SoundBite Prices IPO Well Below Expectations in Wake of Patent Claims

11/1/07

Just a couple weeks after an eleventh-hour patent-infringement claim delayed its planned IPO, SoundBite Communications (NASDAQ: SDBT) has priced the deal well below initial projections.

Expectations of the offering had been high, with the Bedford, MA, automated voice messaging firm projecting a price of $12-14 for 6 million shares and observers looking for the deal to follow in the footsteps of recent successes like the debuts of AthenaHealth and Constant Contact. But in an SEC filing made today, SoundBite has reduced the price to $8 per share, and it has cut the number of shares being offered to 5.2 million. By my calculations, that knocks $36.4 million off the value of the deal (assuming the middle of the original range), or almost 47 percent.

SoundBite is taking this big hit despite the fact that the firm has been able in the last couple of weeks to quash some of the patent-infringement claim leveled against it by Universal Recovery Systems. URS had notified SoundBite on October 17 that it believed the firm’s automated voice messaging technology violated certain of its existing patents in the U.S. and U.K. and would violate a pending U.S. patent should it be issued. On October 19, SoundBite filed a lawsuit seeking “(a) a declaration that we do not infringe any valid and enforceable claim of any of the existing U.S. patents specified in the URS letter and (b) a judgment that URS and its affiliate Blake Rice improperly interfered with our business, including the offering made hereby,” according to today’s filing. On October 23, URS filed a statement of non-liability agreeing to drop the infringement claims related to its existing U.S. patents. The statement, however, does not cover the U.S. patent application or two U.K. patents.

Shares of SoundBite fell when they began trading this afternoon and were off slightly at $7.90 this afternoon.

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