Bad news! SonicBlue to file for Chapter 11

What does this mean for our kick ass Empeg team. Hopefully they don't get sucked up into the parent company of Denon Ltd. and Marantz Japan Inc.

http://biz.yahoo.com/rb/030321/tech_sonicblue_2.html

Not good.

That sucks! Will Pearl or the new OEM car product see the light of day?

I don't get it. They're filing for reorganization, but are selling off all of their product lines (Rio, ReplayTV, and GoVideo). What do they plan to reorganize once they're done? Their moribund Diamond line?

Wow. It was extremely hard to see this one coming... With SonicBlue's* legendary marketing, customer service, and order fulfillment practices, I figured they'd be around forever.........

Let's hope whatever new company is in charge of the Cambridge shop has a better clue as to how to serve customers and market their products.

Goodbye, SonicBlue, we hardly knew ye.




* "SonicBlue" and "customer service" above refer to the service from the parent company, and should not be construed as criticism of the customer service which came directly from the Cambridge team.

Well, I'll give them this. Denon and Marantz are "high-end" consumer audio brands that have much broader market penetration than SonicBlue products were ever able to get. I'll bet that this could put our favorite empeg software into Denon-manufactured hardware, resulting in quality products at reasonable prices.

I just hope they can get another release of 2.0 software out before there's a chance for anybody to pull the plug.

I'm wondering if I should start buying stuff, does anyone know if the "go video" line of products was/is any good? I need a surround sound setup and don't want to shell out an arm and a leg (but would like it to be decent)

Another interesting factoid: look at the stock over the past few months. The market took a noticable up-tick and SonicBlue stayed flat, finally collapsing today with this announcement. The flat response could well imply that some people anticipated something like this was in the offing (although the trading volume is so light, that it looks like nobody really gave a crap, one way or another).

I looked at some of the GoVideo stuff and it is really lightly constructed. Judge for yourself but it doesn't seem to have much metal in the frame, etc. Probably be OK but I backed off of buying a combo DVD/VCR when I picked it up.

I basically want it for the speakers... I need a new set of surround sound stuff.....

I don't know how much you are looking to spend, but these take a lot of beating for the price

I have been watching their stock price over the last several months. They were due on a note payment on March 17, 2003. Guess they couldn't make it ... so Ch 11.

Actually, what I had been calculating was the value of the "Empeg" company purchased by SonicBlue based on original purchase price of $1.9MM and relative stock prices from the date of the purchase to present. Based solely on that criteria, with SonicBlue trading at 9.82 in Novmber 2000 and the current price of ~ 0.07 the value of that business unit is $13,543... give or take.

Hopefully they don't get sucked up into the parent company of Denon Ltd. and Marantz Japan Inc.

Well, better to get sucked up somewhere rather than nowhere....and better, I'm thinking (for The Guys anyway), to actually have a Chapter 11 buyer than disappear in some other Chapter (like 7?).

Not sure that Denon/Marantz would shell out 50 million if they didn't see some of the products/code/people continuing. Let's cross our fingers.

Given Rob's recent upbeat posts about pearl, were the team rather blindsided by this or no?

-Zeke

Hell, I have most of that in my bank account. I'll buy it! Pearl WILL see the light of day.

Does anyone have $10.00 to spare for an initial production run?

Crap. You'd think with kick-ass products like the Empeg, the original mp3 players and ReplayTV they would be doing ok. I bought the original PNP300 32mb player from Rio back when it came out, and later the Rio branded MKII. They have always seemed to be on top of the curve and trying to deliver what people actually want, not what the industry dictates. Remember the hububb over the original PNP300? It almost wasn't released over FUD!

Given Rob's recent upbeat posts about pearl, were the team rather blindsided by this or no?

There was a public announcement in January that buyers were being sought. We didn't know who it would be until today, but Marantz and Denon are both great audio brands. I'd love to get a staff discount on some of their separates!

Development here is continuing as normal. All sorts of official processes have to be gone through before anyone can talk about the future, but we're up beat.

Rob

I'd love to get a staff discount on some of their separates!

Really! Jim *like* Denon.

If y'all are upbeat, I'm upbeat.

Could it have been driven by RePlayTV's legal costs?

Hope you guys weren't being paid in stock options..

True, true. I tend to look at things more from a "solid product" standpoint and sometimes don't think about the hidden business costs behind the curtain.

Assuming that the buyers keep the empeg development team then this could be a good thing - Denon are established in the car audio market.

I would hope that this sale doesn't kill the Visteon deal, and also that the Visteon deal isn't exclusive. It would be great to see competing empeg-technology-based car players on the market.

What I meant by "sucked up into the parent company" was, they stop development on our beloved player and future products. I know the company who bought them make high-end stuff (I'm a NAD person myself).. hehe.

So hopefully good things happen the original team! Maybe Empeg II ?? or Rio Car II??

FYI - My Original Empeg player is now 1 year and 5 months old (Paid $699us for it) Best money I've ever spent. And far better then the NEO 35 which only worked for 8 months. Thanks for the great player, and best wishes on the future!

What I meant by "sucked up into the parent company" was, they stop development on our beloved player and future products.

Oh, I know what you meant and I agree that there is uncertainty as a result of the shift. I just guess that, as someone who is about 6 days away from *not* getting sucked up into any parent company, I am more inclined to look on the bright side WRT Denon/Marantz!!

