Sony buys Sonic Foundry Assets, including Vegas at DVinfo.net

Will Fastie · May 2nd, 2003, 01:53 PM

Yup. See the SoFo press release here: http://www.sonicfoundry.com/news/Sho...eID=536&CatID=

Depressing, I say.

Ken Tanaka · May 2nd, 2003, 05:26 PM

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.

K. Forman · May 2nd, 2003, 05:56 PM

"...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.

Will Fastie · May 2nd, 2003, 08:00 PM

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.

Ken Tanaka · May 2nd, 2003, 09:34 PM

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!

Will Fastie · May 3rd, 2003, 07:15 AM

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.

Mike Rehmus · May 3rd, 2003, 09:56 AM

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.

Kevin Boucher · May 3rd, 2003, 10:03 AM

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

Bill Ravens · May 3rd, 2003, 06:23 PM

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.

Mike Rehmus · May 3rd, 2003, 07:55 PM

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.

Joseph George · May 3rd, 2003, 08:25 PM

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.

Jeff Donald · May 3rd, 2003, 09:56 PM

Quote:

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.

Chris Hurd · May 3rd, 2003, 10:30 PM

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

Ken Tanaka · May 3rd, 2003, 11:38 PM

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.

Mike Rehmus · May 3rd, 2003, 11:55 PM

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.

May 2nd, 2003, 01:53 PM	#1
Will Fastie Major Player Join Date: Feb 2003 Location: Jarrettsville, MD Posts: 353	Sony buys Sonic Foundry Assets, including Vegas Yup. See the SoFo press release here: http://www.sonicfoundry.com/news/Sho...eID=536&CatID= Depressing, I say.

May 2nd, 2003, 05:26 PM	#2
Ken Tanaka Retired DV Info Net Almunus Join Date: Dec 2001 Location: Chicago, IL Posts: 6,943	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. __________________ Lady X Films: A lady with a boring wardrobe...and a global mission. Hey, you don't have enough stuff! Buy with confidence from our sponsors. Hand-picked as the best in the business...Really! See some of my work one frame at a time: www.KenTanaka.com

May 2nd, 2003, 09:34 PM	#5
Ken Tanaka Retired DV Info Net Almunus Join Date: Dec 2001 Location: Chicago, IL Posts: 6,943	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! __________________ Lady X Films: A lady with a boring wardrobe...and a global mission. Hey, you don't have enough stuff! Buy with confidence from our sponsors. Hand-picked as the best in the business...Really! See some of my work one frame at a time: www.KenTanaka.com

May 3rd, 2003, 09:56 AM	#7
Mike Rehmus Wrangler Join Date: May 2002 Location: Vallejo, California Posts: 4,049	Sony purchases Sonic Foundry 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. __________________ Mike Rehmus Hey, I can see the carrot at the end of the tunnel!

May 3rd, 2003, 07:55 PM	#10
Mike Rehmus Wrangler Join Date: May 2002 Location: Vallejo, California Posts: 4,049	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. __________________ Mike Rehmus Hey, I can see the carrot at the end of the tunnel!

May 2nd, 2003, 05:56 PM	#3
K. Forman Capt. Quirk Join Date: Apr 2002 Location: Middle of the woods in Georgia Posts: 3,596	"...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.

May 2nd, 2003, 08:00 PM	#4
Will Fastie Major Player Join Date: Feb 2003 Location: Jarrettsville, MD Posts: 353	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.

May 3rd, 2003, 07:15 AM	#6
Will Fastie Major Player Join Date: Feb 2003 Location: Jarrettsville, MD Posts: 353	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.

May 3rd, 2003, 10:03 AM	#8
Kevin Boucher New Boot Join Date: Apr 2003 Location: Québec, Canada Posts: 23	I wonder what will happen with the 24p Panasonic AG-Dvx100 camera support for the next versions of vegas?

May 3rd, 2003, 06:23 PM	#9
Bill Ravens Join Date: Nov 2001 Location: santa fe, nm Posts: 3,264 Images: 10	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.

May 3rd, 2003, 08:25 PM	#11
Joseph George Permanently Banned Join Date: Mar 2003 Location: Los Angeles, California Posts: 265	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.

May 3rd, 2003, 10:30 PM	#13
Chris Hurd Obstreperous Rex Join Date: Jan 2001 Location: San Marcos, TX Posts: 27,366 Images: 513	Meanwhile, Canon was one of the five most profitable Japanese corps last year. Oops, I'm sounding like a cheerleader... d'oh! __________________ CH Search DV Info Net \| 20 years of DVi \| ...Tuesday is Soylent Green Day!

May 3rd, 2003, 11:38 PM	#14
Ken Tanaka Retired DV Info Net Almunus Join Date: Dec 2001 Location: Chicago, IL Posts: 6,943	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. __________________ Lady X Films: A lady with a boring wardrobe...and a global mission. Hey, you don't have enough stuff! Buy with confidence from our sponsors. Hand-picked as the best in the business...Really! See some of my work one frame at a time: www.KenTanaka.com

May 3rd, 2003, 11:55 PM	#15
Mike Rehmus Wrangler Join Date: May 2002 Location: Vallejo, California Posts: 4,049	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. __________________ Mike Rehmus Hey, I can see the carrot at the end of the tunnel!