Sonicblue Inc. of Santa Clara, Calif., a pioneering manufacturer of portable MP3 players and video recorders that skip commercials, announced Friday that it is "evaluating available strategic options" for reducing its debt, including selling all or part of its assets.
The company's losses grew steadily last year, reaching $32 million on $78 million in sales in the quarter ended Sept. 30. At the same time, the interest payments on its debt doubled in 2002, increasing to $5.5 million in the third quarter.
Making matters worse, the company is fighting an expensive legal battle with the film and television industry in U.S. District Court in Los Angeles.
The entertainment companies claim that Sonicblue's ReplayTV 4000 personal video recorder violates their copyrights by enabling owners to skip commercials and send recordings through the Internet.
On the advice of its investment bankers, Sonicblue's board agreed to search for "new financial or strategic partners who might invest in or acquire the company, its business units or assets," the company said in a statement.
Van L. Baker, an analyst with technology research and consulting company Gartner Group, said Sonicblue's business model assumed that personal video recorders and MP3 players would catch on with consumers much more quickly than they have.
Sonicblue's announcement triggered heavy trading of its shares Friday, which lost 11 cents, or 20%, to close at 45 cents on Nasdaq.