Yup. See the SoFo press release here: http://www.sonicfoundry.com/news/ShowRelease.asp?ReleaseID=536&CatID=

Depressing, I say.

It's far from depressing. It's probably the company's savior, at least temporarily. Such a tiny company with $7mil in debt, a $12mil loss for its previous fiscal year, and a $0.50 share price would probably not have lasted another 12 months. It's certain that sales of niche/enthusiast software is not a durable freestanding business model in itself.

Still, with Sony's own financial troubles, I wonder about this move. The purchase price is a pittance to them, but the move looks like yet another distraction that they do not need now. Sony has never done well with its few ventures into software, which is completely outside of its own business models. So I do not see this as a lasting business for them. I think they'll either try to build it up and spin it off, integrate some of its products as bait giveaways for electronic products or (more likely) get bored and frustrated with its operating costs and quietly let it die.

"...get bored and frustrated with its operating costs and quietly let it die."

That would certainly put an end to the many "Vegas vs. Premiere" threads. It would be a shame though, even if I do like Premiere. Sound Forge was the best audio tool I have ever owned.

Well, Ken, you have a point, but maybe not the one you think. Anything that saves Sonic is good for SoFo stockholders, like me! The stock flew up to $0.59 and closed at $0.51, a very good day. If this keeps up, my profit from the stock will pay for my acquisition of Vegas.

And for the same reasons you mention, it's depressing. I'm concerned that Sony is more interested in the consumer titles for obvious reasons. Where does that leave Vegas? We'll see.

I would be surprised if Vegas does not endure this episode. I have to believe that its growing following constitutes a large enough potential market for 8-10 years for it to be attractive to a buyer if Sony doesn't want to keep it.

Good luck with that SOFO stock, Will!

The real question is what SoFo does with a pro/prosumer product like Vegas. For the price it paid, getting all the consumer software may well have been enough for Sony. That's what's being pushed at screenblast.com.

As for the stock, I bought it on a lark because it was a penny stock and I'd never tried that before. Owning one gives you incentive to watch. But I also had already looked at the products, purchasing Video Factory and Acid, so I knew how good they were. I saw clear efforts to shore up the company, so I based my buying decision on the fundamentals as well as the fun factor.

Had I known about Sony, I would not have done it. SoFo sees potential in the products and services that remain, a business I don't understand. So now I'm definitely looking for an exit strategy.

Sony just announced their purchase of Sonic Foundry.

Guess that means we users of ACID, Sound Forge and Vegas Video can breath a sigh of relief.

Sony claims they are leaving the company in Wisconson.

I wonder what will happen with the 24p Panasonic AG-Dvx100 camera support for the next versions of vegas?

Sony bought the software resources, not Sofo employees. To imply that Sony has any say in what SoFo does or where they are located is a non sequitor. The question of the day is, "whither Vegas?" In the short term, there will be no change. In the long term, I doubt that Sony's intent in spending the millions they did will be to continue to support the prosumer market niche that Vegas presently fits into. My guess is that this app will be developed to be much more....much more capability, much more cost, much more professional. The alternative will be to bundle Vegas as a freebie with their HD camera line. In either case, it portends bad for Vegas as we know it.

The biggest worry to me will be that Sony doesn't know what to do with the resource. They aren't known for their software prowess and seem to buy software solutions.

Coupled with their major fall in revenue for the last accounting periiod, they could run all of this into the wall at mach 2.

Xerox has done that with two companies with which I've been an employee.

The purchase is good for everyone. Sony in the past bundled some of SF applications with their computers. Sony is moving in the direction of integrating all forms of entertainment and they are getting more and more involved with software. They also plan on buying Pal software company, but have to fight over it with IBM.

Sony is the electronic company with the greatest vision and is able to see the whole picture better than anyone, and software is an integral part of that great picture. Vegas Video will become a truly major NLE player.

Sony's main fight is now with Microsoft, after their XBox introduction and their latest red laser based HD DVD introduction without getting approval from the DVD standardization committee.

Sony is keeping the SF location and employees; I'm sure that they'll initially just pour in money to strengthen the products and will use their marketing muscles to significantly improve the market share. The applications integrate perfectly with Sony's computer and video products so Sony will not be losing $ on this purchase. Sony is overall still one of the most profitable Japanese electronic companies and the purchase price means nothing to them.

