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Tuesday, December 15, 2009

Mediasite Adoption Continues = De Facto Global Standard - See "MUG" Presentation

A major part of our Sonic Foundry (SOFO, $5.00) thesis is that Mediasite reliably addresses a clearly defined market need with efficacy. As a result, customers love the solution and Mediasite is becoming the de facto global standard for rich media capture and Webcasting. That is, the Mediasite franchise is growing.

An excellent "window" into Mediasite customer and product happenings are quarterly Mediasite User Group (MUG) meetings (MUG link here). Here's the description and link for last week's meeting:

December 9, 2009 @ 11:00am Central
Don’t have Silverlight? Download it here or watch with classic player.

How cool would it be to have an "Easy Button"? One click and everything happens by itself? Bob Hillhouse, from University of Tennessee-Knoxville, shows us the concepts and how-to's behind the highly automated Mediasite deployment at UT. Colleagues from MediaMission in the Netherlands and Mediasite KK in Japan share how Mediasite is being used internationally. Octavio Heredia from Arizona State University School of Engineering gives us a behind-the-scenes virtual tour of his facilities which have recorded more than 10,000 Mediasite presentations to date. And Sonic Foundry previews what's next for Mediasite. Your host: Helder Conde, Atitude Digital Media – Brazil

We're not going to relay all of the highlights, but the meeting is worth watching for current investors in Sonic Foundry and/or anyone interested in Mediasite. Here are a few noteworthy items:
  • MediaMission, a Mediasite reseller (not a bad business idea for A/V integration companies), is busy spreading Mediasite throughout the Netherlands:
  • First ever User Group Conference in Japan, including presentations from major organizations/companies (link to four minute overview presentation here) -- more than 160 Mediasite customers in Japan per head of Mediasite KK, with 65 customers attending the inaugural conference:
  • On related noted, Mitsubishi used Mediasite at the L.A. Auto Show - link here.
  • Finally, Sonic Foundry announced another new Mediasite release with additional features requested by customers (recall positive feedback loop discussed in our original thesis).
Separately, Sonic Foundry filed a "shelf filing" with the SEC yesterday to issue more equity "from time to time". Although shares are under pressure today, we think the apparent panic in the Market presents a buying opportunity. Companies usually file "shelfs" to have "on file" (sometimes for years) and prepare to "press the button" when share price is at the right level (usually higher). We note that management indicated on the last call that the company may seek additional debt financing for working capital needs related to large deals expected in mid-2010 and has no desire to issue equity at current "depressed prices".

As mentioned in prior posts, we continue to believe shares of Sonic Foundry could fairly fetch at least several multiples of current levels based on private market value supported by recent M&A transactions. We believe Sonic Foundry might consider issuing additional equity at the right price, presumably at or above our estimate of fair value ($20-27) at some future point. We prefer no dilution, but don't mind slight dilution if issued at an appropriate price to finance anticipated, significant growth.

Please stay tuned. We'll come back in the next week or two with how we're making sense of Sonic Foundry's guidance.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long SOFO.

© 2009 Jeffrey Walkenhorst
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