Sony buys Sonic Foundry Assets, including Vegas

[Glenn Gipson]

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.

[Bill Ravens]

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.

[Joseph George]

[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".

[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.

[Will Fastie]

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.

[Rick Spilman]

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.

[Mark Richman]

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

[Jeff Donald]

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.

[Mark Richman]

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

[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.

[Ken Tanaka]

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

[Bill Ravens]

<<<-- 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.

[Jeff Donald]

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.

[Mark Richman]

I will have to research that one.

Thanks,
Mark

[Don Berube]

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