They are losing some market to Matsushita (Panasonic DVX, JVC HD1), but will gain it back with their introductions of blu-ray HD DVD products.

Sony is a bigger company than Matsushita. Matsushita is no match for Sony, which is also a lot larger electronic company than Matsushita, which also makes electric products -- it's more like US GE used to be.

Sony was at one time thousands times smaller than Matsushita but always made higher quality, more innovative products.

Sony is a bigger company than Matsushita. Matsushita is no match for Sony, which is also a lot larger electronic company than Matsushita, which also makes electric products -- it's more like US GE used to be.

For fiscal year 2001 (last year I could find figures for) Panasonic had 61.45 billion in sales. While Sony reported less than 60 billon in sales. General Electric had sales in excess of 140 billion.

Sony just reported first quarter losses of close to 1 billion. I don't really think they'll be over taking Matsushita any time soon.

Meanwhile, Canon was one of the five most profitable Japanese corps last year. Oops, I'm sounding like a cheerleader... d'oh!

Well, it all depends on how we want to categorize "big". In terms of market capitalization (i.e. book value of publicly-traded shares outstanding) here's how they stack up:

Canon: $35.968 bil
Sony: $22.672 bil
Matsushita: $17.295 bil

(Matsushita, of course, encompasses brands such as JVC, Panasonic, Quasar, Victor and Technics.)

In terms of prospective earnings per share estimates at this writing:
Canon: $2.12 (est.)
Sony: $1.46 (est.)
Matsushita: $0.08 (est.)

Note, however, that earnings per share does not directly correlate to profitability, especially where Japanese companies are concerned. You have to be very careful in assessing the profitability of Japanese manufacturers. While this group has made an effort to normalize it's accounting practices to conform with GAAP (generally accepted accounting principles) in order to achieve trading status on US stock markets, they still employ relatively opaque and creative accounting practices. It takes a real a real specialist in Japanese securities analysis to reach anything like the truth. (Which explains why you'll often see "N/A" under key figures on publicly-acccessible financial summaries for Japanese companies. I can virtually guarantee that execs for each of these companies would each claim that they are the most profitable...and show figures to "prove" it.

Sony just posted a terrible financial report that caused the Japanese stock market to tank last week.

Sony did not make a profit in their past accounting period. Their operating loss was nearly one billion dollars for the first calendar quarter of 2003.

Hardly the signs of a financially stable company right now.

Here is the URL to their consolidated financial statement

http://www.sony.net/SonyInfo/IR/financial/fr/2003-4-24/pdf/sony20030424.pdf.

I'd bet this buy was a case of the left hand not knowing what the right hand was doing.

I believe Sony's biggest money maker is the Play Station 2. As for the rest of their electronics, I find them a bit pricey.

There's no doubt in my mind that Sony makes some of the finest electronics in the world. I have numerous Sony products, including a color TV that's over 20 years old that still works like the day I bought it. That kind of quality comes at a price, and I don't mind paying for quality.

However, their marketting strategies are doubtful. AS a business owner, I've got to keep mindful of the best, and the most cost effective product for my needs. Vegas can become overpriced and unreliable, like Premiere, or become just a toy to be bundled with a consumer product line. It could also expand into a fully professional, hardware supported application. The chances of it staying in the somewhat unprofitable pro-sumer niche is unlikely.

