DVD software company Sonic Solutions (ticker: SNIC) is down 12% today after reporting 3Q05 (F2Q06) earnings. SNIC beat analyst estimates for last quarter, but lowered guidance for the next two quarters, due to delay in rollout of the high-definition DVD format, and abrupt webstore changes at Dell (Sonic's largest customer) that Sonic execs admit 'took us by surprise'. Key data points and excerpts from the conference call:
Income: $3.1 million, or 11 cents/share (F2Q05: $3.6m or 14 cents/share) Revenue: $31.9 million (F2Q05: 17.4m) Guidance for F3Q06 income: 25-30 cents/ share (previous: 42-46 cents/share) Guidance for F3Q06 revenue: $37-40 million (previous: $43-47m)
In the conference call, Sonic Solutions CEO Dave Habiger described his company's intiative to monetize -- and legalize -- the downloading of movies off the net.
we have been leading a development in the download and burn space. For over two years, Sonic has been working on a project to address the technical logistical barriers to the emergence of a legitimate download and burn model for distribution of DVD titles. Our goal is to enable the legitimate downloading and burning of movies on recordable DVDs with full support of the content publishing community, particularly the Hollywood studios… While there are several interesting business models that emerge from electronic sellthrough, we feel that the biggest opportunity for Sonic lies in the fact that download and burn of DVDs is the killer app for recordable media, and will expand our businesses in each of our divisions -- professional authoring products, consumer applications, and technology licensing… we're seeking not only to provide a legitimate alternative to DVD piracy, but to open up a very attractive new business opportunity, enabling the legitimate transfer of premium content DVD discs that can be played in the more than 0.5 billion DVD players installed worldwide. In doing so, we hope to open up a massive new markets for studios, content owners, distributors, drive manufacturers, media
