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Tuesday, March 23, 2010

Why Doesn't Sonic Foundry Announce More "Big" Deals? Smart Webinar Series Helps; Autodesk On Deck

We recently had questions from fellow Sonic Foundry (SOFO) investors on why the company isn't putting out more press releases for "large" deals. Longer ago, we actually asked management this question. If we recall correctly, the reason is that customer approval sometimes isn't straightforward/easy and -- even if a customer is willing/able to make a public announcement -- approval may sometimes require months after a deal is completed and/or the solution is installed. Where possible, we'd love to see customer announcements.

However, in our view, "PR" is most important for overall marketing and competitive positioning. What really matters to [us] investors is the results. If the "big deals" show up in results this quarter/year, the share price should move higher -- it's that simple (*even though we believe fair value today based on reproduction cost is somewhere between $20-30). Remember that share prices always track fundamentals (earnings/cash flow) over time. If Sonic Foundry delivers on guidance this year, fair value could be realized and shareholders would be rewarded. In this situation, the "Market" would be clamoring to own the stock.

Fortunately, Sonic Foundry appears to understand significant changes in business marketing trends. Please note this slide from the recent shareholder meeting (link here to Mediasite presentation with "original" player):
And, intelligent use of Webcasting, social media, and targeted marketing is apparently building traction per this slide, also from the annual meeting:
Still, Sonic Foundry today announced a high-profile event services win as well as another Webinar:

Drexel University’s School of Education Selects Sonic Foundry to Webcast Virtual Symposium Keynotes
Hosted by Drexel University, Wainhouse Research and the World Bank’s Global Development Learning Network, second annual symposium connects presenters and viewers from around the world

AND, in the Webinar pipeline -- Autodesk (ADSK): Webinar - Create an Online Learning Destination from Your Conference: Scaling the Autodesk University Experience with Mediasite

We think Webinars featuring satisfied customers who highlight practical Mediasite applications are some of the best marketing possible and showcase Sonic Foundry's growing reference base of customers (thereby attracting more customers). Importantly, insights from customers regularly confirm our view that the Mediasite solution is a comprehensive platform technology that effectively addresses a clearly defined market need and can scale into a large global market. We continue to believe the value of this platform is NOT reflected in the company's current valuation.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long SOFO.

© 2010 Jeffrey Walkenhorst
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