[13] April 23 (22 :32) Sony to buy back shares worth 400 bil. yen
[14] April 21 (22 :44) Sony to make 200 bil. yen semiconductor investment
Matsushita Electric Industrial Co. said Monday it posted a group net loss of 19.45 billion yen for fiscal 2002, the second straight year its ink has run red.
The firm suffered a record 427.78 billion yen net loss in fiscal 2001.
Matsushita, maker of audio visual products and household appliances, recorded a group operating loss in all four divisions, apart from home appliances.
For fiscal 2003, the firm hopes to generate a group net profit of 30 billion yen, on revenue of 7.45 trillion yen, thereby hoping to surpass Sony Corp.'s 7.4 trillion yen.
Sony Corp. said Thursday its group net profit in fiscal 2002 skyrocketed to 115.52 billion yen -- more than 7.5 times its 15.3 billion yen profit the previous year -- on strong movie sales and cost cutting.
The firm's electronics business, which accounts for 66 percent of total sales, slid 6.5 percent to 4.94 trillion yen, due mainly to weak sales of Vaio personal computers.
Sony said it will spend 1.3 trillion yen over the next three years to revamp its earnings structure, including an allocation of 500 billion yen to beef up the development and production of semiconductors and other key electronic devices.
For the current business year, the firm has forecast a 50 billion yen net profit, down more than 50 percent, due to restructuring costs of 140 billion yen, while its revenue is expected to decline 1 percent to 7.4 trillion yen.
Moody's Investors Service has placed its Aa3 long-term unsecured senior debt rating of Sony Corp. under review for possible downgrade due to the consumer electronics giant's weak earnings outlook for fiscal 2003.
The credit-rating agency said Thursday the action "reflects Moody's concern that Sony may take longer than expected to regain the strong profit and cash flow generation patterns seen before."
Sony's overall profitability improved during the year that ended March 31 over the previous year.
That segment "may continue to suffer from weak profitability in the short to intermediate term because deflationary pressures on its electronics products will remain strong," the ratings agency added.
Moody's said its latest action does not affect Sony's Prime-1 short-term rating.
Sony's weak earnings outlook, which coincided with the April 24 release of its earnings report, disappointed investors and caused the Tokyo stock market's key index to fall to a new 20-year low.
The Japan Times: May 2, 2003

My Note: These are short-term fluctuations. Overal Sony is a healty company and it shows in their investment strategies, including in nanotechnology. Their confidence is demonstrated in stock buy back, etc. IMHO Matsushita too is a healthy company, despite their many times higher losses compared to Sony. Sony however is "the" company with "vision".

matsushita/Panasonic also makes the well regared Denon line of home theater products. I have Denon equipment and though it is pricey it is excellent.

The three Japanese companies under discussion here are all vital. I think the sort of market fluctuations mentioned are less difficult to weather than similar problems for a US company.

That discussion, and the discussion of quality of product, is all of-topic. My point is that Sony is not a software company. Vegas is a pure software play. How Vegas will fit into the bigger Sony Pictures Digital (the division that now owns it) picture has to be a huge question.

Among my other activities during my checkered past, I was a stock analyst for Alex. Brown in Baltimore following PC software companies. SoFo might well have been a company I followed if I was still in the job. As a result of this announcement, SoFo would no longer have fallen in my domain, nor would Sony.

That's what worries me.

I find the annoucement mixed. On one hand Sonic Foundry was a hi-tech company that never managed to grow its sales. They arguably have managed to develop the best software in specific categories while at the same time managing to keep their revenues absolutely flat over the past three years. Last quarter's results were the same, absolutely no growth in sales. So, great software without marketing doesn't work and SoFo proved itself inept at marketing.

The real question is whether Sony can get the marketing right while hiring, caring for and feeding the software developers to keep the great software coming. Only time will tell.

I own a buttload of Sony products. (how much is a buttload? approximately $10,000) I like all Sony's products and criticising 1 quarter is naive at best when looking at such a technical giant.

I don't know any other company that represents itself better in some many different electronic arenas. Gaming, audio and video, diplay technology, computers, etc...

Kudos to Sony and Sonic Foundry's sigh of financial relief is comforting to my ears.

OK, now, when's the next version coming? with the new DVD burner or the PD200? Sign me up!!!

Mark

criticising 1 quarter is naive at best when looking at such a technical giant.
It's the way they hid it, that upset investors and the stockmarket. One day they are announcing expected profits for the next quarter, then the next day they hit everybody with a huge loss (923 million). That type of behavior destroys a lot of faith and trust institutional investors have in a huge multi-national company.

I have not heard about them hiding the loss. I would like to read about that, please post a link if it is handy.


thanks,
Mark

It is definitely a plus that a company tat is most prestigeous and adanced in this field is buying SF. Their push into software side of their busines is strong and SF fits perfectly into Sony's "vision". SF was ripe for acquisition and there is no better company to do so than Sony.

Once again for clarity's sake, Sony is not buying Sonic Foundry. They are buying some/most of SF's software titles.

