(November 26, 2024) This past September, Sound United’s future under the stewardship of Masimo, a publicly traded medical tech company known for advanced monitoring devices, came into question. For background, you can read more about that here, but the important takeaway is that financials and changes to its board actively drove a wedge between Masimo, its stakeholders, and Sound United. Of course, that news kicked a hornet's nest of speculation, leading many to assume Sound United's days with Masimo were in short supply.
Masimo has been rather quiet about the situation, which made this report by the Australian outlet NewsChannel all the more explosive. Headlined as Former Sound United Business Could Be “Discontinued” Next Year After Falling Revenues, No Buyer and Losses Claims New Director, the report highlighted a statement attributed to Micah Young, Executive Vice President and CFO, which impart said, “With regard to our strategic review process, the board has not made a final determination of the manner in which the consumer business will be separated. If, among other things, the board anticipates treating the consumer business as a discontinued operation.”
Without an expected buyer publicly identified, a reported decline in sales revenue, and armed with the phrase “discontinued operation,” NewsChannel and two spinoff articles published by German news sources concluded that Sound United and its brands’ business activities could be discontinued or shutdown in a matter of months.
If you read my original (since retracted) article dissecting NewsChannel’s conclusions, you’ll know I, too, read “discontinued operation” as an ominous sign. In part, writing:
Keywords in that statement are "anticipates" and "discontinued operation." Does this mean brands like Marantz and Denon will cease operations entirely? Does Young mean to say Masimo will take drastic restructuring steps to salvage select portions of the business? Or, does it simply mean Masimo anticipates a sale to be completed early in the year, thus shedding operations from Masimo's books?
Objectively speaking, the notion of a complete shutdown or brand discontinuation makes no sense. Yes, we’ve witnessed a change in market dynamics within the consumer electronics segment over the past several years. And, yes, sales may have declined across the industry, but Sound United delivered fantastic products during 2024, and, in many respects, its brands remain market leaders – there isn’t a logical scenario where all of that just disappears.
Now, if you regularly swim in financial circles, then you likely know the phrase “discontinued operation” has little to do with turning off the lights, boarding up the windows, and calling it a day. It is, in fact, accounting terminology that reflects how Sound United is classified in Masimo’s overall financial statements. It’s basically a tool used for transparency that will allow investors to evaluate Masimo’s core healthcare business better.
Based on discussions with a highly credible source, this notion of a shutdown or outright discontinuation is completely misguided. In fact, a move to “discontinued operation” has no impact on the day-to-day operations of any Sound United brand, nor does it change product and financial plans for 2025.
According to the source, budgets for the upcoming fiscal year have been finalized, and Sound United brands have exciting new products on the horizon. In other words, the brands, their products, and the teams behind them are healthy and moving forward with dedicated roadmaps.
As for the current status of Sound United, Masimo is continuing to explore its options and, most importantly, plans to keep all brands under one portfolio. I'm told several outcomes are still being evaluated, including an outright sale, keeping Sound United under Masimo’s control, or spinning it off into a publicly traded entity.
So, yes, the future of Sound United’s ownership remains uncertain, but the brands are not in distress; operations are running normally, and brand managers are poised to continue delivering innovation and quality. Take a breath and let the process play out. In the meantime, plan on Sound United remaining a big player in the home theater and audio segment.
Related Reading:
- Is Sound United on the Ropes? Today's Events Increase the Likelihood of a Sale, But to Whom?
- Marantz Horizon Series: A Stunning and Unique Fusion of Art, Sound, and Modern Convenience
- Denon Refreshes Its Flagship AVR, Meet the AVR-A10H
- Marantz Raises the Bar, Launches New Flagship Model 10 Reference Integrated Amp
- Sound United Gets... Acquired? Yup, Industry Giant Enters Agreement with Masimo Corp
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