Sonicblue lays off more workers

Consumer electronics maker Sonicblue confirmed Monday that it laid off 90 employees.
The Santa Clara, Calif.-based company did not immediately disclose its total number of employees. But the company laid off 500 workers earlier this year.

In early August, Sonicblue acquired digital video pioneer ReplayTV.


"As we announced earlier this summer as part of our realignment plan, Sonicblue is moving to a functional organization as we absorb the ReplayTV, Go-Video and Cal Audio product lines. As a result, we are eliminating redundancy in our organization so that the company has the lean infrastructure necessary to meet our profitability goals," John Todd, the company's chief operating officer, said in a statement.

The maker of the Rio line of MP3 players has been transforming itself over the past two years from a graphics chip company, once known as S3, into a consumer electronics manufacturer. However, the makeover has not been well received by Wall Street. Sonicblue's stock has been falling precipitously and closed Monday at just over $2 dollars per share.

The company effectively turned over its graphics chip business late last year to Via Technologies. It has also been investing in products that, according to analysts, have long-term potential, including MP3 players, digital video recorders, high-end digital television and home theater components.

Gartner analyst PJ McNealy attributes the company's struggles to the markets it is addressing.

"We are really, really early on in the digital age, and a lot of consumers don't understand the benefits of digital audio or video yet," McNealy said. "That doesn't mean consumers won't get it, but it may mean it will take awhile."

Sonicblue has been on an acquisitions tear, which most recently includes ReplayTV. Sonicblue announced the acquisition of ReplayTV in February as an all-stock deal for $123 million. By the time the deal closed Aug. 2, the deal was worth $42 million.

Sonicblue announced last week that it would be entering the digital video recorder market with its first ReplayTV boxes for upscale consumers.

The company has also acquired digital entertainment products company Sensory Science for $8 million in stock.

The company's most profitable acquisition appears to be the Rio line of MP3 players, which the company acquired in 1999. During its most recent earnings announcement Aug. 2, Sonicblue reported net revenue of $29.5 million from its second quarter due in large part by 54 percent growth in sales of its Rio MP3 players.