<<<-- Originally posted by Joseph George : It is definitely a plus that a company tat is most prestigeous and adanced in this field is buying SF. Their push into software side of their busines is strong and SF fits perfectly into Sony's "vision". SF was ripe for acquisition and there is no better company to do so than Sony. -->>>

Prestigious??? who cares? not I. Adobe is prestigious and look at the junk the sell at inflated price. I'll take unknown, but reliable any day. The smaller guys try harder at keeping customers happy...it's a no brainer. Sony's customer support has a horrible track record. I can't see how this acquisition will help me on a personal level. I don't give a rat's a-- about how it helps a monster conglomerate or a stockholder.

Mark,

There is no link other than to follow the events leading up to it. The week of April 20th, Sony was announcing expected profits for the next quarter and painting a somewhat rosy picture. Then a few days later they drop the bomb. That is not the way investors like to see it happen (at least in the US). Sony knew of the huge losses long before last week. Normally the company will signal the expected losses in carefully worded statements to prepare investors for a less than stellar performance. When Sony delivered a blow like they did, it rocks investors confidence.

I subscribe to WSJ and read it cover to cover each day. WSJ is a pay service and any link to old issues would require a subscription on your part. Yahoo financial and some of the others are free and you might be able to research Sony's recent announcements there.

I will have to research that one.

Thanks,
Mark

Well, for one thing, Sony will probably bundle some stripped-down form of Vegas Video with their consumer camcorders for free, to add value to their camcorder pricing - much like how Canon bundles Pinnacle's Studio 8 with their consumer camcorders.

I highly doubt that Sony will ever bundle the full version of Vegas Video for free with their consumer cams, they will probably stick to the stripped down conumer version, hoping to lure newbie camera owners into eventually purchasing an upgrade to the full version of VV.

- don

At first glance, it's hard to tell the difference between Video Factory (now aka ScreenBlast MovieStudio) and Vegas -- the interface looks almost the same. So if something was going to go in a camcorder box, I think it would be VF or VF lite.

Sony has to work some things out, though. Neither VF nor SBMS include MPEG-2 encoding. It's an option. Sony can't pop an NLE without MPEG-2 into its MicroMV cam boxes, for obvious reasons. And the low-end category is characterized by DVD support, which isn't there either.

A Sony rep told me that DVD support for MovieStudio was under development for the next release, which would be October.

Joe Carney: matsushita/Panasonic also makes the well regared Denon line of home theater products. I have Denon equipment and though it is pricey it is excellent.

How do you know that Matsushita manufactures Denon home theater products? I am sure that Denon is using components and assemblies from other companies, including Matsushita's; I think that the relationship ends there.

I bought a small Panasonic radio long time ago. It used one chip -- installed on the other side of the board, so when you replace battries you will not see Sony name on it. You could see all the other parts when you removed the back cover.

Yes and panasonic used sony decoder chips in it's first dvd players, and i am sure canon sells off ccd's to other companies as well, it is how business works.

It is a wait and see for me on how this goes, and i bet it dosn't change 1 thing. I would love to see a real market push for high end customers, and vegas break into the recognised leauges of final cut pro and avid, because i prefer using vegas more than the other 2 products.

If sony does 1 thing, i hope they change it's name, vegas screams cheap, other than that i will just have to see what happens, which i believe will be nothing for quite a while.

Zac

How about Sony ScreenBlast MovieStudio Pro? God forbid.

I think Vegas Video is a pretty good name, distinctive, setting the product apart from those with boring names like Edition and Premiere and Avid. The only really snappy name in the whole category is Final Cut. Edius?

Vegas+DVD is a pretty bad name, though.

I think Vegas Video is about as stupid a name as one could possibly find. That alone kept me away for about 6 months.

Edius? I still suspect that it is the Australian pronunciation of "idiots", but I am probably wrong.

<<<-- Originally posted by Rick Spilman : I think Vegas Video is about as stupid a name as one could possibly find. -->>>

I humbly agree. It's a dumb name.

re:<<<---I bought a small Panasonic radio long time ago. It used one chip -- installed on the other side of the board, so when you replace battries you will not see Sony name on it. You could see all the other parts when you removed the back cover. -->>>

There are mounds of products in the electronics industries that are literally assembled by competitors. This is old hat, but 99% of the consumers don't have a clue this is even happening.

