The Boom at Sonic Solutions

Little-known software maker Sonic Solutions (SNIC ) is suddenly hobnobbing with Microsoft, Hewlett-Packard, and Sony, causing its shares to leap from $1 in July, 2001, to 8.33 in January, 2002. Profit-taking has dropped it to 5.50.

On Jan. 9, Sonic, which makes software for creating digital videodisks, pulled a surprise when Microsoft licensed Sonic's DVD technology. The most recent licensee is Sony, which signed up on Feb. 19. Before Microsoft and Sony were Hewlett-Packard, Compaq, Adobe, and Hitachi. Sony licensed Sonic's AuthorScript DVD technology for its Vaio desktop computers. It will let Vaio users record TV videos on DVD media, says Sonic CEO Bob Doris. Sony could boost Sonic's earnings by fiscal 2003, says Justin Cable of Los Angeles investment firm B. Riley--adding that "Sonic has the potential to sign up more licensing agreements."

Cable believes Sonic is targeting several consumer electronics makers that develop DVD recordable players and set-top boxes. Cable sees the stock rising easily back to its January high. Cable doesn't own Sonic shares.

The analyst expects Sonic to turn profitable in the year ending Mar. 3, 2003. Based on what it expects from the Microsoft deal, Sonic has upped its sales forecast for 2003 to $30 million and its operating profit to 24 cents a share. That doesn't include Sony's contribution. Sales in 2002 are expected to rise to $18.3 million, up from 2001's $16.5 million.

By Gene G. Marcial

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