SONICblue Ponders its Existence

Once at the forefront of the convergence between the Internet and recordable TV and digital music players, SONICblue Friday said its financial situation is so dire that it is considering selling the company.

The Santa Clara, Calif.-based company said it has hired financial advisor, Houlihan Lokey Howard & Zukin to help it evaluate its options in light of the growing amount of debt the company has acquired.

Among the various options, SONICblue’s Board is looking at new financial or strategic partners who might invest in, or acquire, the company, its business units, or assets.

“The goal of this process is to clear the way for the company’s businesses to continue their strong growth in the market, unburdened by the amount of debt now carried on the company’s balance sheet,” SONICblue CEO Gregory Ballard issued in a statement.

Ballard said the company has “improved its operational performance,” and is still moving forward with its new product lines for this year.

In a November filing with the Securities and Exchange Commission, SONICblue said it had total debt and other liabilities of $335.5 million. Industry analysts have said SONICblue has a $16.5 million line-of-credit that is due in March and $178 million in convertible debt that matures in October.

To add insult to injury, Planet Replay, a popular Web forum for ReplayTV owners Thursday pulled the plug on a program-sharing service after the movie and television studios confronted them.

Much has been made of SONICblue’s products including its controversial ReplayTV brand. The company also supports personal television technology and software for its Go-Video Dual-Deck VCRs, and digital home theater systems.

But SONICblue has weathered most of its storms and even managed to drop its ongoing patent lawsuits with rival TiVo

But despite consumer interest, the DVR space is not catching on as much as analysts had first predicted. TiVo and SONICblue are both losing money and according to research firm NPDTechworld, sales of DVRs have dropped for the first time since 1999.