Sonic Solutions (SNIC) shares soared Friday following an announcement by the DVD Copy Control Association of the approval of technology that will allow consumers to download-and-burn copy-protected DVDs. The theory is clearly that Sonic, which makes software used in DVD burning, should be a big beneficiary of any subsequent surge in consumer and retailer use of the technology.
Steven Frankel, an analyst at Canaccord Adams, Friday raised his rating on the stock to Buy from Hold on the news. “While this event alone does not lead to any material change in our estimates,” he wrote in a research note, “it does increase our confidence level that the investments the company has made over the last two years can begin to bear fruit.” He added that “the approval of Download & Burn should provide a much needed psychological boost to the shares,” which it surely has.
Barbara Coffey, an analyst at Kaufman Bros., wrote in a research note that companies will likely start testing the technology later this year. “DVD Burning on Demand has the potential to help DVD retails better manage inventory as they should no longer need racks of DVDs and should never be in an ‘out of stock position’,” she writes.
Finally, I had to chuckle at the following phrase on the quote page for the company on Yahoo Finance, which refers to the fact that the company is behind on its financial filings due to some stock-option backdating issues: “SNIC is deficient and delinquent.” Kind of harsh, no?
SNIC 1-yr chart: