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SoundBite Bares Its Teeth Again
In the weeks since its delayed IPO, the on-demand voice-messaging vendor has struggled to shed the stigma of patent-infringement allegations.
Posted Nov 14, 2007
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SoundBite Communications, a provider of on-demand voice messaging, is still trying to shake off the effects of an initial public offering earlier this month that had been delayed due to accusations of patent infringement, and, as a result, raised much less money than expected. After roughly two weeks on the Nasdaq market, the company's stock price continues to struggle, currently trading below its already-lowered offering price. SoundBite has filed a lawsuit against the company responsible for the patent-infringement accusations, Universal Recovery Systems (URS), alleging that URS's claims interfered with its IPO. Bedford, Mass.-based SoundBite had planned to seek $12 to $14 a share in its IPO of 6 million shares, raising $72 million to $84 million, according to the initial paperwork filed with the Securities and Exchange Commission. However, in the shadow of URS's claims, SoundBite emended that filing, and in the end only 5.2 million shares were issued for the offering on November 1, at a much-reduced price of $8. The stock has had a difficult time even at that reduced IPO level, dropping to intraday lows of as little as $7.25 this week before closing at $7.50 at the end of Wednesday's trading session. Despite the lower-than-expected proceeds from the company's IPO, SoundBite officials and at least one analyst are very optimistic about the firm's prospects. "The patent liability issue is resolved," says Robert Leahy, SoundBite's chief financial officer and chief operating officer. "It has not disrupted our business prospects. We plan to be the number-one provider of software for outbound services." The company is indeed growing, the performance of its stock notwithstanding: In a conference call this week detailing its third-quarter results, SoundBite reported revenues of $10.1 million, an increase of 29.4 percent from the same period last year. The company now has 188 total active clients, an expansion of 23 percent over the size of its client base of 153 a year ago. "We were pleased with our third-quarter revenue growth represented by the strong contributions to sales from both new and existing clients," Peter Shields, SoundBite's president and chief executive officer, said in a statement. "The 57 percent revenue growth we experienced in first-party revenues demonstrates our further penetration in this market, where SoundBite's technology is being used for both collections and a growing number of customer-care applications. Among existing clients, increasing usage is being driven by their continued success and the compelling ROI benefits of our solution. This recurring usage is not only helping to drive the top line, but also offers us good revenue visibility."
Nevertheless, the increased revenues didn't prevent SoundBite from posting a net quarterly loss of $277,000 (due, in part, to a noncash charge of $389,000 associated with stock warrants and a nonrecurring write-off of $435,000 associated with the relocation of the company's corporate headquarters). Those losses may not persist, however, if analyst expectations are proved correct. "The prospects for the company are very good," says Daniel Hong, lead analyst, customer interactions technology, for Datamonitor. "The technology they provide from a delivery standpoint is very unique. There are a slew of other vendors coming into this space, if they haven't already done so, but the market is large enough for all of them." What sets SoundBite apart from the competition, according to Hong, is that the company's technology and the on-demand model enables a user to get a personalized outbound telemarketing campaign up and running quickly. SoundBite's technology includes business rules that enable the user to match different scripts with different customers rather than using "one message fits all" scripts. Hong predicts SoundBite could grow its business to the point that it would be an attractive takeover candidate in three to five years. "The demand for outbound is definitely growing," he says.

Related articles: SoundBite Bites Back The initial public offering for on-demand voice messaging provider SoundBite Communications continues to be delayed due to accusations of patent infringement. Viewpoint: Debunking Common Myths about Automated Voice Messaging The key to AVM success is overcoming misplaced skepticism. Viewpoint: Going Through Automated voice messaging helps B2C companies deepen customer relationships. Feature: Fixed Dialing Telemarketers taking the ostrich approach to DNC compliance is a nonstarter for enterprises. Refresh marketing initiatives to ensure that the rules are followed and reach your target audience more effectively. The End of Agents? SoundBite 4.0 uses interactive voice messaging in place of customer service reps. Personable Voice Messaging SoundBite offers clients an interactive automated voice messaging solution using voice recognition and text-to-speech technology. Dispatch: December 22, 2004 Nationwide Credit has selected SoundBite 5.0 for Collections from SoundBite Communications to power 1,500 agent desktops across 10 contact center sites, in a move to promote higher productivity among the existing workforce. Speech Technology magazine: SoundBite and Latitude Collect on Debt Customer contact solutions provider SoundBite Communications and Latitude Software, a provider of debt collection solutions, are joining forces to develop a speech-enabled outbound calling solution for debt collection. Speech Technology magazine: SoundBite Communications Releases Autopayment Interface Agentless Direct Collect enables SoundBite to seamlessly integrate fully-automated inbound and outbound calls with a number of market-leading payment processing platforms via a combination of advanced telephony and XML. Speech Technology magazine: Ringing in the New Year Not many companies have any history at all with voice in outbound-marketing, according to Chris Selland, vice president of business development at SoundBite Communications, an automated customer-contact solutions provider.
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