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Tuesday, October 12, 2010

Sonic Foundry (SOFO): Mediasite Awareness Increasing as More Organizations 'Get the Memo'

We are pleased to see that shares of Sonic Foundry (SOFO) continue to move higher on (sometimes) slightly elevated for the micro-cap company. We think awareness of Mediasite continues to increase as the solution is used to capture more and more events around the world.

For example, positive news yesterday:
Also, the other week, BlackBerry maker Research in Motion (RIMM) used Mediasite to capture the keynote speech (and possibly other sessions) at its annual developer conference:
Like Autodesk (ADSK), RIM is another example a major company that 'got the memo,' realizing that most alternative Webcasting solutions (or, perhaps more accurately, offerings) are lackluster relative to Mediasite. We covered this topic in our August post, Webcasting Redux: Did Your Firm Get the Mediasite Memo? An Objective View.

Someone asked us if we think the uptrend in Sonic Foundry's stock will continue. We don't know. The near-term is near impossible to forecast correctly. We thought favorable fundamentals and results over the past year would already have pushed shares meaningfully higher. BUT, what we do know is that private market valuation (supported by recent M&A multiples) and earnings power suggest reasonable (non-egregious) valuations in the $20-30 range. Upside to estimates and additional, large-scale adoption around the globe could bring higher fair values for the company.

Happy investing,

Jeffrey Walkenhorst

Disclosure: long SOFO.
© 2010 Jeffrey Walkenhorst
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