Audio tools producer Sonos is dealing with rising acquisition hypothesis following latest struggles which have pushed its market worth all the way down to $1.7 billion from over $5 billion throughout its pandemic peak.
The corporate’s latest management shakeup, which noticed CEO Patrick Spence and its Chief Product Officer Maxime Bouvat-Merlin depart final week, has intensified discussions about potential consumers. Bloomberg’s Mark Gurman factors to Spotify and Amazon as probably the most possible suitors, every providing distinct benefits for a possible acquisition.
Gurman mentioned Amazon seems to be “probably the most pure match,” significantly following its appointment of former Microsoft govt Panos Panay to guide {hardware} growth. Buying Sonos might assist Amazon elevate its Echo system lineup with premium audio know-how, he mentioned.
“Amazon might actually afford to purchase Sonos,” Gurman mentioned. Nonetheless, he famous that the corporate may face regulatory scrutiny just like what derailed its try to accumulate Roomba maker iRobot.
Music streaming big Spotify, one other doubtless suitor, might face fewer regulatory hurdles as a European firm, Gurman mentioned. An acquisition would give Spotify speedy entry into the {hardware} market. In 2021, Spotify turned a {hardware} maker after launching a sensible system for the automotive known as the Automotive Factor. Nonetheless, lower than three years after its preliminary rollout, the product turned formally non-operational, with Spotify saying the marketplace for the Automotive Factor was not what the corporate had been hoping for.
“Spotify has lengthy needed to get into {hardware} however struggled to make it occur. Sonos would give them an on the spot entry, with a wonderful vary of merchandise that might run its audio companies,” Gurman wrote.
Different potential consumers embrace Samsung Electronics, which has struggled to achieve traction within the dwelling speaker market regardless of proudly owning the Harman model. Buying Sonos might strengthen its dwelling audio choices. Roku, with its present soundbar and speaker lineup, might additionally profit, however a stock-based deal is likely to be crucial, given Roku’s restricted money reserves, Gurman famous.
The Bloomberg chief correspondent added that whereas bigger tech corporations like Apple, Google, and Meta might be potential consumers, they’re unlikely candidates as a result of present methods and previous relationships with Sonos.
Apple might purchase Sonos for round $2 billion — lower than it spent on Beats — and Sonos’ {hardware} might assist strengthen Apple’s underwhelming HomePod and residential audio lineup, Gurman mentioned.
“However I don’t imagine Apple will ever purchase Sonos. If Apple actually needed to construct out its dwelling audio enterprise, it already has the {hardware}, software program, content material and manufacturing chops internally. It’s nearly desirous to get issues completed correctly — one thing that Apple is already engaged on,” he wrote.
Hypothesis a couple of sale of Sonos comes amid the corporate’s ongoing restoration from a problematic software program replace launched in Could 2024 that affected its product ecosystem. Three months later, the corporate laid off 100 staff, or round 6% of its workforce.
The corporate mentioned final week that Spence’s departure as CEO is “unrelated” to Sonos’ fiscal Q1 (calendar This fall) outcomes which will likely be reported on February 6, 2025, and for which the corporate mentioned it “is offering no replace at the moment”.
Within the fiscal fourth quarter of 2024, ended September, Sonos’ income tumbled 8% YoY to USD $1.52 billion, which the corporate attributed to “softer demand as a result of difficult market circumstances and challenges ensuing from our latest app rollout”.
Bloomberg’s Gurman mentioned one of the best situation for shoppers is for Sonos to stay impartial.
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