt about the company's ability to continue. Phil Leigh, vice president of technology research at Raymond James & Associates, stopped short of predicting Sonic Foundry's demise, saying the Ernst & Young opinion "speaks for itself." One thing is clear: To stay afloat, Sonic Foundry needs to raise cash, experts and investors said. Sonic Foundry has blamed its woes on a continued market funk and economic downturn. But Leigh blames the company's trouble, in part, on its own missteps. "It's very hard to compete for consumer software without a strong distribution channel," Leigh said. "The markets that Sonic has been seeking to grow in with its software have been consumer markets, whereas in the past the products were primarily sold to recording studios, and professional customers." Leigh said the company didn't have the financial resources to give its award-winning software the retail presence it needed in big stores, including Best Buy. And that hurt sales. Other businesses Sonic Foundry is in have been hit by a market slowdown, Leigh said. And its newest technology, Media Site, although promising, has yet to have a mass appeal. "Three years ago, everyone was anxious. Companies felt more compelled to do things with Internet video than they do now," Leigh said. "Internet video will continue to grow but now, there is no compelling urgency." Throughout the Nasdaq appeal process, Sonic Foundry's stock (SOFO) will continue to trade on the national market. Within a month, the firm is expected to wrap up a sale. In the meantime, people wait and wonder. "They always announce these great deals they made and it doesn't seem to get reflected in the business," said stockholder Judith Guyot. "They should figure it out or call it quits."

The Brown Noise is believed to be ninety-two cents

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Yep, they have made some good products - some that deserve to make it to the next round. They've also made some big goofs like the CD Architect thing and letting Wavelab so get the jump on them in an area where they used to lead. Very sloppy. Their noise reduction is still really good even with no updates in ages, but again, Waves is coming on strong with that too. In the software business, you cannot take a nap. The new Vegas Video 4 looks really cool - it would be a bummer to see that die on the vine.

Steve Powell - Bull Moon Digital

www.bullmoondigital.com

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I'm sure they will make it out alive. If they get back to the core of why they started in the first place, things should turn around (fingers crossed).

The Brown Noise is believed to be ninety-two cents

below the lowest octave of E flat..

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There have been several changes with Sonic Foundry's management over the last couple of years. Also, keep in mind that the company's focus has changed too - with a huge initiative to offer media services (not just develop and market software). There was also some talk recently on F*ckedcompany.com about a steep loan that Sonic Foundry had acquired to stay afloat. Here's the actual entry found [url=http://comments.fuckedcompany.com/fc/phparchives/index.php?startrow=101]here[/url] : "Wow I knew Sonic Foundry was f*cked but this is insane... A few key points from their recently-filed 10K: They lost 56 million in 2002. The CEO's brother loaned the company $1 million. The terms 25% interest, payback due in 4 months. The collateral put up by the company? Everything." As with most of these "what's wrong with..." threads, it's more complicated than just a couple of titles of software. And to think that their stock topped out at around $127 a share just a few years ago... After the acquisitions of Emagic and Steinberg, I was actually wondering lately who the next one will be - maybe it'll be Sonic Foundry. "The grabbing hands grab all they can - everything counts in large amounts." - Depeche Mode
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[quote]Originally posted by felix: [b] After the acquisitions of Emagic and Steinberg, I was actually wondering lately who the next one will be - maybe it'll be Sonic Foundry. [/b][/quote]Hopefully somebody will bail them out. The whole deal with the two 'brothers' reeks. Run the company into the ground because it's worth more money dead and in parts than it is up and running.

The Brown Noise is believed to be ninety-two cents

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[quote]Originally posted by rdpete: [b]Sonic Foundry's troubles continue Appeal sought in Nasdaq delist ruling By Lynn Welch January 22, 2003 "I think we're all waiting on pins and needles to find out what this partial sale of assets will produce," said investor Ray Unger, of Unger Capital Management Inc. [/b][/quote]This is really bad news to me as I really like their stuff. I use Sound Forge, Acid and CD Architect and was looking to buy Vegas 4 when it comes out. I hope all those crackers are feeling pleased with themselves - I've seen SF stuff on Kazaa many times. P.S. What does "waiting on pins and needles" mean?
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There was a thread here somewhere about a month ago about Sonic Foundry trying to sell off Acid, SoundForge and other products of that type. About a year ago their web site hardle mentioned these products. There was a clear movement towards media services at that time. This does highlite another issue with copy protections. What happens if they go under and we cannot get web authorizations when reinstalling Acid or SoundForge? Robert

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My Sweetwater Gear Exchange Page

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I have more than one program that I can't use because the company has gone out of business and the copy protection prevents me from reinstalling it on a newer machine. Before I bought Acid, I called up Sonic Foundry. I had exactly the same concern - I would not buy a program that I couldn't use if they went out of business... The person that I talked with me said that they had a contingency plan specifically to deal with this. At the time, I had no concern with the company's stability. Now, I hope that the plan is in place. js
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I have a legit version of Acoustic Mirror which I keep finding new things to do with! Great plugin! :thu: I hope they survive, unless Gibson buys them out in which case you can kiss SF's ass goodbye! I had an Opcode Sonicport USB ad/da which died under warranty. The catch was Opcode went belly up and so did my warranty! :( BTW... isn't it kind of bizzare stating you have legimate versions of software? :rolleyes:
"WARNING!" - this artificial fruit juice may contain traces of REAL FRUIT!!
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Alright, I've kept quiet long enough. I worked for Sonic Foundry right when they were at their peak. The stock was about $130 a share and they were expanding. They made a bold decision to aquire a company in santa monica, ca for $66 million dollars thinking it would immediately turn around profits. When news of the purchase hit the public the stock plummeted. It was a huge nose dive on the graph. I worked as an audio editor for the media services division and while I truely enjoyed the people I worked for, they were all like kids in a candy store and had little sense of how to run a profitable business. They thought encoding audio and video for the web was gonna be a little "side" business that would make them an all in one solution. Never happened. They also aquired yet another business that specialised in transferring film to hi def digital storage. Again, they thought how profitable this would be to have all of these abilities combined. I think this aquisition set them back another $40 million if I'm not mistakin'....and this was all within one year's time. It was too much too fast and financial experts had serious concerns over their rampant spending sprees.....and quite frankly, so did many of the employees. In november of 2000, they shut down most of the santa monica office and many of us were out of work. This was the beginning of the end for Sonic.

Glenn Halldorson

 

Premiere Radio Networks

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everybody knows how going public can make you rich. but sometimes "being" public means you have to drag the world along to watch an unpleasant physical exam. example follows: [url=http://biz.yahoo.com/e/030128/sofo10-k_a.html]Sonic Foundry 10K[/url]
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