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Jeffrey Walkenhorst, CFA
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Summary: Portfolio Manager at Copeland Capital, formerly a Senior Research Analyst at international think tank, Wall Street Research Analyst, and Private Investor. Experience consulting to investment funds, financial services firms, global organizations, and high net worth individuals/families.... More
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Copeland Capital Management LLC
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  • SOFO Surviving Turmoil, Raises Guidance (not kidding), and Answers Questions
    For those interested in Webcasting and rich media capture - Mediasite v 5.1 worth a look and Sonic raises guidance:

    Last week, we provided an update on Sonic Foundry (SOFO, $0.63) and included our top ten questions for management. The company reported results today and, on the Mediasite Webcast, management mostly answered our key questions. Due to limited time, we can't recount all answers here, but recommend watching the Webcast for those interested - link to new Mediasite version 5.1 Webcast here. We find the 5.1 player very impressive.

    June quarter revenue of $5.0 million was down 7% Q/Q and 1% Y/Y as seasonal strength didn't materialize. We were afraid this might happen amidst the state budget crisis as well as retrenchment by private institutions (pension/endowment funds down significantly). However, management relayed some good news: with 46 state budgets now approved, customers are moving forward with purchases and the company expects to realize better-than-expected revenue in the September quarter. As a result, management raised fiscal 2009 revenue guidance from +15-20% to >20% Y/Y. Since very few companies are growing in the current environment, and even fewer are raising guidance, we are encouraged by the increased forecast. In addition, federal stimulus money is coming down the pike, which should assist cash-strapped schools (depending upon allocation) and boost spending for online learning platforms/applications (President Obama's 10 year program - per Sonic Foundry, includes $500 million for this purpose).

    While there are really no direct comparable companies for microcap Sonic Foundry, for reference, audio/video companies Polycom (PLCM) reported June quarter revenue down 15% Y/Y while Tandberg saw revenue increase 5% Y/Y in the quarter. Major tech titan IBM saw June quarter software revenue down 7% Y/Y (flat in constant currency) and Adobe (ADBE) reported revenue down 10% Y/Y in its most recent quarter (end-May).

    We include more detail on Sonic's results on our personal blog here:

    Disclosure: Long SOFO.
    Jul 31 12:46 AM | Link | Comment!
  • Web Video Trends - McGraw-Hill / S&P is Mediasite Customer

    In a June blog post, we noted that McGraw-Hill's (MHP) Standard & Poor's unit may now be using Mediasite for analyst commentary. Yet, we weren't sure whether the use was a trial or an actual deployment. We recently confirmed with Sonic Foundry (SOFO) that McGraw-Hill's S&P unit has been a Mediasite customer since last year. We believe the firm keeps most of their Mediasite presentations behind their firewall, but we did find public access to the following 7/06/09 presentations:

    We are delighted to see an equity research group using Mediasite to deliver analyst commentary. During our time in Equity Research at Banc of America Securities, we encouraged the bank -- with disclosure of our SOFO position -- to adopt Mediasite not just for research, but for the many monthly meetings, continuing education sessions, and compliance presentations that are common at many large financial services firms (and, in general, at many corporations). We didn't push Mediasite because of our stock ownership, but rather, because the solution would improve life for everyone.

    An internal archive of events for on-demand viewing would have made life much easier as many meetings were simply missed because of scheduling conflicts and/or offered multiple times on the same topic to accommodate different schedules. Plus, an external catalog available to the bank's institutional investor clients would allow live or on-demand access to analyst stock "calls", facilitating timely communication regarding investment recommendations, potentially improving client relationships, and possibly leading to new business models. Mediasite could also be used to Webcast conferences, as Noble Financial is doing (McGraw-Hill's CEO presented at this conference). All makes perfect sense. But, adoption by BofA never happened during our tenure. Glad to see S&P is taking advantage of the technology.

    We'll provide an update on languishing SOFO later this week on our personal blog. In brief: we continue to believe that Mediasite franchise value is meaningfully greater than Sonic Foundry's current market valuation, although the illiquid stock is speculative and not without risk. As background, Sonic Foundry faces competition from a number of participants, but most products provide somewhat different applications and may be complementary to Mediasite. For example, Adobe (ADBE), Cisco/WebEx (CSCO), Microsoft (MSFT), and Citrix (CTXS) provide web conferencing solutions geared toward group collaboration rather than one-to-many broadcast-like communications enabled by Mediasite.

    Disclosure: long SOFO.

    Jul 21 1:59 PM | Link | Comment!
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