Sonicblue shakes up executive ranks
The struggling consumer-electronics maker announces several executive changes, a day after narrowly missing analysts' earnings expectations. Shares in the company take a dive.
The biggest change comes from the chief operating officer position. COO John Todd will move into a consulting capacity immediately, the company said. He joined Sonicblue just under a year ago after leaving PC maker Gateway where he was the chief financial officer. Company representatives said Sonicblue is not looking for a new COO at this time.
Todd is the second executive at the Santa Clara, Calif.-based company to move out of upper management this month. Earlier this month, David Sugishita left the company after serving as chief financial officer for less than two months. Todd took over as interim CFO. The company announced Thursday that Marcus Smith will be taking over as acting CFO immediately. Smith has been the company's vice president of finance for the past year.
During the company's first-quarter earnings call Thursday, Chief Executive Ken Potashner said that there would be additional executive changes in the near future.
In midday trading, Sonicblue shares were down 64 cents, almost 25 percent, to $1.95.
The company has been in the midst of a strategic turnaround from a graphics chip company to a maker of consumer-electronics devices that can playback digital media, such as its Rio digital audio players and its ReplayTV digital video recorders. While sales have been strong for the company, analysts are concerned about the company's debt. Some fear the changes in the executive ranks may also throw a wrench into the company's growth opportunities.
On Thursday, the company reported that it beat analysts' revenue expectations but narrowly missed earnings.
The company said Tuesday that it had sold a $75 million bond and received proceeds of $62.25 million that it will use as working capital to meet demand for its popular audio and video products.
Needham analyst Andrew Scott wrote in a research note that the cash would help boost the manufacturing of products, but that debt is an issue for the company.
"The bad news is the company's balance sheet is already debt laden, including a $103 million convertible due next fall. The good news is Sonicblue now has the capital needed to grow...The additional funding will allow the company to purchase more inventory and ramp revenues faster...We are increasingly concerned with the health of the company's balance sheet," Scott wrote.
The company also announced Friday that former 3dfx Chief Executive Greg Ballard has joined Sonicblue as executive vice president of marketing and product management and Nikhil Balram has joined as vice president of product marketing for ReplayTV.
"Now is the time for the company to be in a more aggressive growth plan, where marketing will play a more important role (than in the past)," Potashner said. "These management changes are designed to enable us to take advantage of new marketing opportunities."
Anthony Wood, founder of ReplayTV, is also leaving the company to pursue personal interests, the company announced Friday.