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January 1, 2003

Lower Demand Hurts Maker of Hearing Aids

From: Salt Lake Tribune, UT - 01 Jan 2003


Sonic Innovations Inc. cautioned investors and analysts Tuesday to expect a fourth-quarter loss as a result of decreased sales in a shrinking global hearing-aid market.
The Salt Lake City-based company, which designs, manufactures and markets hearing aids, estimated a net loss of about 2 cents per share for the quarter on net sales of about $17 million. The average estimate of four analysts polled by Thomson First Call is a 4 cent profit.
The company reported $18.3 million in sales in the third quarter.
"The global hearing-aid market has been contracting and the decline in worldwide hearing aid sales has caught up with us," said president and chief executive Andy Raguskus. "While fourth-quarter sales will be up nicely from last year's comparable quarter, the decline in sales from the third quarter 2002 is disappointing."
However, Raguskus said he expects sales and marketing changes and the introduction of new products to spur growth in 2003. Complete fourth-quarter results for the company will be released the week of Jan. 27.
The warning prompted Deutsche Securities to downgrade the company's stock Tuesday from buy to hold and First Albany Corp. analyst William Plovanic to downgrade it from strong buy to buy.
Sonic Innovations began shipping its digital hearing aids and components in 1998. The first product, the Natura hearing aid, was built around technology developed by Douglas Chabries, dean of Brigham Young University's College of Engineering and Technology.
Chabries collaborated with researchers Thomas Stockham and Carver Mead to create the technology that allows for personalized tuning that approximates the use of a graphic equalizer to adjust a stereo.
Earlier this year the company purchased Sentech Systems of Ontario and Orsonique of Quebec to expand its reach into Canada and its presence worldwide.
The company, with 170 employees in Salt Lake City, now offers four families of hearing aids and more than 40 products.
Sonic Innovations shares sank 15 percent to $3.81 on Tuesday, a 52-week low.

© Copyright 2003, The Salt Lake Tribune.