The Santa Clara, California-based company, together with three of its wholly owned subsidiaries, Diamond Multimedia Systems Inc, ReplayTV Inc and Sensory Science Corporation, have filed voluntary petitions for bankruptcy protection. SonicBlue also announced that plans to sell off assets for roughly $52m.

SonicBlue CEO Gregory Ballard said in a statement: In the end, we and our financial advisers have concluded that the best outcome for our creditors and our employees is to sell our businesses to better heeled owners.

The units to be sold off include the Rio unit, which makes a popular MP3 player, and the ReplyTV digital video recorder unit, which enables people to customize television viewing and record shows on a hard drive in a set-top box, allowing viewers to skip ads. Rivals include TiVo Inc, and UK-based Pace Micro Technology Plc. Both units will be sold to D&M Holdings, the parent company of Denon and Marantz, for approximately $40m.

Also to go is the GoVideo unit, which makes dual-deck VCRs, DVD players, DVD/VCR combo players, and home theater systems. It will be sold to Opta Systems LLC for roughly $12.5m. Any sales have to be approved by a US bankruptcy court, and should be completed by the end of April.

Financially, it has not been an easy time for the company. For the fourth quarter, SonicBlue reported a net loss of $33.4m, from a net loss of $52.4m in the fourth quarter in 2001, on revenue down at $67m, from $79.6m in the year-ago quarter. For the fiscal year 2002, it reported a net loss of $105m, down from a net loss of $756m in 2001, on revenue of $272.1m.

As of December 31, SonicBlue had debt and other liabilities of $305m. Ballard admitted that the company had no way of paying $180m in debt, which was due in October. In addition, SonicBlue’s holding in Taiwanese chipmaker UMC, once worth almost $1bn, has plummeted following the collapse in stock. The company did report however that it has obtained an additional $4m in financing from its senior secured lender.

Another problem for SonicBlue has been ongoing legal battles, which have been costing it $3m a quarter in legal expenses. It is currently mired in a protracted copyright infringement legal fight brought by the 27 entertainment companies, including the major US TV networks. The battle centers over the capability of ReplayTV PVRs (Personal Video Recorders), which allow users to make digital copies of copyrighted programs and distribute them to other users via the internet. In the late 1990s, SonicBlue’s Rio MP3 player also survived a legal attack from the music industry.

It is not clear at this stage whether SonicBlue will still be responsible for the lawsuit, after the sale of ReplayTV to its new owners.

Founded in 1989 as S3 Inc, the company was originally a graphics chip business. In 2000 it changed its name to SonicBlue and transformed itself into a consumer appliance company. It employs 260 staff.

Source: Computerwire