Hope you guys weren't being paid in stock options..

My empeg options were due to vest in a couple of months. Guess I won't be buying that Porsche now

Rob

My empeg options were due to vest in a couple of months. Guess I won't be buying that Porsche now

That blows, everyone deserves a Porsche.

I notice that D&M also own McIntosh.

For whatever it's worth, Marantz does know how to deal with expensive, very limited market, highly complex (for the user) hardware products. They still sell home-theater remote controls related to the Phililps Pronto series. Great devices, I have two.

Don't options vest immedietly when the company is bought or goes IPO??

Edit: Rather, check to see if they do.. Stock option agreements are never standard.

Oh, hey, that would rock if that were the case. Rob could get his Porsche early.

He'd have to have a looooooot of 7 cent shares to afford a Porsche.

He'd have to have a looooooot of 7 cent shares to afford a Porsche.

Well, that depends on where he's doing his shopping, dunnit?

I sure do like that Porsche about halfway down (#BB3040) that looks like it was designed by Pininfarina.

Heh. "Woops".

Yeah I'd have to agree with your comments on D & M.
They seem to understand the specialist high-end market, which has complex functionality and good product design

This is not totally unexpected - SB had to make repayments of debt this month and obviously couldn't make that hence Chapter 11.

The 2 big questions are:

(1) will this deal proceed? - D&M said they maybuy the company, and that "discussions are still continuing".

(2) will D&M "get" MP3 playback (only) devices - which is after all what Rio [and empeg] was all about. They don't do ATRACS or any other stuff - its mp3 [yeah they do WMA, but no-one I know uses that format if they can use mp3 due to license/digital rights issues].

Those two issues aside, it may be that this outcome turns out to be the *BEST* thing to happen to the guys - if the deal proceeds and they let products like the Pearl continue to be developed.

They also know how to market and dsitribute product worldwide - something SB seemed to have trouble understanding.

I'm sure with a little help from D&M marketing, the Pearl could now seriously become the next iPod - e.g. small, upmarket device, that sells well to those who appreciate the product and software design, and will pay a reasonable premium for it].

I guess the PVP [Personal video Player] device SB were developing with Intel may not see the light of day.

Glad to hear that you guys are going to be ok in all of this.

Don't options vest immedietly when the company is bought or goes IPO??

The trick being that (I think) shareholders are last on the list to be paid under Chapter 11 and that share price drops to $0.00. So, 20,000 shares at $0.00 equals....

Complete speculation, but D/M might not have agreed -- may not agree -- to a buy-out unless Chapter 11 is part of the deal --- take other SB liabilities off the table.

Now I'll never get a Central.

The trick being that (I think) shareholders are last on the list to be paid under Chapter 11 and that share price drops to $0.00. So, 20,000 shares at $0.00 equals....

That's correct. During Chapter 11, equity stock is basically worthless. I found out the hard way too. I bought $4k of stock during a company IPO, when *all* the 'independant' merchant bank analysts covering the stock rated it at a 'strong buy'. We were also given some stock options at the IPO price. Surprise, surprise, the price sank from day 1, and was never worth it's IPO price again. From an IPO price of $11, it sank to under $1, did a 5x reverse split to get back to about $4, but kept going down. Finally Chapter 11 ensued, and the stock now sits at about 7 cents. Split adjusted, that's going from $11 to 1.2 cents.

Strangely enough, I now have no confidence in 'independant' analysts. I also have very little confidence in the stock market in general. Given the large number of accounting 'discrepancies' that keep cropping up, I'd have more faith in making a return on investment if I gave my local beggar $4k.

I'm fully aware that 'stock values may go down as well as up', but when 'independant' analysts who are 'professionals' and highly paid to give 'accurate' independant analyses manage to get it so wrong, I can't help but feel that the stock market is little more than an arena for legalised robbery.

And what's with this week? The DJ is up 8% on the week, it's biggest weekly gain in over 20 years. I don't understand.

I'm fully aware that 'stock values may go down as well as up', but when 'independant' analysts who are 'professionals' and highly paid to give 'accurate' independant analyses manage to get it so wrong, I can't help but feel that the stock market is little more than an arena for legalised robbery.

Correction... Legalized gambling. Some win, some lose.

Glad to hear that you guys are going to be ok in all of this.

With the proven skills and track records that our guys@empeg have demonstrated, I think there is very little chance that any of them will ever have to worry about keeping food in their belly and a roof over their heads. And once you get past that point, everything else is a bonus.

tanstaafl.

And what's with this week? The DJ is up 8% on the week, it's biggest weekly gain in over 20 years. I don't understand.

Stock markets hate uncertainty. Before last week, no one knew whether the war with Iraq would be this week, this month or in 6 months time.

Once France came out and rejected the "6 key tests", it was clear that there would be no 2nd UN resolution and that the US (and probably UK) would go to war within the next 14 days. Suddenly, the markets could predict the future with a lot more certainty - more confidence so indices rise.

So I assume, this is going to delay the release of any future player released, such as 2.0 finla and the 3.0 beta that we have been teased with.

No.

well that was a firm answer wooohoooo

If anything, I'd see this push the release of 2.00 final.

Marantz has gone down the route of the xiva standard same as the imerge, yet their product is better.
I'd have loved to see them build something with an empeg interface.

Greetings!

Another article from CNNfn about SonicBlue and "Big Media".