Industry News

Sonos: Bad News and Less-Bad News

Issue 60

Since its founding in 2002, Sonos has stood apart in many ways from other booming California tech companies. For starters, Sonos is headquartered in Santa Barbara— better-known for tourists than tech— and not in Silicon Valley. The company also started up without venture capital, and had consistent leadership from a founder for 14 years—both rarities in Bay area tech companies.

The company once completely dominated the distributed-sound world with its multiroom systems, but the appearance of Amazon’s voice-controlled Echo — and similar subsequent offerings from Google and Apple—led to an unstated number of  layoffs in March, 2016. Founder/CEO John MacFarlane stepped down in January, 2017, and also left his seat on the board.

In 2015, the company was said to have $1B in sales. It’s unclear what the number is today; a company spokesman recently stated only that Sonos “is profitable”. Over the last several years the possibility of an IPO listing has been mentioned several times. Early this April, longtime Sonos critic Daniel Sanchez of Digital Music News noted that an IPO by itself will not “save Sonos from extinction.” 

Later the same month, news stories reported that Sonos had indeed filed paperwork with the Securities and Exchange Commission with the intention of holding an IPO as soon as it could be executed—possibly as soon as June, with a market valuation of $2.5-$3B. And what often occurs ahead of an IPO?

You guessed it–layoffs. This time, the number mentioned was 96 workers, about 6% of a workforce stated as 1500 (also mentioned in last issue’s Industry News). That’s where the company stands at this moment. It’ll be interesting to watch developments as the IPO occurs. The recent IPO of Spotify, often mentioned in the same breath as Sonos,  has not produced the growth hoped-for by potential investors:  in the two months since the offering, shares have gone from $148 to around $158, about a 6% increase.
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Short stories:

Monster Products made a less-expected SEC filingMonster Products—you know, that company once known as Monster Cable —intends to launch a $300M offering of “Monster Money” cryptocurrency. This latest move shouldn’t really be a shock, given the company’s past history of suing anything and everything with a similar name (mocked nicely by Gizmodo), losing the golden egg of Beats (detailed here-–thanks again, Gizmodo!), or investing in online gambling, or spending a zillion bucks on an embarrassing, ego-fodder ad during the Super Bowl, and yet…

Issues with Gibson bankruptcy. We recently reported that Gibson Brands had been forced by creditors to enter into a pre-arranged Chapter 11 filing in the Delaware District of Federal Bankruptcy court. To the surprise of virtually no one who has followed the company’s tumultuous debt-wrangling of recent years, there are problems: less than a month after the filing, major unsecured debtors including Philips have disputed the legitimacy of a $135M DIP (debtor-in-possession) financing arrangement, designed to keep the company afloat. Hearings are scheduled to determine what happens next.

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