When I was working for Intel we made every Sony Vio desktop in the North American market FOR Sony for almost 3 years, until another foundry could be setup at a 3rd party manufacturer.(Selectron) was trying to bring their assembly process up to Sony's "snuff". Intel is not a competitor in this market, but it makes you wonder how it all works after know this little tidbit.

There were also other companies we were doing the same thing for that would raise your brow in wonder.

In my experience Sony has the typical problem that most giant companies have. The left hand has no idea what the right hand is doing.......

I do have many Sony products, and they are all of high quality for their price point. I have a 27" TV I bought in 1984 that still looks as good as most of the TV's out there today.

My point above is nothing but this:
On some, maybe most of Sony's products, it's not their quality of work......it's the quality of their process that drives a quality product. That one I do know first hand, in my personal experience.

If they apply that process to future rev's of VV's we will have a world class product to utilize in the very near future.

vegas video sounds like a toy or a tool geared for porn producers

John, I understand the name doesn't impress you, but the fact is Vegas has been an extremely popular and powerful editing application. It has a huge following of devoted users.

By the way, for the sake of consistency I've combined the separate threads of this topic (one started by Will Fastie and the other by Mike Rehmus) into one discussion.

I think that Vegas Video is a better name than Sonic Foundry. In the Internat era you need more than ever names that are easier to remember.

hmmpf....
why do people place more time and energy on labels than they do on what's beneath the label?
Oh well, nevemind...whatever.

Because marketing sells products, not engineering.

I think you're on to something Dylan. Doesn't that mean that anyone with half a brain should look below the marketing before they shoot their mouth off.

<<<-- Originally posted by John Threat : vegas video sounds like a toy or a tool geared for porn producers -->>>

That's one of my favorite reasons for using Vegas+DVD !

"Doesn't that mean that anyone with half a brain should look below the marketing before they shoot their mouth off."

OK. Bottom line is SoFo's bottom line bled red because their marketing guys didn't have a clue. Their software developers came up with some of the best products in the industry and their sales numbers decreased in real terms over the last three years. Engineering matters. Marketing matters. Distribution matters. Every part of doing business matters, when you come down to it.

I ignored Vegas for at least six months because I didn't take it seriously. Call me stupid if you want, but I have better things to do than spend my money on software that sounded like a bad joke. Finally I got the word on Vegas, more in spite of SoFo than because of it.

If SoFo had been anything less than a trainwreck at selling their excellent software, we wouldn't be having this discussion.

<<<-- Originally posted by Bill Ravens : I think you're on to something Dylan. Doesn't that mean that anyone with half a brain should look below the marketing before they shoot their mouth off. -->>>

Yes, but that's not the problem. Most people looking for an NLE have never heard of Vegas Video. I talk to alot of indie film/video people here. They look at me like I'm a newb when I say I edit on Vegas because they haven't heard of it, because SoFo doesn't market it very well (if at all).

It doesn't matter how good your product is if you can't sell it.

Does anyone remember what Final Cut Pro was originally named when Apple bought it from Macromedia a few years ago? <g>

I am a long term Vegas user and certainly do like the product above the others I have tried. Having said that, I am beginning to think that wasting time worrying about what Sony does is really a waste of time. Simply put, if Sony were to throw Vegas on the scrap heap it really wouldn't affect my professional career. I would merely chose another NLE and learn to live with it. I am one of the few former Premiere user who really did like aspects of the software. I have used Avid and could learn to live with that. What I am saying is that life goes on and tools will be created and will disappear---what remains constant is our love for video and editing.

>>How do you know that Matsushita manufactures Denon home theater products? I am sure that Denon is using components and assemblies from other companies, including Matsushita's; I think that the relationship ends there. <<

Panasonic owns Denon, Matsushita owns Panasonic. As far as what components they use, I am merely saying that Denon is considered one of the better Home theater brands. They have their own engineering people, just like Pana and JVC. In fact Denon is using tech developed by several well regared US based audio/video chip vendors. They also make one of the best (and expensive) all format DVD players you can currently purchase.
My point was about Sony not being the only quality brand around. Nothing more.

<<<-- Originally posted by Ken Tanaka : Does anyone remember what Final Cut Pro was originally named when Apple bought it from Macromedia a few years ago? <g> -->>>

No, what was it?