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SOFO Surviving Turmoil, Raises Guidance (not kidding), and Answers Questions

|Includes: ADBE, CSCO, PLCM, Sonic Foundry, Inc. (SOFO)
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 (NASDAQ: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 (NASDAQ: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.