Canaccord Adams Technology Analyst Steven Frankel regarding Sonic Solutions. While results for the company's March quarter were in
line, problems with Dell (DELL) will likely cause its June quarter to be significantly worse.
The maker of software for video disc production plunged in Nasdaq trading after its forecasts were much weaker than expected. A shift toward lower-priced PC's and some miscues on the marketing front have translated into about $3 million less in revenues than anticipated. So, the company expects a loss of $0.09 a share (excluding some items) on sales of at least $29 million in the quarter ending June 30.
However, management is betting its future on the success of both Blu-ray and its DVD download & burn (D&B). The former has begun to pay off, albeit modestly at this point due to the fact that revenue gets spread over 12 months. The company is not publicly stating what will hit the market first – movies on demand, kiosks or direct to consumer. Sonic has seen meaningful progress with drive manufacturers, but doesn’t expect to see Qflix drives embedded in new PC's until next spring. The company
believes the stock's recovery is tied to proving that the investment in D&B yield a high rate of return.