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Sonic Foundry CEO says he's bullish on Madison company
(Wisconsin State Journal, The (KRT) Via Thomson Dialog NewsEdge)Mar. 14--Miles Turner used to write a column every month and send it by mail to 420 school superintendents around the state to keep them apprised of the latest legislation or health concerns that may affect them.
Now, Turner, executive director of the Wisconsin Association of School District Administrators, sits in front of a camera and sends his messages over the Internet, where busy school district executives can watch them whenever they have a free moment. Turner uses Mediasite, the technology developed and marketed by Sonic Foundry of Madison. He is among an increasing number of Mediasite customers -- universities, corporations and government agencies.
The technology synchronizes audio, video and graphics for presentations streamed over the Internet, either live or archived for replay.
But three years after Sonic Foundry put all its eggs in Mediasite's basket -- selling to a division of the Sony Corp. the audio and video editing programs that had put the company on the map -- Sonic is still working hard to get public attention and place its finances in the black.
Even so, with the annual shareholders meeting scheduled for this morning at Monona Terrace, Sonic Foundry may post a quarterly profit this year, its chief executive said. The company's stock increased by nearly 24 percent last Friday amid heavy trading on the Nasdaq to close at $1.62, its highest level in more than a year. The stock lost 15 cents on Monday but rebounded on Tuesday, gaining 18 cents to close at $1.65.
CEO is bullish Investors may or may not have noticed that Sonic Foundry's chairman and chief executive officer, Rimas Buinevicius, was quietly stocking up on shares last month. Buinevicius purchased a total of 96,395 shares in seven transactions over a three-week period between Feb. 9 and Feb. 27, spending $103,580, according to documents filed with the Securities and Exchange Commission.
The move was not prompted by expiring stock options, Buinevicius said, just that he's "very bullish on what Sonic Foundry is doing and where it's going."
Only one other Sonic executive has bought company stock lately. Darrin Coulson, promoted to senior vice president in July 2005, purchased 206,185 shares last November for $199,999.
"Generally, when senior management buys stock in a company, it is an indication of confidence," said John Nelson, investment director of small company stocks for the state Investment Board, who has not bought Sonic stock for the board or for himself.
Sonic's most recent announcement was that its Mediasite Building Block product is being coupled with Blackboard, a computer platform used at some colleges and universities to coordinate students' records, from tuition payments to course requirements.
Blackboard is a publicly traded Washington, D.C., company started in 1997. It has 3,700 clients, primarily academic institutions, as well as $135.7 million in annual sales and 550 employees. It dwarfs Sonic Foundry, which reported $8.3 million in sales for the 2005 fiscal year and has 65 employees.
Mediasite adds lectures to Blackboard's offerings so that, for example, a student studying for a test can watch the instructor's lecture again on a home computer or iPod.
"More kids are learning online, outside the classroom," said Mike Niehuser, founder and analyst at Beacon Rock Research, an independent research firm in Portland, Ore., and owner of some Sonic shares. "This could be what the online education mission has been missing all this time."
Niehuser, whose firm focuses on small, publicly traded companies that often fly below the radar of most Wall Street analysts, said Mediasite "brings efficiency to the learning process" with a system that is simple to use, both for those producing content and those watching it.
It combines streams of data in a seamless way, Niehuser said, adding, "I've yet to find anyone (else) that does this."
Steve Vonder Haar, an industry analyst with Interactive Media Strategies of Arlington, Texas, does not own Sonic stock, but calls Sonic Foundry "one of the leaders and pioneers and one of the top evangelists" of the use of multimedia.
"The sector that Sonic is attacking now is the equivalent to the birth of the desktop publishing industry two decades ago," Vonder Haar said.
The problem is: It's tough to get people to try something new.
"You can build a better mousetrap, but even if you bring something that is clearly and obviously better, there still is a process of adoption," said Niehuser. "This product -- until you see it, it's really tough to (understand) it."
Like a TV station Turner, head of the school superintendents association, records talks by experts who explain issues such as open records, health concerns and suicide prevention, and stores their presentations in a video library, available on the group's Web site.
"It's not only a convenience, but also a cost-saving device," Turner said. "Administrators can get their information very quickly, right at their desks" rather than spending hours driving to Madison and attending meetings.
Buinevicius likens the Mediasite system to a television, "using a TiVo to watch the content."
The product is also opening doors to new forms of revenue, he said, as organizations are starting to use Mediasite to host on-demand viewing of video presentations for which they charge a subscription fee. "And we'll be the middleman," Buinevicius said.
He is projecting that Sonic Foundry will reach $15 million in revenue this year and the company should show a quarterly profit. "We are now at the point where any given quarter, including this quarter, (could become) a cash break-even quarter," he said.
Over the next three years, Buinevicius said he thinks the technology will take off. "I clearly believe that we have a technology that is delivering something that's never been done before, allowing for a 'narrow-cast' .-- .-- . a mini- television station for people that wouldn't have had access or it would have been too expensive to get their message out."
Sonic's board of directors is apparently confident about Buinevicius' leadership. He was paid a $248,000 salary and $40,000 bonus in the fiscal year that ended Sept. 30, 2005. This year, he is getting $300,000 plus a $50,000 cash bonus.
UW-Madison School of Business assistant professor Masako Ueda said presentations over the Internet are a "hot market," particularly for online education. "However, that means competition will be very fierce, too," she said.
"Not only the strength of the technology, (but) the ability of the company to market well and to understand the needs of the customer will be very important for being successful in such a market," Ueda said. For now, most of Sonic's competitors focus on Web conferencing that allows participants to interact with each other at the same time, while Sonic is more oriented toward presentations that can be viewed at any time, said analyst Vonder Haar. Accordent Technologies, a privately owned Los Angeles-area presentation software developer, is a closer competitor, he said.
The multimedia market "hasn't skyrocketed in the way an enthusiastic investor might have envisioned, but that doesn't diminish the prospects," Vonder Haar said.
"People who help companies become more productive are the people who create value," he said. "Sonic Foundry is right in the midst of helping people figure that out."
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